Delhi High Court

Vls Finance Ltd & Others vs The Assistant Commissioner Of ... on 10 January, 2011

Author: Dipak Misra,Chief Justice

14.
*     IN THE HIGH COURT OF DELHI AT NEW DELHI


+     W.P.(C) 19774-75/2005


      VLS FINANCE LTD & ORS.                    ..... Petitioners
                    Through Mr. O.S. Bajpai, Sr. Advocate with
                    Mr. V.N. Jha, Advocate.

                    versus

      THE ASSISTANT COMMISSIONER OF INCOME TAX &
      ANOTHER          .....                    Respondents
                    Through Mr. Sanjeev Rajpal, Advocate.

       CORAM:
       HON'BLE THE CHIEF JUSTICE
       HON'BLE MR. JUSTICE SANJIV KHANNA

               ORDER

% 10.01.2011

The petitioner-assessee was assessed under Section 143(3) of the

Income Tax Act, 1961(Act, for short) for the assessment year 1998-99

and eventually the said assessment order was framed vide order dated

31st March, 2001. Assessment order under Section 143(3) o the Act for

the assessment year 1999-2000 was passed on 31st March, 2001. On 25th

June, 2001, an order of assessment was passed under Section 143(3) of

the Act for the assessment year 2000-01. On 21st October, 2002, the

petitioner on the basis of the said assessment orders submitted an

application for grant of refund. At this juncture, on 17 th January, 2003, a

notice under Section 148 of the Act was issued for the assessment years, viz., 1998-99 to 2000-01. When the matter stood on 24th January, 2003,

a notice under Section 148 of the Act was issued for the assessment years

1996-97 and 1997-98. On 3rd July, 2003, reassessment order under

Section 143(3) of the Act was passed for assessment years 1997-98 to

2000-01. Learned counsel for the petitioner has pleaded that the

petitioner submitted an application under Section 154 of the Act before

the first respondent to allow the set off for brought forward loss. A writ

petition W.P. (C) No. 4406/2003 was filed for quashing of the notice

under Section 148 of the Act and the subsequent reassessment orders

passed by the respondent No. 1. Later on the said writ petition was

withdrawn. On 4th August, 2003, the petitioner was intimated that the

demand had been reduced in accordance with the prayer made and it is

proposed to adjust the refund due against the balance payment. Be it

noted, the initial demand of Rs.31.89 crores was reduced to Rs.3.99

crores.

2. As is perceptible from the material brought on record, the

reassessment orders passed by the Assessing Officer were quashed by

the CIT-A on 18th November, 2004. Thereafter, the petitioner filed an

application for grant of refund. When the matter stood thus, an order

under Section 281B of the Act was passed on 28th July, 2005. The said

order reads as follows:-

" Please refer to block assessment proceedings for the period 1.4.1988 to 22.6.1998 pending in your case. In this connection since the undisclosed income for the block period is yet to be ascertained/assessed and the regular assessment for assessment year 2003-04 and 2004-05 are pending, a provisional attachment u/s 281B in your case has been authorized by the Commissioner of Income tax (Central)-II, New Delhi vide No. CIT (C)-II 281B 2005-

06/346 dated 26.7.2005 to protect the interest of revenue. The following refunds determined in you(sic) case are provisionally attached for a period of 6 months i.e. upto 25.01.2006 DETAILS OF PROPERTY

S. NO. A.Y. Amount of Refund (Rs.)

1. 1998-99 1,09,03,472

2. 1999-00 12,44,152

3. 2001-02 2,49,67,988

4. 2004-05 14,19,546 3,85,35,158"

3. At this juncture, we may usefully use that the initiation of the

proceeding in block assessment has been challenged before the Apex

Court and it was directed that audit can go on but no final assessment

order be passed. This is not disputed at the Bar. The stay order

continues.

4. Section 281B reads as follows:-

"281B. Provisional attachment to protect revenue in certain cases. (1) Where, during the pendency of any proceeding for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment, the Assessing Officer is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do, he may, with the previous approval of the Chief Commissioner, Commissioner, Director General or Director , by order in writing, attach provisionally any property belonging to the assessee in the manner provided in the Second Schedule.

[Explanation.-For the purposes of this sub- section, proceedings under sub-section (5) of section 132 shall be deemed to be proceedings for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment.]

(2) Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section (1):

Provided that the Chief Commissioner, Commissioner, Director General or Director may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years:

Provided further that where an application for settlement under section 245C is made, the period commencing from the date on which such application is made and ending with the date on which an order under sub-section (1) of section 245D is made shall be excluded from the period specified in the preceding proviso.

Provided also that the period during which the proceedings for assessment or reassessment are stayed by an order or injunction of any court shall be excluded from the period specified in the first proviso"

5. The third proviso has been inserted by Finance (No. 2) Act, 2009 (33/2009) with effect from 1st April, 1988. The order of attachment,

which was reproduced hereinabove was passed on 28 th July, 2005.

Subsequently under sub-section 2 to Section 281B of the Act, the life

span of said provisional attachment is six months and the said provision

categorically stipulates that provisional attachment was ceased to have

effect after the expiry of the order, i.e., six months from the date of the

order made under sub-section 1. It is not disputed at the Bar when the

exercise of the power vested with the competent authority under the first

proviso to sub-section 2, time was initially extended for a further period

of six months by the order dated 6th January, 2006 upto 25th July, 2006.

6. At this juncture, Mr. Sanjeev Rajpal, learned counsel for the

Revenue Department has referred us to the order dated 3 rd March, 2008.

It reads as follows:-

" It has been stated in the affidavit in reply to the show cause notice that the period of limitation for the order passed under Section 281-B of the Income Tax Act, 1961 would expire on 28th January, 2008. Since the period of limitation has expired, learned counsel for the Revenue seeks time to take instructions with regard to the refund allegedly due to the petitioner.

On request, adjourned to 12th March, 2008."

7. It is submitted by Mr. O.S. Bajpai, learned senior counsel for the

petitioners that this Court had computed the period of 2 ½ years,

including the initial period of six months and the period of extension, which is permissible in exercise of the first proviso to sub-section 2. It is

submitted by Mr. O.S. Bajpai, learned senior counsel that this Court had

held that the time can be extended till 28th July, 2008. Learned senior

counsel has invited our attention to second proviso to sub-section 2 to

highlight that a positive and affirmative act is required to be done prior to

the expiry of the specified date and communicate it to the petitioners, but

because a power is vested with the competent authority that does not ipso

facto will result or cause extension of time. Mr. Sanjeev Rajpal, learned

counsel for the Revenue Department shall produce the file to show