Tags Income Tax

Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Civil), 2984 of 2008, Judgment Date: May 02, 2016

  


                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION


                        CIVIL APPEAL  NO(S).2984/2008


COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL                     APPELLANT(S)


                                VERSUS


SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD                       RESPONDENT(S)



                                    WITH
                        CIVIL APPEAL  NO(S).4971/2016
                   (Arising out of SLP(C) No. 13766/2011)

M/S. SARAYA SUGAR MILLS PVT. LTD.                               APPELLANT(S)

                                VERSUS

COMMISSIONER OF INCOME -A WARD, GORAKHPUR                      RESPONDENT(S)


                               J U D G M E N T

A.K. SIKRI,J.



      Leave granted in SLP(C) No. 13766/2011.

2.    The Commissioner  of  Income  Tax,  Gujarat  Central,  Ahmedabad-  the
appellant (hereinafter referred to as “the Revenue”), is  aggrieved  by  the
judgment dated 20.01.2005 passed by the High Court of  Gujarat  whereby  the
High Court has dismissed the appeal of the Revenue affirming  the  order  of
the Income Tax  Appellate  Tribunal  (hereinafter  referred  to  as  “ITAT”)
holding that the assessment order dated 01.09.1984 passed by  the  Assessing
Officer in respect of Assessment  Year  1981-82  was  time  barred.  We  may
mention at the outset that in terms of Section 153 of the  Income  Tax  Act,
1961 (hereinafter referred to as “the Act”), time limit  for  completion  of
the assessment to be made under Sections 143 or 144 of the  Act  is  at  any
time after the expiry of two years from the end of the  Assessment  Year  in
which the income is first assessable, where Assessment  Year  is  commencing
on or after 01.04.1969. On this reckoning,  the  date  by  which  assessment
should have been  carried  out  by  the  Assessing  Officer  in  respect  of
Assessment Year 1981-82 was 31.03.1984. The assessment order  was,  however,
passed on 01.09.1984. The Revenue claimed that  this  assessment  order  was
still within the prescribed period of limitation because of the reason  that
on 13.03.1984 draft assessment order was passed pertaining to the  aforesaid
Assessment Year and forwarded  to  the  Inspecting  Assistant  Commissioner,
Central Range-II, Ahmedabad  (hereinafter  referred  to  as  “the  IAC”)  on
13.03.1984 (i.e. before  31.03.1984).  The  IAC  issued  instructions  under
Section 144B of the Act on  31.08.1984  and  based  on  that  the  Assessing
Officer framed the assessment on 01.09.1984 under Section 143(3) of the  Act
read with Section 144B of the Act.

3.    The position that was taken by the Revenue was that the   period  from
13.03.1984 to 31.03.1984, when the matter was before  the  IAC,  had  to  be
excluded while computing the period of limitation of two years and once  the
period is excluded the assessment order was  passed  within  the  period  of
limitation. The contention of the respondent/assessee, on  the  other  hand,
was that, by  order  dated  29.08.1983,  the  Commissioner  of  Income  Tax,
Central, Ahmedabad (hereinafter referred  to  as  “the  CIT”)  passed  under
Section 125A(1) of the Act had assigned all the powers and functions of  the
Income Tax Officer, Central Circle, Jamnagar  (hereinafter  referred  to  as
“the ITO”) to the IAC. This order was passed specifically  in  the  case  of
the respondent herein which became effective from 01.09.1983. It  was  their
submission that once, by virtue of  the  aforesaid  order  dated  29.08.1983
passed by the CIT, the IAC is conferred concurrent jurisdiction, along  with
ITO, empowering him to make assessment order in the case  of  the  assessee,
there was no question of forwarding the draft assessment order  by  the  ITO
to the IAC and this unnecessary and superfluous exercise would not enure  to
the advantage of the Revenue giving  it  the  benefit  of  the  period  from
13.03.1984 to 31.08.1984 while calculating the period of limitation  of  two
years provided under Section 153 of the Act.  In  nutshell,  the  submission
was that the conferment of the powers of  the  Assessing  Officer  upon  the
IAC, he is in the same position as the ITO and draft assessment order  could
not be sent to him who was brought at par with the ITO.

