Spences Hotels (P) Ltd. Vs. Dy. Cit - Court Judgment

Excerpt:
counsels: k.r. prasad, for the assessee m.v. seshachala, for the revenue in the karnataka high court r. gururajan, j. - securities & reconstruction of financial assets & enforcement of security interest act, 2002 [c.a. no. 54/2002]. section 17: [s. abdul nazeer, j] proceedings under jurisdiction of tribunal to direct the bank to redeliver possession of the property during the pendency of the appeal - held, once possession of the secured asset is taken, delivering back possession during the pendency of the appeal does not arise. it is only after examining the facts and circumstances of the case and the evidence produced by the parties, if the tribunal comes to the conclusion that any of the measures referred to in sub-section (4) of section 13 of the act taken by the secured creditor are not in accordance with the provisions of the act and the rules made there under, then only the tribunal can restore the possession of such secured asset to the borrower. tribunal is not justified in allowing the application of the respondent directing redelivery of the possession of the property in question. - hence, initiation of assessment proceedings would be bad, even when they are initiated in consequence of or to give effect to any finding or direction contained in the appellate order, if such initiation of reassessment proceedings is barred by any other provision of the act on the date of the order which was the subject-matter of appeal. it was filed only on 5-2-1971. in as much as this return was invalid in the eye of law, a notice under section 148 was issued by the income tax officer on 1-3-1971, and the assessment was completed on 29-3-1972. against the said order of assessment, the assessee filed an appeal, which was disposed of by the appellate assistant commissioner on 6-10-1972. the judgment of the tribunal in the second appeal is dated 9-9-1974. now, according to sub-section (2) of section 150, the initiation of reassessment proceedings would be bad, even when they are initiated in consequence of or to give effect to any finding or direction contained in the appellate order, if such initiation of reassessment proceedings is barred by any other provision of the act on the date of the order which was the subject-matter of appeal. the relevant assessment year in this case is 1966-67. four years therefrom would expire on 31-3-1971. thus, the impugned initiation of proceedings under section 147 by a notice issued on a date subsequent to 9-9-1974, would be clearly barred. according to them what is challenged in this case is a notice and that notice can be as well be considered by the authorities. proceedings which had attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings which had already concluded and attained finality.orderthe petitioner spences hotels (p) ltd., has filed this petition on the following facts :the petitioner, a limited company is assessed with tax by the respondent in terms of the indian income tax act (hereinafter referred to as 'the act') the petitioner was assessed for the assessment year 1976-77 under section 143(3) of the act vide order dated 3-5-1979. in march 1975, the petitioner entered into an agreement with the indian hotels company limited under which it along with other shareholders in m/s. fonseca private limited agreed to transfer the shares. the issue relates to the liability to tax in respect of the consideration payable under this agreement. payments were made in instalments over a period of time. the implementation of the agreement was the subject matter of a dispute and it was finally resolved through arbitration.arbitration which was concluded in the previous year relevant for the assessment year 1980-81. the amount payable to the petitioner in terms of the award was sought to be taxed to capital gains in the assessment year 1980-81. the matter reached the income tax appellate tribunal (hereinafter referred to as 'the tribunal'). the tribunal passed an order and in the said order, the tribunal notices the. fact that the transaction by way of agreement was within the knowledge of the assessing officer while concluding the assessment for the assessment year 1976-77 and inasmuch as the amount arising from the agreement of rs. 2 lakhs which was received during the calendar year 1975 was offered to tax for the assessment year 1976-77.2. purporting to act upon the above decision of the tribunal, the respondent issued a notice dated 17-11-1998 for the assessment year 1976-77 under section 148 of the act in terms of annexure b. in the notice, it is stated that the department has reason to believe that the income chargeable to tax for the assessment year 1976-77 as escaping tax within the meaning of section 148 of the act. on receipt of the notice, the petitioner submitted a detailed reply objecting to the said notice. the petitioner also raised a question of limitation with regard to the issuance of the notice. the petitioner states in the petition that the initiation of escaped assessment proceedings is beyond the period of limitation prescribed in law and any issuance of