HIGH COURT OF CHHATTISGARH AT BILASPUR Tax Case No.28 of 2006 APPELLANT: (Assessee) K.M. Tiwari & Sons (HUF), Prop. M/s Maruti Enterprises, 2 Floor Deshlahara Sadan, Kankali Hospital Chowk, Raipur (CG) Versus RESPONDENT: (Revenue) Assistant Commissioner of Income Tax, Circte 2 (1) Raipur (CG) AND Tax Case No^4 of 2008 APPELLANT: Assistant Commissioner of Income Tax,2(1), Raipur Versus RESPONDENT: K.M. Tiwari & Brothers (HUF), Prop. M/s Maruti Enterprises, 2 Floor, Deshlahara Sadan, Raipur Present: Shri Neelabh Dubey, counsel for the appellant in Tax Case No.28/06 and for respondent in Tax Case No.4/2008. Shri Rajeev Shrivastava, counsel for the respondent in Tax Case No.28/06 and for the appellant in Tax Case No.4/2008. DivisionBench: Hon'ble Shri Dhirendra Mishra & Hon'^leShriPrashant Kumar Mishra, JJ. JUDGMENT BEN1 (Delivered on»33MApril,2010) The following judgment of the Court was delivered by Dhirendra Mishra, J. 1. The aforesaid appeals are being disposed of by this common judgment, as both these appeals pertain to dispute between the parties relating to block assessment for the same period. 2. For the purposes of this judgment, facts of Tax Case No.28 of 2006 are relevant. ^ 3. This appeal underSection 260-A of the Income Tax Act, 1961 (for short 'the Act') against the order of the Income Tax Appeltate Tribunal, Nagar, (for short 'the Tribunal') has been admitted on 27-11-2006 on substantial questions of law as detailed under the caption 'Substantial Questions of Law' in the memo of appeal. 4. Briefly stated facts of the case, as projected in the impugned order of the Tribunal, are that search and seizure operations in the premises of Dhuppad Group were conducted between 20 and 23 December, 2001 and proceeding underSection 158BD was initiated against the assessee and the assessment was completed on 2-2-2006. In the assessment order, it was mentioned that the assessee filed return showing nil income on 19-1-2004 for the block period. The present incumbent had taken over the charge of ACIT -2(1), Raipur and issued notice to the assessee under Section 158BE read with Section 129 of the Act, therefore, limitation for finalizing the assessment under section 158BD stood extended by a period of 60 days. Since the present A.O. started proceeding on 5-12-2005, limitation stood extended up to 3 February, 2006 and the case did not get time barred in view of the provisions of Section 129 of the Act. However, on appeal by the assessee, CIT(A) after considering the provisions of Section 158-BE and Section 129 of the Act annulled the order of the A.O. by declaring the order as time barred. 5. The Revenue, being aggrieved by the order of tearned CIT (A), preferred an appeal before the Tribunal and the Tribunal even after arriving at a conclusion that assessment in dispute is time barred by 2 daysand the A.O. should have completed assessment as per the 1 provisions of Section 158BE by 31-1-2006 but the assessee has completed assessment on 2-2-2006 which is detayed by only 2 days. Having held this, learned Tribunal further observed that "Had the AO noticed that the assessment is getting time barred by two days on 02.02.2006, it was not difficult for him to pass the ante dated order on 02.02.2006 mentioning the date of assessment order as 31.01.2006. Therefore, mistake committed by the AO is bona fide and for the bonafide mistake comnrijtted by the AO in passing the order on 02.02.2006, the revenue should not suffer. It would be a rigid view against the revenue if wp quash the impugned assessment which is being time barred by only two days." And accqrdingly cancelled the order of CIT(A) and restored the matter back to the file of CIT(A) with a direction to decide the issue of addition of Rs.17,90,000/- made in the assessment order by the AO on merits as per law after affording reasonable opportunity of being heard to the assessee. The instant appeal is djrected against the aforesaid order of the Tribunal. e. Shri Neelabh Dubey, learnedcounsel for the appellant would argue that admittedly notice under Section 158BD of the Act was served on the appellant on 8-1-2004. The period of limitation for completion of block assessment in theicase of other persons referred to in Section 158 BD as per clause (b) of sub-section (2) of Section 158BE is 2 years from the end of the month in which notice underSection 158BD is servedon such other:person. Thus, assessment of the appellant under Chapter XIV-B should have been completed by 31st January, 2006 whereas assessment was completed on 2-2-2006. The appellate Commissioner after elaborately considering facts of the case and ^ provisions of law held that no hearing had taken place prior to 22-12- 2005, the date new incumbent had taken over the charge, therefore, there is no qyestion of re-hearing of the case. The matter was never heard by the predecessor AO and in these circumstances, the provisions of Section 129 had no application and the AO does not get extended time of 60 days for passing the order. 