4.    The Assessing Officer was not amused by the  aforesaid  contention  of
the assessee and repelled the same resulting in framing  of  the  assessment
order  dated  01.09.1984.  However,  the  ITAT  found  force  in  the   said
submission of the assessee and allowed the appeal thereby setting aside  the
assessment order. The High Court, as pointed  out  above,  has  upheld  this
view of  the  ITAT,  resulting  in  the  dismissal  of  the  appeal  of  the
appellant.

5.    Before proceeding further, we may mention that in the  appeal  arising
out of SLP(C) No.13766/2011 which is preferred by the  assessee-M/s.  Saraya
Sugar Mills Pvt. Ltd., in the same circumstances, on the same question,  the
Allahabad High Court has taken a contrary view. The High Court of  Allahabad
has found merit in the stand taken by the Revenue and  excluded  the  period
during which the draft assessment was forwarded to the IAC till the date  of
receiving the instructions from the IAC under Section 144B of  the  Act.  We
are, thus, faced with two conflicting views and to decide as to  which  High
Court has correctly decided the issue of limitation.

6.    We have already stated, in detail, the facts of Civil Appeal No.  2984
of 2008. Before we embark upon our detailed  discussion  on  the  issue,  we
would like to place on record the relevant provisions of the Act which  have
bearing on the issue. As mentioned above, Section 153 prescribes  limitation
of two years for making assessment under Section 143 or Section 144  of  the
Act. Avoiding those portions  of  these  Sections  with  which  we  are  not
concerned, the material provisions are re-produced below:

"153. Time-limit for completion of assessments and reassessments. -  (1)  No
order of assessment shall be made under section 143 or section  144  at  any
time after -

(a) the expiry of - ...

(iii) two years from the end of the assessment year in which the income  was
first  assessable,  where  such  assessment  year  is  an  assessment   year
commencing on or after the 1st day of April, 1969; or....

whichever is latest. . . .

(3) The provisions of sub-sections (1)  and  (2)  shall  not  apply  to  the
following classes of assessments, reassessments  and  re-computations  which
may, subject to the provisions of sub-section  (2A),  be  completed  at  any
time - ...

(ii) where the assessment, reassessment or re-computation is : made  on  the
assessee or any person in consequence of or to give effect  to  any  finding
or direction contained in an order under section 250, 254, 260, 262, 263  or
264 or in an order of any court in a proceeding otherwise  than  by  way  of
appeal or reference under this Act;...

Explanation 1. - In computing the period of limitation for the  purposes  of
this section - . . .

(iv) the period (not exceeding one hundred and eighty days) commencing  from
the date on which the Income-tax Officer forwards the draft order under sub-
section (1) of section 144B to the assessee and  ending  with  the  date  on
which the Income-tax Officer receives the  directions  from  the  Inspecting
Assistant Commissioner under sub-section (4) of that section, or, in a  case
where no objections to the draft order are received  from  the  assessee,  a
period of thirty days, or  (iva)  the  period  (not  exceeding  sixty  days)
commencing from the date  on  which  the  Income-tax  Officer  received  the
declaration under sub-section (1) of section 158A and ending with  the  date
on which the order under sub-section (3) of that section  is  made  by  him,
or. . . .

shall be excluded. . . ."


7.    Section 123 of the Act lays down  the  jurisdiction  of  the  IAC  and
reads as under:

"123.  Jurisdiction  of  Inspecting  Assistant  Commissioners  -   (1)   The
Inspecting Assistant Commissioners shall perform their functions in  respect
of such areas or of such persons or classes of persons or  of  such  incomes
or classes  of  income  or  of  such  cases  or  classes  of  cases  as  the
Commissioner may direct.

(2) Where any directions issued under sub-section (1) have assigned  to  two
or more Inspecting Assistant  Commissioners,  the  same  area  or  the  same
persons or classes of persons or the same incomes or classes  of  income  or
the same cases or classes of cases, they shall have concurrent  jurisdiction
and shall perform such functions in relation to the said area or persons  or
classes of persons or incomes or classes of income or cases  or  classes  of
cases as the Commissioner may, by  general  or  special  order  in  writing,
specify, for the distribution and allocation of the work to be performed.”


8.    Section 124, on the other hand, deals with  the  jurisdiction  of  the
Income Tax Officer and reads as under:

“124. Jurisdiction of Income-tax Officers. - (1) Income-tax  Officers  shall
perform their functions in respect of such  areas  or  of  such  persons  or
classes of persons or of such incomes or classes of income or of such  cases
or classes of cases as the Commissioner may direct.