notice is contrary to the provisions of the act.3. respondents have entered appearance and they have filed a very detailed objection statement. they justify their stand in terms of section 150 of the income tax act. according to them, a limitation prescribed under section 149a of the act is not applicable to the circumstances of the case. the exemption granted in section 150 of the act would be applicable to the facts and circumstances of the case. they justify their stand. they have filed statement of objection and additional statement of objection.4. sri prasad, learned senior counsel took me through the pleadings to contend that notices issued in the case on hand requires to be set aside solely on the ground of limitation. according to the learned counsel, the tribunal disposed of the appeal on 26-6-1988 and the same was served on 22-7-1988 on the department. the assessment order that is being reopened is of assessment year 1976-77. a period of 4 years is already over in the year 1991 and therefore according to the learned counsel, no proceedings could be initiated. he states that the limitation under section 149(1)(a)(iii) for reopening is over on 31-3-1987. by 31-10-1989, such action had become barred by limitation. he has referred to me the following case laws :cit v. g. viswanathan : [1988]172itr401(ap) , mysore cements ltd. v. ito : [1987]167itr370(kar) , ganga saran & sons (p) ltd. v. ito (1981) 130 itr 13 , praveen kumari v. cit .5. per contra, the central government contends that limitation is available in terms of the proviso to section 150 of the act. he says that section 152 comes to the rescue of the department. according to him, the present order is passed in the light of the order passed by the tribunal.6. after hearing the counsel, i have carefully perused the material on record.7. it is unnecessary for me to refer to the other facts in the light of the counsels confining their arguments only to the limitations. the relevant sections are section 149, section 147, section 148, section 143(3), section 151 and section 152.section 143 provides for assessment sub-clause (iii) provides for an order in writing in the matter of assessment.section 145 provides for method of accounting.section 146 deals with reopening of assessment at the instance of the assessee in respect of escaped assessment.section 147 is income escaping assessment.section 148 provides for issue of notice where income has escaped assessment.section 149 provides for a time limit for notice.section 150 deals with provision for cases where assessment is in pursuance of an order of an appeal.8. a combined reading of all these provisions would show that before making the assessment, re-assessment or re-petition under section 147, a notice is required to be furnished.9. section 149 provides for time limit for notice.10. section 150, as i mentioned earlier is a provision for cases where assessment is in pursuance of an order of an appeal. the said provision reads as under :'150. provision for cases where assessment is in pursuance of an order on appeal, etc.(1) notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this act by way of appeal, reference or revision or by a court in any proceeding under any other law.(2) the provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken.'11. in the case on hand, notices are admittedly issued under section 148 of the income tax act. it is with regard to the escape assessment in terms of section 144 of the income tax act. the assessment year is referable to 1976-77. admitted facts reveal that assessment under section 143 was passed on 5-8-1983. notice under section 148 was issued on 23-3-1984. return was filed on 29-5-1984. assessment order was passed under section 143(3) of the act read with 147(b) of the act bridging to tax as per the order of the arbitrator dated 30-1-1985. appeal was partly allowed on 18-10-1985. matter was remanded. assessee preferred further appeal to the tribunal which remanded the matter on 23-9-1988. the assessing officer passed an order under section 143(3) on 31-10-1989. appeal filed by the assessee against the order dated 31-10-1989 was partly allowed in terms of an order dated 12-3-1990. the tribunal disposed of the appeal on 26-6-1998 and the tribunal has noticed that the transfer of the intangible rights belonging to the assessee did take place in assessment year 1976-77 and not in the assessment year 1980-81. the tribunal allowed the appeal filed by the department and the cross-appeal filed by the assessee stood dismissed. admitted facts reveal that the assessments are being reopened in terms of the appellate order on 17-11-1998 in terms of section 148. as i mentioned earlier, notice is under section 148 in the matter of escape assessment under section 147. it is subject to section 149. section 149 provides for 4 years in terms of section 149(1)(a)(i). section 149(1)(a)(ii) provides not more than 7 years if 4 years have elapsed from the end of the relevant assessment year. in the case on hand, the admitted facts reveal of payments in the year 1975 and the taxing of such amount took place in the assessment year 1976-77 