Assessment: Time limit for completion of assessment: Limitation: Extention of period: Section 153 Expl 1(ii): A. Y. 1986-87 to 1989- 90: Stay of assessment proceedings by order of Court: Limitation restarts immediately on vacation of the stay order and not on receipt by the Department of the order vacating the stay:

On 08-11-1989, the Assessing Officer issued notices u/s. 148 of the Income-tax Act, 1961 for reopening of the assessment. Assessee filed writ petition challenging the reopening. The Allahabad High Court admitted the petition by an order dated 24-03-1992 and granted stay of the assessment proceedings. Thereafter, on 01-08-1995 the High Court dismissed the petition and accordingly stay was vacated on that day. The Assessing Officer passed the reassessment order on 04-01-1996. The assessee challenged the validity of the reassessment order on the ground that the reassessment order passed on 04-01- 1996 is barred by limitation since a valid reassessment order could have been passed only upto 30-09-1995. The Tribunal accepted the assessee’s claim.

In the appeal, it was contended by the Revenue that the order vacating the stay was communicated to the Assistant Commissioner of Income Tax (Investigation) on 18-12-1995 and accordingly, the reassessment order passed on 04-01-1996 is within the period of limitation and hence is a valid order. The Allahabad High Court upheld the decision of the Tribunal and held as under:

“i) T he statutory scheme of Explanation 1(ii) of section 153 clearly indicates that for computing the period of limitation the period during which the assessment proceedings is stayed shall be excluded. In excluding the above period, the concept of communication of the order of the Court cannot be imported. The exclusion of the period has been provided because of stay or injunction by any Court during which the assessment proceedings are stayed

ii) T he submission of the revenue that the limitation will start again only when the order is communicated to the Department cannot be accepted. The other reason for not accepting the above submission is equally potent. Explanation 1(v) and (vi) to section 153 are also part of the same statutory scheme. In Explanation 1(v) and (vi) to section 153 the statutory scheme provides for computing the period of limitation from the date when the order under s/s. (1) of section 245D and 245Q is received by the Commissioner.

iii) T hus, the legislature has provided for excluding the period from the date of communication of the order where they so intended. The use of concept of communication of receiving the order in the same provision which is absent in Explanation 1(ii) concerned clearly indicates that for the purposes of Explanation 1(ii), the communication of the order of the Court vacating the stay or injunction is not contemplated.

iv) In view of aforesaid, the Tribunal is justified in law in coming to the conclusion that the assessments made by the Assessing Officer was barred by limitation on 30-9-1995.

v) The question is answered in favour of the assessee and against the Revenue. The appeal is dismissed.”