(2) Where any directions issued under sub-section (1) have assigned  to  two
or more Income-tax Officers, the same area or the same  persons  or  classes
of persons or the same incomes or classes of income or  the  same  cases  or
classes of cases, they shall have concurrent jurisdiction and shall  perform
their functions in relation to the said  area,  or  persons  or  classes  of
persons, or incomes or classes of income, or cases or classes of  cases,  in
accordance  with  such  general  or  special  orders  in  writing   as   the
Commissioner or the Inspecting  Assistant  Commissioner  authorised  by  the
Commissioner in this behalf may make for the  purpose  of  facilitating  the
performance of such functions.

(3) Within the limits of the area assigned to him,  the  Income-tax  Officer
shall have jurisdiction -

(a) in respect of any person carrying on a business or  profession,  if  the
place at which he carries on his business or profession  is  situate  within
the area, or where his business or profession is carried on in  more  places
than one, if the principal place of his business or  profession  is  situate
within the area, and

(b) in respect of any other person residing within the area.

(4) Where a question arises under this section as to whether  an  Income-tax
Officer has jurisdiction  to  assess  any  person,  the  question  shall  be
determined by the Commissioner; or where the question  is  one  relating  to
areas  within  the  jurisdiction  of   different   Commissioners,   by   the
Commissioners concerned or, if they are not in agreement, by the Board.

(5) No person shall be entitled to call in question the jurisdiction  of  an
Income-tax Officer -

(a) after the expiry of one month from the date  on  which  he  has  made  a
return under sub-section (1) of section 139 or after the completion  of  the
assessment, whichever is earlier :-

(b) where he has made no such return, after the expiry of the  time  allowed
by the notice under sub-section (2) of section 139 or under section 148  for
the making of the return.

(6) Subject to the provisions of sub-section (5), where  an  assessee  calls
in question the jurisdiction of an Income-tax Officer, then the Income-  tax
Officer shall, if not satisfied with the correctness  of  the  claim,  refer
the matter for determination under  sub-section  (4)  before  assessment  is
made.

(7) Notwithstanding anything contained in this section or in  section  130A,
every Income-tax Officer shall have all the powers  conferred  by  or  under
this Act on an Income-tax Officer in  respect  of  any  income  accruing  or
arising or received within the area for which he is appointed.



9.    Likewise, Section  125  of  the  Act  prescribes  the  powers  of  the
Commissioner with respect to specified areas, cases,  persons  etc.  Section
125A of the Act, to which we shall advert at a later  stage,  discusses  the
concurrent  jurisdiction  of  IAC  and  ITO  under  certain   circumstances.
Further, Section 130A of the  Act  deals  with  competency  of  the  ITO  to
perform any function or functions  under  certain  specified  circumstances.
Sections  131   to  136  provide  for  various  powers  of  the  Income  Tax
Authorities with which we  are  not  concerned  in  the  present  case.  The
important provisions directly relevant for  the  controversy  in  issue  are
contained in Chapter XIV,  namely,  Sections  144A  and  144B  of  the  Act.
Section 144A authorises the IAC to issue directions  in  certain  cases  and
Sections 144B provides that in certain cases reference is to be made to  the
IAC by the ITO before framing the  final  assessment  order.  Under  Section
144A, the IAC may, on his own motion or on a reference being made to him  by
the ITO or on the application of an  assessee,  call  for  and  examine  the
record of any proceedings in which the assessment  is  pending  and,  if  he
considers that, having regard to the  nature  of  the  case  or  the  amount
involved or for any other reason, it is necessary or expedient so to do,  he
may issue such directions as he thinks fit for the guidance of  the  ITO  to
enable him to complete the assessment. Directions so issued are  binding  on
the ITO.

10.   Section 144B of the Act deals with a situation where the  ITO  intends
to pass an assessment order which is in variation  to  the  income  or  loss
that is shown in  the  return  of  the  assessee  and  the  amount  of  such
variation exceeds the amount that can be  fixed  by  the  Board  under  sub-
Section (6) thereof.  In such a situation, the ITO is  under  obligation  to
first forward a draft of the proposed order of assessment  to  the  assessee
who can file his objections within 7 days thereof and if the objections  are
received,  the  ITO  is  to  forward  the  draft  order  together  with  the
objections to the IAC. The IAC, after considering the draft  order  and  the
objections, is empowered to issue such directions as he thinks fit  for  the
guidance of the ITO to complete the assessment.

