[Dheeraj Construction and Industries Ltd. v. CIT, 13 Taxman.com 32 (Cal.)]
In this case, the main point involved in the appeal filed before the Calcutta High Court u/s.260A was whether the addition of certain amount based on alleged bogus purchase could be made in block assessment notwithstanding the fact that those findings were based on no material recovered from search and seizure. The Court held that the aforesaid findings were not based on any material unearthed on search and seizure and, thus, was not liable to be assessed on the block assessment under Chapter XIV-B, but should be subject to regular assessment. The assessee filed review application challenging the observation ‘but should be subject to regular assessment’.
The assessee contended that the Court should not have made such observation when such observation was beyond the scope of the subject-matter of the questions framed in the appeal. The assessee contended that the regular assessment proceedings u/ss.143/147/148 were already barred by limitation as contained in section 149(1) and, as such, the aforesaid observation should be deleted.
The Revenue opposed the application contending that there was no bar in proceeding afresh for regular assessment, if a direction to that effect was given by the Court while disposing of an appeal u/s.260A notwithstanding the fact that period of limitation for initiating fresh assessment had since expired; and that in such circumstances, the provisions of section 14 of the Limitation Act, 1963 would apply.
The Calcutta High Court held as under: “ (i) The question before the Court was whether those two transactions could form subjectmatter of block assessment when findings in support of those transactions were based on no material recovered from search and seizure and, thus, within the narrow scope of section 260A, there was no necessity of considering whether the transactions in question could be assessed under regular assessment. Aforesaid observation was not meant for giving direction upon the Assessing Officer because there was neither any scope of passing such direction for effective disposal of the dispute, nor could any such direction be passed while answering questions formulated by the Division Bench admitting the appeal.
(ii) The expressions ‘finding’ and ‘direction’ contained in section 153(3) are limited in meaning. A finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of that particular case and must also be a direction which the authority or the Court is empowered to pass while deciding the case before it. Similarly, under the Act, there is no scope of applying the provisions of the Limitation Act as would appear from the fact that in section 260A itself, the power of condonation of delay in filing the appeal has been incorporated by the Legislature by introducing sub-section (2A) with effect from 1-4-2010 only and if the Limitation Act, on its own, had the application to such an appeal, there was no necessity of incorporation of such a provision in section 260A and that too with effect from 1-4-2010 and, consequently, the benefit of section 14 of the Limitation Act also cannot be availed of by the Assessing Officer, if under the Incometax Act, the regular assessment is barred and even the period of limitation for reopening the regular assessment had expired.
(iii) Sub-section (7) of section 260A merely provides that save as otherwise provided in the Act, the provisions of the Code of Civil Procedure, 1908, relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section. Thus, such an appeal must be limited to substantial questions of law and not like an ordinary appeal u/s.96 of the Code.
(iv) Thus, there was no basis of the apprehension that by taking advantage of impugned observations, the Assessing Officer could reopen the regular assessment by taking aid of section 14 of the Limitation Act.
(v) Consequently, it was to be clarified that the Court never intended to direct the Assessing Officer to bring those transactions within regular assessment after the expiry of the period of limitation prescribed under the Income-tax Act by taking aid of section 14 of the Limitation Act which was not even applicable.”