7. The Tribunal also recorcled a finding that the Assessing Officer had issued one notice under Section 158BE read with Section 129 on 22- 12-2005 fixing the case on 29-12-2005. Virtually, the hearjngof the case was started from thi? date onlyand no hearing tookplace prior to this date, except issue of fixation notice and questionnaire. The case was heard by the new incumbent i.e. by the present Assessing Officer onlyfrom 22-12-2005 and it was not reheard since the proceedings were itself started from 22-12-2005. Under these circumstances, the Assessing Officer cannot take shelter of the provisions of Section 129 for extending the limitation. The provisions under Section 129 could be resorted to had there been any hearing earlier and any demand by the assessee for re-hearing after taking over of new incumbent and thus, assessmentshould have been completed by 31 January, 2006 as per the provisions of Section158BE. However, the Tribunal illegatly held that passing of order with a delay of 2 days is a bonafide mistake committed by the AO and for this bonafide mistake, the revenue would not suffer and the assessment cannot be quashed as being time barred. s. It is settled law that the;assessment order cannot be passed in the cases of block assessment under Section 158BD beyond the period 1 prescribed under Seetion 158BE and the provisions of limitation are to be construed strictly, as the appellant is vested with valuable right of not to be assessed and the same cannot be taken away without any express provisions of law and equitable consideration cannot govern the cases of limitation. The Tribunal had no power under the Act to bypass the provisions of limitation by treating the assessment made beyond limitation as bonafide mistake and liable to be condoned. g. On the other hand, Shri Rajeev Shrivastava, learned counsel for the Revenue submitted that both the forums below have committed an error of law by arriving at a conclusion that the order of assessment passed by the AO was barred by 2 days. The forums below have arrived to the aforesaid eonclusion without considering the provisions ofSection 129/158BE oftheAct in its real perspective. 10. Emphasizing upon Explanation 1 (iii) and the proviso appended to Sectjon 158BE read with Section 129 of the Act, it was argued that where there is change of incumbent of an office, the Income Tax Authority ceases to exercise jurisdiction and succeeded by another, the assessee cpricerned may demand that before the proceeding is continyed the previous proceeding be reopened and he may be reheard before any order pf assessment is passed. In such circumstances, time taken in reopening the proceeding or giving an opportunity tothe assessee to be reheard under proviso to Section 129 is to be excluded and after exclusion of the aforesaid period, the period of limitation referred to in sub-section (1) or sub-section (2) of Section 158BE available to the A.O. for making an order under clause (c) of ru-T?] Section 158 BC is less than 60 days, such remaining period stands extended to 60 days. 11. We have heard learned counsel for the parties. 12. Indisputably, notice under Seetion 158 BD was issued on 5 Janudry, 2004 and served on the assessee on 8 January, 2004. As per the provisions of sub-clause (b) of clause (2) of Section 158 BE, the assessment could be completed not later than 31 January, 2006. Both the forums below after perusal of the record have held that no hearing had taken place prior to 22-12-2005 and by that date new incumbent had already taken over the charge. 13. From bare reading of Section 129 of the Act, it is clear that the same is attracted only when some proceeding had taken place in the past and the same is to be continued by new incumbent. In such circumstances, the assessee may demand for reopening of the previous proceeding or any part thereof and he may also demand for rehearing before the order of assessment is passed against him by the new incumbent. In view of the fact that no hearing had taken place before new incumbent had taken over the charge, the question of any demand for reopening of the case or rehearing by the assessee does not arise and, therefore, question of extension of limitation for making an order under clause (c) under Section 158BC to 60 days after excluding period of limitation referred to in sub-section (2) of Section 158 BE does not arise. The contingency envisaged in proviso to Section 158 arises only when the assessee demands reopening of the previous proceeding or any part thereof or applies forrehearing before any order of assessment is passed by the new incumbent and after |nm'|'-| excluding time spent in reopening or rehearing if the limitation prescribed for completing assessment is less than 60 days, in that case, such remaining period stands extended to 60 days. 14. Indisputably, there is no provision in the Act which confers the Tribunal with any power to condone any delay in framing assessment on the ground of bonafide mistake on the part of the Assessing Officer. 15. On the basis of aforesaid discussion, we are of the opinion that the Tribunal had no power to bypass the provision of limitation by treating the assessment made beyond limitation as bonafide mistake on the part of the A.O. and liable to be condoned. Accordingly, we answer the substantial questions of law proposed by the appellanVassessee in the memo of appeal in favour of the assessee and against the revenue. 16. Accordingly, we allow Tax Case No.28/2006, set aside the order of the Revenue and restore the order of the CIT(A) and quash the assessment order passed by the AO as barred by limitation. Tax Case No.4 of 2008 17. Since we have already set aside the order of the Tribunal and restored the order of CIT (A) and ;quashed the order of assessment passed by the Assessing Officer, the instant appeal arising out of fresh assessment after remand by the Tribunal is redundant and subsequently, assessment proceedings after remand is redundant and meaningless. 18. With these observations, we dispose of this appeal. __ Sd/- Dhtrendra Mishra Jadge Sd/- prashantKumarMishra Judge Barve