11.   From the reading of Section 153, the period (not exceeding  180  days)
commencing from the date on which the ITO forwards  the  draft  order  under
sub-Section (1) of Section 144B to the assessee  and ending  with  the  date
on which the ITO receives the directions from the IAC under sub-Section  (4)
of  Section  144B,  is  to  be  excluded  while  computing  the  period   of
limitation.

12.   There is no quarrel up to this stage. However, as pointed out  in  the
earlier portion of this judgment, as per  the  assessee  when  the  IAC  was
vested/empowered  with same powers as that of ITO, by specific order of  the
CIT in respect of the respondent/assessee itself and with the conferring  of
said powers the IAC and ITO had concerned jurisdiction  over  the  assessee,
there was no reason to send the draft assessment order by  the  ITO  to  the
IAC. To  appreciate  this  contention,  we  at  this  stage,  reproduce  the
provisions of Section 125A of the Act under which concurrent powers  can  be
assigned to the IAC as well.

“125A. Concurrent jurisdiction  of  Inspecting  Assistant  Commissioner  and
Income-tax Officer. - (1) The Commissioner may, by general or special  order
in writing, direct that all or any of the powers or functions conferred  on,
or assigned to, the Income-tax Officer or Income-tax Officers  by  or  under
this Act in respect of any area,  or  persons  or  classes  of  persons,  or
incomes or classes of income,  or  cases  or  classes  of  cases,  shall  be
exercised  or   performed   concurrently   by   the   Inspecting   Assistant
Commissioner.

(2) Where  under  sub-section  (1),  an  Inspecting  Assistant  Commissioner
exercises concurrent jurisdiction with one or more  Income-tax  Officers  in
respect of any area, or  persons  or  classes  of  persons,  or  incomes  or
classes of income, or cases or classes of cases, the Income-tax  Officer  or
Income-tax Officers shall exercise the  powers  and  perform  the  functions
under this Act in relation-thereto as the Inspecting Assistant  Commissioner
may direct.

(3) Without prejudice to the generality of the provisions contained in  sub-
section (3) of section 119, every Income-tax Officer shall also observe  and
follow such instructions as may be issued to him for  his  guidance  by  the
Inspecting Assistant Commissioner within whose jurisdiction he performs  his
functions in relation to any particular proceeding or the initiation of  any
proceeding under this Act :

Provided that no instructions, which are prejudicial to the assessee,  shall
be issued before an opportunity is given to the assessee to be heard.

Explanation. - For the purposes of this sub-section, no  instruction  as  to
the lines on which an investigation connected with the assessment should  be
made shall be deemed to be an instruction prejudicial to the assessee.

(4) Where an  order  is  made  under  sub-section  (1)  and  the  Inspecting
Assistant Commissioner exercises the powers or performs the functions of  an
Income-tax Officer in relation  to  any  area,  or  persons  or  classes  of
persons, or incomes or classes of income, or  cases  or  classes  of  cases,
references in this Act or in any rule  made  thereunder  to  the  Income-tax
Officer shall  be  construed  as  references  to  the  Inspecting  Assistant
Commissioner and any provision of this Act requiring  approval  or  sanction
of the Inspecting Assistant Commissioner shall not apply.



12. From the aforesaid sections, it is apparent:



(i) Under section 123 of the Act,  the  Inspecting  Assistant  Commissioners
have jurisdiction in respect of such areas or of such persons or classes  of
persons or of such incomes or classes of income or of such cases or  classes
of cases as per the direction of the Commissioner. Where there  are  two  or
more  Inspecting  Assistant  Commissioners,  they  are   having   concurrent
jurisdiction and are required to exercise their  powers  and  perform  their
functions as per the order in writing made by  the  Commissioner  specifying
for the distribution and allocation of the work to be performed.

(ii) Similarly, under section  124(1),  the  Income-tax  Officers  are  also
required  to  perform  their  functions  as  per  the   direction   of   the
Commissioner. If there are two or more Income-tax Officers, they are  having
concurrent jurisdiction and are required to perform their functions  as  per
the general or special  orders  in  writing  made  by  the  Commissioner  or
Inspecting Assistant Commissioner authorised by  the  Commissioner  in  this
behalf. Sub-section  (3)  provides  that  within  the  limits  of  the  area
assigned to him, the Income-tax Officer shall have jurisdiction  in  respect
of any person carrying on business or profession, if the place at  which  he
carries on his business or profession is situate within the area,  or  where
his business or profession is carried on in more places  than  one,  if  the
principal place of his business or profession is  situate  within  the  area
and in respect of any other person residing  within  the  area.  Sub-section
(4) provides as to who shall decide the dispute arising with regard  to  the
jurisdiction of an Income-tax Officer to assess any person. Sub-section  (5)
provides  that  no  person  shall  be  entitled  to  call  in  question  the
jurisdiction of an  Income-tax  Officer  beyond  the  time-limit  prescribed
therein;



