RENUSAGAR POWER COMPANY LIMITED Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is a petition for issuance of a writ in the nature of prohibition restraining the respondents (assessing authorities under the Income-tax Act) from proceeding with, or passing any orders in, the assessment proceedings against the petitioner relating to the assessment year 1971-72.

(2.) THE petitioner is a company registered under the, Companies Act. It is engaged in the business of generation and supply of power. It is an assessee under the Income-tax Act. For the assessment year 1971-72, the petitioner filed a return of its income, on the basis of which an order of assessment was made by the Income-tax Officer on February 27, 1975, under Section 142 of the Act. It was a case of nil assessment. Subsequently, the Income-tax Officer sought to reopen the assessment by issuing a notice under Section 148, which was questioned by the petitioner by way of a writ petition in this court (C.M.W.P. No. 578 of 1976). This aspect is not really relevant for our purpose and it is also not clear as to what happened to the said writ petition. What is, however, relevant is that by a notice dated February 7, 1977, the Commissioner of Income-tax proposed to revise the assessment order dated February 27, 1975. Under the said notice, the order of assessment was proposed to be revised on eight points. After hearing the petitioner, the Commissioner passed final orders on February 26, 1977. Of the eight points mentioned in the show cause notice, two were held in favour of the assessee, one was held against it and with respect to the remaining five, the matter was remitted to the Income-tax Officer to make a fresh assessment in accordance with law. THE assessee filed an appeal against the order of the Commissioner dated February 26, 1977, confined only to the five points which were remitted to the Income-tax Officer. THE appeal did not pertain to the points which were held against the assessee. In this appeal, the petitioner filed a stay petition, but no orders were passed thereon. Ultimately, the appeal was dismissed by the Tribunal on February 28, 1979. While dismissing the appeal, the Tribunal gave certain directions, which are relevant for our present purpose, and, therefore, set out :

(3.) SUB-section (1) of Section 153 prescribed the period of limitation within which an order of assessment has to be made. In respect of an assessment year commencing on or after April 1, 1969, it is two years from the end of the assessment year in which the income was first assessable (vide Section 153(1)(a)(iii), as it then stood). SUB-section (2) provides the period of limitation in case of assessment, reassessment or recomputation made under Section 147. In a case of assessment etc., to be made under Clause (a) of Section 147, it is four years from the end of the assessment year in which the notice under Section 148 is served while, in the case of Clause (b) of Section 147, it is four years from the end of the assessment year in which the income was first assessable, or the expiry of one year from the date of service of the notice under Section 148, whichever is later. The Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, says that notwithstanding anything contained in SUB-Sections (1) and (2), an order of fresh assessment in pursuance of an order under Sections 250, 254, 263 or 264, setting aside or cancelling an assessment can be made at any time before the expiry of two years from the end of the financial year in which the order under Section 146 cancelling the assessment is passed by the Income-tax Officer or the order under Section 250 or Section 254 is received by the Commissioner or from the date the order under Sections 263 or 264 is passed by the Commissioner. SUB-section (3) was made subject to SUB-section (2A) by the very same amendment, though it was a pre-existing provision. SUB-section (3) says that the provisions of SUB-sections (1) and (2) shall not apply to certain classes of assessments, reassessments or recomputations which can be completed at any time. One of the classes of assessments specified in the sub-section is "(ii) where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under Section 250, 254, 260, 262, 263 or 264 or in an order of any court in a proceeding otherwise than by way or appeal or reference under this Act." But, as stated above, this sub-section is expressly made subject to the provisions of SUB-section (2A) by the Taxation Laws (Amendment) Act, 1970. Explanation 1 to the section prescribes certain rules of computation. Inter alia, it says that "the period during which the assessment proceeding is stayed by an order or injunction of any court" shall be excluded in computing the period of limitation for the purposes of this section. For the sake of convenience, we may set out SUB-sections (2A) and (3) of Section 153 and Explanation 1 thereto (in so far as it is relevant) herein below :