proceedings, therefore, 4 years' period in terms of section 147 read with 148 ends on 31-3-1981 that is 4 years from 31-3-1977.12. sri prasad, learned counsel is therefore right in his submission that the period of limitation is already over in the case on hand and therefore, the notices are barred by time in terms of the statutory provisions.13. however, the defence put forth by the respondent is sub-section (2) of section 150 of the act. section 150 provides for a notice being issued under section 148 notwithstanding anything contained in section 147. sub-section (2) makes it very clear that the proviso to section 148 shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which re-assessment could not have been made at the time the year which was the subject matter of an appeal was made by raising of any other provisions limiting the time within which any action by the assessment may be taken. a reading of section 150 would show that a notice is permissible in consequences of or to give effect to any finding contained in an order passed by any authority in any proceedings under this act by way of an appeal. therefore, what is required to be noticed by the authorities is as to whether limitation is available or not in respect of escaped assessment order. in this connection, it is necessary to notice the case laws submitted by the counsel.14. in somewhat identical circumstances, a division bench of the andhra pradesh high court in the case of cit v. g. viswanatham : [1988]172itr401(ap) has considered this very issue. in the said judgment, the court notices sections 147, 149 and 150 provisions. after noticing, the andhra pradesh high court ruled that the expression 'the order which was the subject matter of the appeal, reference or revision, as the case may be was understood as referring to original order of assessment'. the andhra pradesh high court, after noticing the judgment of various other high courts ruled as under :'section 147 of the income tax act, 1961, provides for assessment and reassessment of income which has escaped assessment. the reassessment is, however, subject to the provisions contained in sections 148 to 153. section 149 provides the time limit for issue of notice, i.e., for initiation of proceedings under section 147. section 150 is in the nature of a proviso to section 149. a reading of sub-section (1) of section 150 shows that where the reassessment proceedings are initiated in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the income tax act by way of appeal, reference or revision, the time limits prescribed in section 149 shall not apply, and that notice under section 148 can be issued at any time. sub-section (2), however, is again in the nature of a proviso to sub-section (1). it says that the provisions of sub-section (1) shall not apply where, by virtue of any other provision limiting the time within which action for assessment, reassessment or recomputation may be taken, such assessment, reassessment, or recomputation is barred on the date of the order which is the subject-matter of the appeal, reference of revision in which the finding or direction is contained. section 153 provides the time limits of completion of assessments and reassessments. explanations 2 and 3 to section 153 merely illustrate and clarify the meaning of the words 'in consequence of or to give effect to any finding or direction contained in an appellate, revisional or any other order. explanations 2 and 3 do not purport to obliterate or remove the restriction contained in sub-section (2) of section 150. they no doubt refer to section 150, but for a limited purpose. hence, initiation of assessment proceedings would be bad, even when they are initiated in consequence of or to give effect to any finding or direction contained in the appellate order, if such initiation of reassessment proceedings is barred by any other provision of the act on the date of the order which was the subject-matter of appeal.' (p. 401)15. the andhra pradesh high court also in the last paragraph has ruled as under:'now, coming to the facts of the case before us, the finding inconsequence of which under section 148 has been given, was recorded by the appellate tribunal at the stage of the second appeal. in this case, it is relevant to notice that the assessee did not file a return within the prescribed period. it was filed only on 5-2-1971. in as much as this return was invalid in the eye of law, a notice under section 148 was issued by the income tax officer on 1-3-1971, and the assessment was completed on 29-3-1972. against the said order of assessment, the assessee filed an appeal, which was disposed of by the appellate assistant commissioner on 6-10-1972. the judgment of the tribunal in the second appeal is dated 9-9-1974. now, according to sub-section (2) of section 150, the initiation of reassessment proceedings would be bad, even when they are initiated in consequence of or to give effect to any finding or direction contained in the appellate order, if such initiation of reassessment proceedings is barred by any other provision of the act on the date of the order which was the