AUTO AND METAL ENGINEERS Vs. UNION OF INDIA

JUDGEMENT

(1.) The short question that falls for consideration in these appeals relates to the interpretation of the expression "assessment proceeding" in Explanation I in Section 153 of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

(2.) Civil Nos. 2739-41 of 1981 have been filed by M/s Auto and metal Engineers, a partnership firm, and its partners while Civil nos. 2742-44 of 1981 and Civil Nos. 2745-47 of 1981 have been filed by Sunanda Rani Jain and Karuna Rani Jain, the two partners of the assessee-firm in their individual capacity. The appeals relate to Assessment years 1967-68, 1968-69 and 1969-70. On 24/4/1971 a search was conducted at the business premises of the assessee-firm as well as at the residential premises of the partners and certain documents and papers were seized during the course of the search. The partners of the assessee-firm filed writ petitions in the Delhi High court wherein they challenged the validity of the said search and seizure. The said writ petitions were admitted by the High court on 26/10/1971. In the said writ petitions an interim order was passed on 23/11/1971 by Rajinder Sachar, J. (as he then was) in the following terms:

(3.) The said interim order was continued till 12/8/1974 when the writ petitions were dismissed by the Delhi High court. Thereafter, the Income tax Officer issued notices to the assessee-firm as well as its partners under sections 142 (1, 143 (2 and 143 (3 of the Act in respect of the assessment years mentioned above. The reply to the said notices was submitted by the assessees on 21/11/1974. Soon thereafter the writ petitions, which have given rise to these appeals, were filed by the appellants in the High court of punjab and Haryana. In the said writ petitions the case of the appellants was that under the interim order dated 23/11/1971 passed by the Delhi High court there was no stay of the assessment proceedings and that Explanation i in Section 153 of the Act could not be invoked and that after the expiry of the period prescribed under Section 153 the Income Tax Officer was not competent to issue the notice in the assessment proceedings against the appellants. The said contention of the appellants was rejected by the learned single Judge on the view that expression "assessment proceeding" in explanation I in Section 153 would include the passing of the order of assessment and since the passing of the order of assessment had been stayed by the Delhi High court, there was a stay of assessment proceedings by the high court. The learned Single Judge held that in view of the stay order passed by the Delhi High court the period from 23/11/1971 to 31/3/1972 (the last date for completing the assessment) , i. e. , the period of four months and eight days, was available to the Income Tax Officer to complete the assessment after the dismissal of the writ petition by the Delhi High court on 12/8/1974 and that the assessments could be completed up to 20-12- 1974. The learned Single Judge, therefore, dismissed the writ petitions filed by the appellants. Letters patent appeals filed by the appellants against the judgment of the learned Single Judge were dismissed by the division bench of the High court by order dated 11/12/1980. Feeling aggrieved by the said order of the division bench, the appellants have filed these appeals by special leave.