1. This appeal by the Revenue and C.O. by the assessee emanate out of the order of the learned Commissioner of Income Tax (Appeals) dated 18.11.03 and pertain to assessment year 1996-97.
2. The issue raised in Revenue's appeal is that the learned Commissioner of Income Tax (Appeals) has erred in cancelling the assessment as barred by limitation even though confirming the addition made by the Assessing Officer on merits.
3. In the CO., the assessee has remonstrated that the Commissioner of Income Tax (Appeals) erred in confirming the addition made by the Assessing Officer on merits.
4. To briefly stratify the case, during the course of proceedings Under Section 230A, the Assessing Officer noticed that the assessee purchased a property at New No. 106, Old No. 39, Lattice Bridge Road, Adyar, Chennai-20 for a sum of Rs. 3,00,300/- vide sale deed 31.10.95. The property was purchased by the assessee from his father Shri O.M. Umar Mohideen. In addition to the sale price as mentioned in the sale deed, the Assessing Officer noticed that the assessee would have spent money on Stamp Duty and Registration expenses, etc. Thus, according to the Assessing Officer, the total investment on this property was Rs. 3,50,000/-. It was also noticed by the Assessing Officer that the assessee had not filed any return of income for the assessment year 1996-97. Accordingly, the Assessing Officer issued a notice Under Section 148 on 7.11.2000. Subsequently, notice Under Section 142(1) was also issued. No return was filed in response to the notice issued Under Section 148. The Assessing Officer, therefore, completed the assessment Under Section 144 determining the total income at Rs. 3,50,000/-.
5. Before the learned Commissioner of Income Tax (Appeals), it was stated that the assessee is an unemployed person and was dependent upon his father at the relevant point of time. It was stated by him that his father wanted to settle the property in question on the assessee and the value of the said property was fixed at Rs. 3,00,000/-. Since the assessee was unemployed, his family members and friends decided to give the assessee money for the purchase of the property on the understanding that the assessee would return their money from the rental income of the property. Accordingly, his brother-in-law, who is working in Libya sent a sum of Rs. 2,18,000/- on various dates. His other sisters also gave Rs. 20,000/- each and his mother also gave Rs. 20,000/-. Thus, the assessee was able to raise the source for the purchase of the said property by way of loan from his close relatives.
6. Upon enquiry from the Commissioner of Income Tax (Appeals), the Assessing Officer in his report submitted that, A summons Under Section 131 was issued to the loan creditors. Since the creditors except Shri S. Ahmed Ibrahim, are muslim women, they could not appear in person. Shri S. Ahmed Ibrahim is now employed at Libya. Hence, an inspector was deputed to verify the facts. All the creditors have given in writing that they have given a loan amount of Rs. 20,000/- in cash but no evidence were filed. None of them are assessed to tax and they do not have any independent source of income.
In respect of Shri S. Ahmed Ibrahim, the assessee Shri Shahul Hameed filed a bank statement stating that cash was drawn from the bank.
There is no proof that the cash drawn from the bank was actually given to Mr. Shahul Hameed. Now, Mr. A. Ahmed Ibrahim has sent a letter from Libya stating that he has given a sum of Rs. 2,18,000/- to Mr. Shahul Hameed. All the other creditors have stated that they have received back the amount from Mr. Shahul Hameed. Since then, he has admitted about Rs. 50,000/- to Rs. 60,000/- as income from rent for the past five years. It is not known how he has repaid the loans totaling Rs. 3,18,000/-.
7. On the basis of the aforesaid, the learned Commissioner of Income Tax (Appeals) dismissed assessee's appeal on merits. However, the learned Commissioner of Income Tax (Appeals) noted that the assessee has filed additional ground that assessment is barred by limitation Under Section 153(2). In this regard, the Assessing Officer, on Commissioner of Income Tax (Appeals)'s enquiry stated that Section 153(2) was amended by the Finance Act 2001 and substituted for 2 years with effect from 01,06.2001. In this case, the notice Under Section 148 was issued and served on 07.11.2000 (i.e. before 01.06.2001). Hence, the time limit for completion of assessment was two years. I 8. However, the learned Commissioner of Income Tax (Appeals) on this question as to whether the amended provisions would apply to the present case or the original provision would apply placed reliance upon Hon'ble jurisdictional High Court decision in the case of Chettinad Corporation (P) Ltd. v. CIT 141 ITR 693 in which the Hon'ble Apex Court decision in the case of S.C. Prashar v. Vasantsen Dwarkadas was also referred. The learned Commissioner of Income Tax (Appeals) further placed reliance upon Karnataka High Court decision in the case of B.M. Shivakumar v. State of Karnataka 222 ITR 9. Thereafter, the learned Commissioner of Income Tax (Appeals) held that in view of the above two decisions, and in particular, decision of the territorial High Court, it has to be held that in the present case, the amended provision would apply. The assessment should have been completed by 31.03.2002. Since the assessment has been completed on 13.02.2003, the same is barred by limitation and has to be cancelled.
Accordingly, the learned Commissioner of Income Tax (Appeals) cancelled the assessment made by the Assessing Officer as barred by limitation.