subject-matter of appeal. in this case, the second appeal in which the finding was recorded arose from the order of the appellate assistant commissioner dated 6-10-1972. the question is, whether on that date the initiation of reassessment proceedings is barred by any provision of law? according to section 149(1)(b), reassessment proceedings cannot be initiated after the expiry of four years from the end of the relevant assessment year. the relevant assessment year in this case is 1966-67. four years therefrom would expire on 31-3-1971. thus, the impugned initiation of proceedings under section 147 by a notice issued on a date subsequent to 9-9-1974, would be clearly barred. even if we construe the expression 'the order which was the subject-matter of the appeal, reference or revision, as the case may be' occurring in sub-section (2) of section 150 as referring to the original order of assessment, as has been understood by the calcutta high court in ito v. eastern coal co. ltd. : [1975]101itr477(cal) , even then the result would not be different, because the order of assessment in this case was made on 29-3-1972, which too is beyond 31-3-1971.' (p. 411)16. the said judgment is squarely applicable to the facts of this case i must also notice another judgment of the punjab high court in parveen kumari's case (supra). in that case also, the division bench noticed the scope of sections 147, 149 and 151. after noticing, the punjab high court has ruled as under :'149. time limit for notice(1) no notice under section 148 shall be issued....(b) incases falling under clause (b) of section 147, at any time after the expiry of four years from the end of the relevant assessment year.'in the light of the aforesaid provision specifying the period of limitation as four years from the end of the relevant assessment year, the case of the assessee for the purposes of issuance of notice for reassessment for the assessment year 1977-78 is found to be barred by limitation. the period of four years from the end of the assessment year 1977-78 expired on 31-3-1982. the assessment for the assessment year 1978-79, which was the subject matter of appeal before the tribunal, was made in the case of nand kishore on 23-3-1989.... thus, the subject-matter of appeal before the tribunal was the order of the commissioner dated 27-12-1989 .... the assessing officer had no jurisdiction to issue a notice under section 148 for the assessment year 1977-78 in as much as the period of four years had already expired on 31-3-1982.' (p. 347)17. these two judgments support the contentions of the petitioner.18. however, i must notice the technical objections raised by the revenue. according to them what is challenged in this case is a notice and that notice can be as well be considered by the authorities. learned counsel says that writ court is not to interfere in such matters. he relies on a judgment of the supreme court in 1994 (supp) 1 scc 635. it is no doubt true that in the said case, the supreme court dismissed the appeal filed by an assessee in the matter of reassessment. a careful reading of the said judgment would show that in the said case, the submission of the learned counsel for the petitioner was with regard to the limitation based of certain facts which required to be determined at the first instance by the assessing officer. in the case on hand, the facts are undisputed. it is purely a legal question. therefore, the said judgment cannot be pressed into service to hold against my interference in the case on hand. the revenue relies on another judgment of this court in mysore cements ltd.'s case (supra). that also stands totally on a different footing. that was not a case as in the present case. that was a case in which the court rejected on the ground of a finding of facts. in the case on hand, i have not. gone into those questions of fact and this case is also argued only on the question of limitation on the admitted facts.19. i must notice the latest judgment of the supreme court in : [2002]254itr772(sc) . the supreme court has ruled that the provisions of a fiscal statute, more particularly one regulating the period of limitation, must receive a strict construction. the law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation of litigants for an indefinite period of future unforeseen events. proceedings which had attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings which had already concluded and attained finality.20. a time bar assessment cannot be reopened in the absence of any specific power available to the revenue in the matter of reassessment. as observed by the apex court, finality has to be at one stage or the other. finality has been given in terms of the statute to the proceedings of the assessment year 1977-78 in this case.21. in these circumstances, these petitions are allowed. the impugned notices are set aside. a direction is issued to the respondent not to proceed further in the given circumstances by way of reopening of the assessment proceedings for the year 1976-77 pertaining to the petitioner. no other point is argued before me.22. ordered accordingly. no costs.

