COMMISSIONER OF INCOME TAX Vs. KAMLA DEVI SMT

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue to answer the following question of law :

(2.) THE assessee is an individual and the question of law referred to us relates to the assessment years 1971-72 and 1972-73. For the said assessment years, the assessee filed returns of income which were accepted and consequently assessment orders were passed on December 31, 1971, and September 14, 1972, respectively. Subsequently, the Commissioner of Income-tax by order dated December 27, 1973, set aside the assessments made by the Income-tax Officer under Section 263 of the Act and the assessment proceedings were directed to be initiated afresh. THE fresh assessments were made by the Income-tax Officer on March 26, 1977, for both the assessment years.

(3.) LEARNED counsel appearing for the Revenue urged that since subsection (2A) of Section 153 used the word "may" and as such it is not mandatory on the part of the Income-tax Officer to complete the assessment proceedings within the time prescribed under Sub-section (2A) of Section 153 of the Act. This argument is devoid of merit. The word "may" refers to the exercise of the power by the Assessing Officer. A similar question came up for consideration before the Madhya Pradesh High Court in the case of Gulabchand Motilal v. CIT [1988] 174 ITR 117, it was held that the language used in Sub-section (2A) of Section 153 of the Act is very clear and there is no ambiguity. In clear terms it is held that an order of fresh assessment passed by the Income-tax Officer in pursuance of the order passed under Section 263 setting aside or cancelling the earlier assessment order has to be passed within the period of two years prescribed therein. In the case of Shri Prem Nath Mayor v. CIT [1984] 148 ITR 588 (P and H), it was held that it is open to the Income-tax Officer to pass a fresh order of assessment within two years from the end of the financial year in which the order of remand is passed. We are in agreement with the decisions referred to above. The result of the discussion is that the Assessing Officer has to pass an order of assessment within two years from the date of passing of the order of the Commissioner of Income-tax (?) under Section 263 of the Act.