(iii) In section 125,  an  exception  is  carved  out  with  regard  to  the
jurisdiction of an Income-tax Officer which provides that  the  Commissioner
may by general or special order in writing direct that the powers  conferred
on the Income-tax Officer by or under the  Act  shall,  in  respect  of  any
specified case or class of cases or of any  specified  person  or  class  of
persons, be exercised by the Inspecting Assistant Commissioner. By an  order
of the Commissioner under  section  125(1)(a),  the  Income-tax  Officer  is
divested of his jurisdiction to deal with the specified  case  or  class  of
cases or specified person or persons.  Hence,  even  though  the  Income-tax
Officer is having jurisdiction in respect of any specified case  or  person,
the Commissioner is empowered to  direct  that  the  said  powers  shall  be
exercised by the Inspecting Assistant  Commissioner.  Where  such  order  is
made under section 125(2)(a), any provision of the  Act  requiring  approval
or  sanction  of  the  Inspecting  Assistant  Commissioner   will   not   be
applicable.



(iv)  Section  125A  carves  out  further  exception  with  regard  to   the
jurisdiction of an Income-tax Officer. It does not oust the jurisdiction  of
Income Tax Officer but confers concurrent  jurisdiction  on  the  Inspecting
Assistant Commissioner. It provides that the Commissioner  may,  be  general
or special order in writing, direct  that  all  or  any  of  the  powers  or
functions conferred on, or assigned to, the Income-tax  Officer  or  Income-
tax Officers by or under this Act in respect  of  any  are,  or  persons  of
classes of persons, or incomes or classes of income, or cases or classes  of
cases, shall be  exercised  or  performed  concurrently  by  the  Inspecting
Assistant Commissioner. Sub-section (2) of section 125A  also  empowers  the
Inspecting Assistant Commissioner  to  issue  direction  to  the  Income-tax
Officer and the Income-tax Officer is required to exercise  his  powers  and
perform his functions under the Act as per the said  direction.  Sub-section
(3) thereto clarifies that  the  Income-tax  Officer  is  also  required  to
observe and follow such instructions  as  may  be  issued  to  him  for  his
guidance by the Inspecting Assistant Commissioner within whose  jurisdiction
he performs his functions in relation to any particular proceedings  or  the
initiation of any proceeding under the Act. The proviso  clarifies  that  no
instructions which are prejudicial to the assessee shall  be  issued  before
an opportunity is given to the assessee to be heard.“



13.   Thrust of the counsel for the  assessee  was  on  sub-Section  (4)  of
Section 125A with the submission that on the conferment  of  the  concurrent
jurisdiction, provisions of the Act requiring approval and the  sanction  of
the IAC are not applied and,  therefore,  the  provisions  of  Section  144B
seize to apply and should not have been invoked by the ITO in   the  instant
case. It was also argued that the High Court in the  impugned  judgment  has
rightly  discussed  that  with  the  passing  of  a  specific  order   dated
29.08.1983 by the CIT directing that all the powers and  functions  assigned
to the ITO, Central Circle, Jamnagar  are  thereby  available  to  the  IAC,
Central Range II, Ahmedabad,  the  IAC,  Central  Range  II,  Ahmedabad  was
brought at par with the ITO, insofar as it pertains  to  the  assessment  of
the assessee herein and he did not remain an Officer higher in  status  than
ITO insofar as assessment of the assesse is concerned and  for  this  reason
also no such reference to the IAC was called for.

14.   These arguments are  without  any  force  and  the  result  which  the
respondent/assessee wants does not flow from the reading of Section 125A  of
the Act. A bare reading  of  sub-Section(4)  of  Section  125A  of  the  Act
provides that where-
(a) an order is made under sub-section (1), and

(b) the Inspecting Assistant Commissioner exercises the powers  or  performs
the functions of an Income-tax Officer in relation to any area,  or  persons
or classes of persons, or incomes or classes of income, or cases or  classes
of cases, -

(i) references in this Act or in any rule made thereunder to the  Income-tax
Officer shall  be  construed  as  references  to  the  Inspecting  Assistant
Commissioner, and

(ii) any provision of  this  Act  requiring  approval  or  sanction  of  the
Inspecting Assistant Commissioner will not be applicable.