Judgment:
ORDER

The petitioner Spences Hotels (P) Ltd., has filed this petition on the following facts :

The petitioner, a limited Company is assessed with tax by the respondent in terms of the Indian Income Tax Act (hereinafter referred to as 'the Act') The petitioner was assessed for the assessment year 1976-77 under section 143(3) of the Act vide order dated 3-5-1979. In March 1975, the petitioner entered into an agreement with the Indian Hotels Company Limited under which it along with other Shareholders in M/s. Fonseca Private Limited agreed to transfer the shares. The issue relates to the liability to tax in respect of the consideration payable under this agreement. Payments were made in instalments over a period of time. The implementation of the agreement was the subject matter of a dispute and it was finally resolved through arbitration.

Arbitration which was concluded in the previous year relevant for the assessment year 1980-81. The amount payable to the petitioner in terms of the award was sought to be taxed to capital gains in the assessment year 1980-81. The matter reached the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal'). The Tribunal passed an order and in the said order, the Tribunal notices the. fact that the transaction by way of agreement was within the knowledge of the assessing officer while concluding the assessment for the assessment year 1976-77 and inasmuch as the amount arising from the agreement of Rs. 2 lakhs which was received during the calendar year 1975 was offered to tax for the assessment year 1976-77.

2. Purporting to act upon the above decision of the Tribunal, the respondent issued a notice dated 17-11-1998 for the assessment year 1976-77 under section 148 of the Act in terms of Annexure B. In the notice, it is stated that the department has reason to believe that the income chargeable to tax for the assessment year 1976-77 as escaping tax within the meaning of section 148 of the Act. On receipt of the notice, the petitioner submitted a detailed reply objecting to the said notice. The petitioner also raised a question of limitation with regard to the issuance of the notice. The petitioner states in the petition that the initiation of escaped assessment proceedings is beyond the period of limitation prescribed in law and any issuance of notice is contrary to the provisions of the Act.

3. Respondents have entered appearance and they have filed a very detailed objection statement. They justify their stand in terms of section 150 of the Income Tax Act. According to them, a limitation prescribed under section 149A of the Act is not applicable to the circumstances of the case. The exemption granted in section 150 of the Act would be applicable to the facts and circumstances of the case. They justify their stand. They have filed statement of objection and additional statement of objection.

4. Sri Prasad, learned senior counsel took me through the pleadings to contend that notices issued in the case on hand requires to be set aside solely on the ground of limitation. According to the learned counsel, the Tribunal disposed of the appeal on 26-6-1988 and the same was served on 22-7-1988 on the department. The assessment order that is being reopened is of assessment year 1976-77. A period of 4 years is already over in the year 1991 and therefore according to the learned counsel, no proceedings could be initiated. He states that the limitation under section 149(1)(a)(iii) for reopening is over on 31-3-1987. By 31-10-1989, such action had become barred by limitation. He has referred to me the following case laws :

CIT v. G. Viswanathan : [1988]172ITR401(AP) , Mysore Cements Ltd. v. ITO : [1987]167ITR370(KAR) , Ganga Saran & Sons (P) Ltd. v. ITO (1981) 130 ITR 13 , Praveen Kumari v. CIT .

5. Per contra, the Central Government contends that limitation is available in terms of the Proviso to section 150 of the Act. He says that section 152 comes to the rescue of the department. According to him, the present order is passed in the light of the order passed by the Tribunal.

6. After hearing the counsel, I have carefully perused the material on record.

7. It is unnecessary for me to refer to the other facts in the light of the counsels confining their arguments only to the limitations. The relevant sections are section 149, section 147, section 148, section 143(3), section 151 and section 152.

Section 143 provides for assessment sub-clause (iii) provides for an order in writing in the matter of assessment.

Section 145 provides for method of accounting.

Section 146 deals with reopening of assessment at the instance of the assessee in respect of escaped assessment.

Section 147 is income escaping assessment.

Section 148 provides for issue of notice where income has escaped assessment.

Section 149 provides for a time limit for notice.

Section 150 deals with provision for cases where assessment is in pursuance of an order of an appeal.

8. A combined reading of all these provisions would show that before making the assessment, re-assessment or re-petition under section 147, a notice is required to be furnished.

9. Section 149 provides for time limit for notice.

10. Section 150, as I mentioned earlier is a provision for cases where assessment is in pursuance of an order of an appeal. The said provision reads as under :

'150. Provision for cases where assessment is in pursuance of an order on appeal, etc.(1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a court in any proceeding under any other law.

(2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken.'

11. In the case on hand, notices are admittedly issued under section 148 of the Income Tax Act. It is with regard to the escape assessment in terms of section 144 of the Income Tax Act. The assessment year is referable to 1976-77. Admitted facts reveal that assessment under section 143 was passed on 5-8-1983. Notice under section 148 was issued on 23-3-1984. Return was filed on 29-5-1984. Assessment order was passed under section 143(3) of the Act read with 147(b) of the Act bridging to tax as per the order of the arbitrator dated 30-1-1985. Appeal was partly allowed on 18-10-1985. Matter was remanded. Assessee preferred further appeal to the Tribunal which remanded the matter on 23-9-1988. The assessing officer passed an order under section 143(3) on 31-10-1989. Appeal filed by the assessee against the order dated 31-10-1989 was partly allowed in terms of an order dated 12-3-1990. The Tribunal disposed of the appeal on 26-6-1998 and the Tribunal has noticed that the transfer of the intangible rights belonging to the assessee did take place in assessment year 1976-77 and not in the assessment year 1980-81. The Tribunal allowed the appeal filed by the department and the cross-appeal filed by the assessee stood dismissed. Admitted facts reveal that the assessments are being reopened in terms of the appellate order on 17-11-1998 in terms of section 148. As I mentioned earlier, notice is under section 148 in the matter of escape assessment under section 147. It is subject to section 149. Section 149 provides for 4 years in terms of section 149(1)(a)(i). Section 149(1)(a)(ii) provides not more than 7 years if 4 years have elapsed from the end of the relevant assessment year. In the case on hand, the admitted facts reveal of payments in the year 1975 and the taxing of such amount took place in the assessment year 1976-77 proceedings, therefore, 4 years' period in terms of section 147 read with 148 ends on 31-3-1981 that is 4 years from 31-3-1977.