10. We have heard the rival contentions and perused the relevant records. The learned Departmental Representative in this regard further submitted that the learned Commissioner of Income Tax (Appeals) has relied on the decision of the Madras High Court in the case of Chettinad Corporation (P) Ltd. v. CIT 141 ITR 693 which is applicable only where the time limit is exhausted even before the initiation of proceedings such as penalty proceedings, issue of notice Under Section 148, etc. This decision is distinguishable from the facts of the assessee's case as notice Under Section 148 has been issued within the time limit allowed under the Act. Thus, the original time limit of two years is available for completion of assessment irrespective of whether the time limit is extended or not.
11. On the other hand, the learned Counsel of the assessee submitted that the exposition emanating out of this decision is very much applicable and it is in his favour.
12. We have considered the issue. The extant provisions of Section 153(2) read as under: No order of assessment, reassessment or re-computation shall be made under Section 147 after the expiry of [two years] from the end of the financial year which the notice under Section 148 was served: Provided that where the notice under Section 148 was served on or after the 1st day of April, 1999 but before the 1st day of April, 2000, such assessment, reassessment or re-computation may be made at any time up to the 31st day of March, 2002.
13. The two years mentioned above was substituted for one year by Finance Act, 2001 w.e.f. 1.6.2001. Notice in this case was issued on 7.11.2000 and assessment order was passed on 13.2.2003. As per the pre-amended provision, the assessment could have been completed by 31.3.2003 whereas as per the amended provision, the assessment had to be completed on or before 31.3.2002. Thus, the assessment completed is in time as per the pre-amended provision but barred by limitation as per the amended provision. The question that is to be decided is whether the amended provision would apply to the present case or the original provision would apply to the present case.
14. We find that the Hon'ble jurisdictional High Court in the case of Chettinad Corporation (P) Ltd. v. CIT 141 ITR 693 has referred to Hon'ble Apex court's observations in the case of S.C. Prashar v.Vasantsen Dwarkadas ...we wish to say a few words about the well-known principle that subsequent changes in the period of limitation do not take away an immunity which has been reached under the law as it was previously.
In this sense statutes of limitation have been picturesquely described as 'statutes of repose'. We were referred to many cases in which this general principle has been firmly established. We do not refer to, these cases because in our opinion it is somewhat inapt to describe Section 34 with its many amendments and validating sections as a section of repose. Under that section there is no repose till the tax is paid or the tax cannot be collected. What the law does by prescribing certain periods of time for action is to create a bar against its own officers administering the law. It tries to trim between recovery of tax and the possibility of harassment to an innocent person and fixes a duration for action from these two points of view. These periods are occasionally re-adjusted to cover some cases which would otherwise be left out and hence these amendments.
15. Thereafter, the High Court observed that the period prescribed in the unamended Section 275 cannot be described as a statute of repose.
It further held that, It has also been held that this provision is a procedural one.
Learned Counsel for the assessee contended that he had acquired a vested right of the penalty proceedings having to be completed within two years from the assessment and that the said vested right could only be affected by express retrospective amendment. Section 275 being only in the nature of a procedural provision, there is no question of any vested right accruing to any assessee by reason of the assessment being completed on any particular date. It is now well settled that there is no vested right in any procedural matter.
In the present case, therefore, the extended period of limitation would alone apply.
16. Applying the principles laid down by the Apex Court and jurisdictional High Court as aforesaid, we have to examine whether the period prescribed under the unamended Section 153(2) can be considered as a statute of repose or a procedural one. Section 153(2) deals with law of limitation. Law of limitation has been held to be procedural law always having retrospective effect unless the amended statute provides otherwise. (CIT v. Sadhuram . This view is further fortified by the fact that this section is analogous to Section 34 of the Income Tax Act, 1922 in which the Hon'ble Apex Court dealt in 49 ITR 1 cited supra. Hence, the section under consideration before us cannot be termed as substantive law, much less a statute of repose.
When it is not so termed, the exposition emanating from the above that in such cases of adjective law or procedural statute, amended provisions would apply. It is trite proposition that neither revenue nor assessee should be given a step-motherly treatment. Hence, when the revenue can claim benefit of extension of time under limitation provisions by way of amendment, it is but equitable that restriction of time in limitation provisions should also be binding on the revenue.
17. Considering the aforesaid, we are of the opinion that in this case, the amended provision of Section 153(2) would apply. As such, we uphold the order of the learned Commissioner of Income Tax (Appeals) in this regard and dismiss the revenue's appeal.
18. As regards merits of the case, we find that for proving genuineness of credits, courts have held that assessee had to prove three things: If all these are proved the burden shifts to the Revenue to prove that the amounts belonged to the assessee.
19. Considering the present case through the prism of aforesaid, we find that for the sum of Rs. 2,18,000/- received from Shri S. Ahmed Ibrahim, the assessee has discharged his onus. As Shri S. Ahmed Ibrahim works abroad and the said amount is shown as withdrawal in his bank statement and he has given a letter to the effect that he has given the said sum to the assessee. Now, the burden is shifted to the Revenue to prove that the same is not true and that the amount actually belonged to the assessee. This, in our opinion, has not been done. As such, genuineness of this credit is accepted. As regards the other credits, it is seen that neither the said persons appeared before the Assessing Officer nor are they income tax assessees nor any source of their income has been shown. As such, addition on this account is sustained.
20. In the result, Revenue's appeal in I.T.A. No. 142/Mds/04 is dismissed and the assessee's C.O. in 99/Mds/04 is partly allowed.