12. Sri Prasad, learned counsel is therefore right in his submission that the period of limitation is already over in the case on hand and therefore, the notices are barred by time in terms of the statutory provisions.

13. However, the defence put forth by the respondent is sub-section (2) of section 150 of the Act. Section 150 provides for a notice being issued under section 148 notwithstanding anything contained in section 147. Sub-section (2) makes it very clear that the proviso to section 148 shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which re-assessment could not have been made at the time the year which was the subject matter of an appeal was made by raising of any other provisions limiting the time within which any action by the assessment may be taken. A reading of section 150 would show that a notice is permissible in consequences of or to give effect to any finding contained in an order passed by any authority in any proceedings under this Act by way of an appeal. Therefore, what is required to be noticed by the authorities is as to whether limitation is available or not in respect of escaped assessment order. In this connection, it is necessary to notice the case laws submitted by the counsel.

14. In somewhat identical circumstances, a Division Bench of the Andhra Pradesh High Court in the case of CIT v. G. Viswanatham : [1988]172ITR401(AP) has considered this very issue. In the said judgment, the court notices sections 147, 149 and 150 provisions. After noticing, the Andhra Pradesh High Court ruled that the expression 'the order which was the subject matter of the appeal, reference or revision, as the case may be was understood as referring to original order of assessment'. The Andhra Pradesh High Court, after noticing the judgment of various other High Courts ruled as under :

'Section 147 of the Income Tax Act, 1961, provides for assessment and reassessment of income which has escaped assessment. The reassessment is, however, subject to the provisions contained in sections 148 to 153. Section 149 provides the time limit for issue of notice, i.e., for initiation of proceedings under section 147. Section 150 is in the nature of a proviso to section 149. A reading of sub-section (1) of section 150 shows that where the reassessment proceedings are initiated in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Income Tax Act by way of appeal, reference or revision, the time limits prescribed in section 149 shall not apply, and that notice under section 148 can be issued at any time. Sub-section (2), however, is again in the nature of a proviso to sub-section (1). It says that the provisions of sub-section (1) shall not apply where, by virtue of any other provision limiting the time within which action for assessment, reassessment or recomputation may be taken, such assessment, reassessment, or recomputation is barred on the date of the order which is the subject-matter of the appeal, reference of revision in which the finding or direction is contained. Section 153 provides the time limits of completion of assessments and reassessments. Explanations 2 and 3 to section 153 merely illustrate and clarify the meaning of the words 'in consequence of or to give effect to any finding or direction contained in an appellate, revisional or any other order. Explanations 2 and 3 do not purport to obliterate or remove the restriction contained in sub-section (2) of section 150. They no doubt refer to section 150, but for a limited purpose. Hence, initiation of assessment proceedings would be bad, even when they are initiated in consequence of or to give effect to any finding or direction contained in the appellate order, if such initiation of reassessment proceedings is barred by any other provision of the Act on the date of the order which was the subject-matter of appeal.' (p. 401)

15. The Andhra Pradesh High Court also in the last paragraph has ruled as under:

'Now, coming to the facts of the case before us, the finding inconsequence of which under section 148 has been given, was recorded by the Appellate Tribunal at the stage of the second appeal. In this case, it is relevant to notice that the assessee did not file a return within the prescribed period. It was filed only on 5-2-1971. In as much as this return was invalid in the eye of law, a notice under section 148 was issued by the Income Tax Officer on 1-3-1971, and the assessment was completed on 29-3-1972. Against the said order of assessment, the assessee filed an appeal, which was disposed of by the Appellate Assistant Commissioner on 6-10-1972. The judgment of the Tribunal in the second appeal is dated 9-9-1974. Now, according to sub-section (2) of section 150, the initiation of reassessment proceedings would be bad, even when they are initiated in consequence of or to give effect to any finding or direction contained in the appellate order, if such initiation of reassessment proceedings is barred by any other provision of the Act on the date of the order which was the subject-matter of appeal. In this case, the second appeal in which the finding was recorded arose from the order of the Appellate Assistant Commissioner dated 6-10-1972. The question is, whether on that date the initiation of reassessment proceedings is barred by any provision of law? According to section 149(1)(b), reassessment proceedings cannot be initiated after the expiry of four years from the end of the relevant assessment year. The relevant assessment year in this case is 1966-67. Four years therefrom would expire on 31-3-1971. Thus, the impugned initiation of proceedings under section 147 by a notice issued on a date subsequent to 9-9-1974, would be clearly barred. Even if we construe the expression 'the order which was the subject-matter of the appeal, reference or revision, as the case may be' occurring in sub-section (2) of section 150 as referring to the original order of assessment, as has been understood by the Calcutta High Court in ITO v. Eastern Coal Co. Ltd. : [1975]101ITR477(Cal) , even then the result would not be different, because the order of assessment in this case was made on 29-3-1972, which too is beyond 31-3-1971.' (p. 411)

16. The said Judgment is squarely applicable to the facts of this case I must also notice another Judgment of the Punjab High Court in Parveen Kumari's case (supra). In that case also, the Division Bench noticed the scope of sections 147, 149 and 151. After noticing, the Punjab High Court has ruled as under :

'149. Time limit for notice(1) No notice under section 148 shall be issued....

(b) incases falling under clause (b) of section 147, at any time after the expiry of four years from the end of the relevant assessment year.'

In the light of the aforesaid provision specifying the period of limitation as four years from the end of the relevant assessment year, the case of the assessee for the purposes of issuance of notice for reassessment for the assessment year 1977-78 is found to be barred by limitation. The period of four years from the end of the assessment year 1977-78 expired on 31-3-1982. The assessment for the assessment year 1978-79, which was the subject matter of appeal before the Tribunal, was made in the case of Nand Kishore on 23-3-1989.... Thus, the subject-matter of appeal before the Tribunal was the order of the Commissioner dated 27-12-1989 .... the assessing officer had no jurisdiction to issue a notice under section 148 for the assessment year 1977-78 in as much as the period of four years had already expired on 31-3-1982.' (p. 347)

17. These two judgments support the contentions of the petitioner.

18. However, I must notice the technical objections raised by the revenue. According to them what is challenged in this case is a notice and that notice can be as well be considered by the authorities. Learned counsel says that writ court is not to interfere in such matters. He relies on a judgment of the Supreme Court in 1994 (Supp) 1 SCC 635. It is no doubt true that in the said case, the Supreme Court dismissed the appeal filed by an assessee in the matter of reassessment. A careful reading of the said Judgment would show that in the said case, the submission of the learned counsel for the petitioner was with regard to the limitation based of certain facts which required to be determined at the first instance by the assessing officer. In the case on hand, the facts are undisputed. It is purely a legal question. Therefore, the said judgment cannot be pressed into service to hold against my interference in the case on hand. The revenue relies on another Judgment of this court in Mysore Cements Ltd.'s case (supra). That also stands totally on a different footing. That was not a case as in the present case. That was a case in which the court rejected on the ground of a finding of facts. In the case on hand, I have not. gone into those questions of fact and this case is also argued only on the question of limitation on the admitted facts.

19. I must notice the latest Judgment of the Supreme Court in : [2002]254ITR772(SC) . The Supreme Court has ruled that the provisions of a fiscal statute, more particularly one regulating the period of limitation, must receive a strict construction. The law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation of litigants for an indefinite period of future unforeseen events. Proceedings which had attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings which had already concluded and attained finality.

20. A time bar assessment cannot be reopened in the absence of any specific power available to the revenue in the matter of reassessment. As observed by the Apex Court, finality has to be at one stage or the other. Finality has been given in terms of the statute to the proceedings of the assessment year 1977-78 in this case.

21. In these circumstances, these petitions are allowed. The impugned notices are set aside. A direction is issued to the respondent not to proceed further in the given circumstances by way of reopening of the assessment proceedings for the year 1976-77 pertaining to the petitioner. No other point is argued before me.

22. Ordered accordingly. No costs.