15.   Hence, the provision of the Act requiring the approval or sanction  of
the Inspecting Assistant Commissioner will not be applicable only  in  those
cases where both the aforementioned conditions (a) and  (b)  are  satisfied.
It would mean that, even though an  order  is  made  under  section  125A(1)
empowering the Inspecting Assistant Commissioner to  perform  the  functions
of an Income-tax  Officer,  yet  if  he  has  not  exercised  the  power  or
performed the function of an Income-tax Officer,  the  provisions  requiring
approval or sanction  of  the  Inspecting  Assistant  Commissioner  will  be
applicable. Sub-section (4) nowhere provides that,  if  some  directions  by
the Inspecting Assistant Commissioner are  issued  as  provided  under  sub-
section  (2),  then  provisions  requiring  approval  or  sanction  of   the
Inspecting Assistant Commissioner will not be applicable.


16.   In the instant case, we find that it is not the IAC who exercises  the
powers or performs the functions of the ITO, even  when  such  a  power  was
conferred upon him, concurrently with the ITO.  The significant  feature  of
Section 125A of the Act is that even when the IAC is given the  same  powers
and functions which are to be performed by the ITO in relation to  any  area
or classes  or person or income or classes of income or cases or classes  of
cases, on the conferment of such powers, the ITO does not stand  denuded  of
those  powers.  With  conferment  of  such  powers  on  the  IAC  gives  him
“concurrent” jurisdiction which means that both, ITO as  well  as  the  IAC,
are empowered to  exercise  those  functions  including  passing  assessment
order. It is still open to the ITO to assume the jurisdiction and  pass  the
order in case the IAC does not exercise  those  powers  in  respect  of  the
assessment year. Provisions of Section 144B would not apply only if the  IAC
exercises powers or performs the functions of an ITO. What is  important  is
the actual exercise of powers and not merely conferment of the  powers  that
are borne out from the bare reading of sub-Section (4) of Section 125B.

17.   The position becomes abundantly  clear  when  we  read  Section  144B,
particularly, sub-Section (7) thereof, though for the  sake  of  clarity  we
reproduce hereunder the entire provision:

“(7) Nothing in this section shall apply  to  a  case  where  an  Inspecting
Assistant Commissioner exercises the powers or performs the functions of  an
income-tax Officer in pursuance of  an  order  made  under  section  125  or
section 125A."





18.   Sub-Section (7), in no uncertain terms, mentions  that   Section  144B
will not apply only in that case where the  IAC  “exercises  the  powers  or
performs the functions of an ITO”  in  pursuance  of  an  order  made  under
Section 125 or Section 125A.


19.   In the instant case,  as  already  noted  above,  no  such  power  was
exercised or function of an ITO was performed by the IAC. We would  like  to
point out here that the High Court of Gujarat while  dismissing  the  appeal
of the Revenue failed to take into account the earlier judgment of  the  Co-
ordinate Bench of the High Court in CIT vs.  Shree  Digvijay  Woollen  Mills
Ltd. [1995] 212 ITR 310], which has taken the view that  we  have  expressed
above. We agree with the view taken in CIT vs. Shree Digvijay Woollen  Mills
Ltd. thereby allowing Civil Appeal No. 2984 of 2008 and  setting  aside  the
impugned judgment.


20.     For   these   reasons,   the   Civil   Appeal   arising    out    of
SLP(C)No.13766/2011 filed  by  the  assesee  against  the  judgment  of  the
Allahabad High Court is dismissed affirming the view in the said case  which
is reported as Commissioner of Income tax vs. Saraya  Sugar  Mills  P.  Ltd.
[2011] 336 ITR 572 (All).

21.   The Revenue shall be entitled to costs in both the appeals.

                                                    ......................J.
                                                               [A.K. SIKRI]


                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION


                        CIVIL APPEAL  NO(S).2984/2008


COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL                     APPELLANT(S)


                                VERSUS


SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD                       RESPONDENT(S)



                                    WITH
                        CIVIL APPEAL  NO(S).4971/2016
                   (Arising out of SLP(C) No. 13766/2011)

M/S. SARAYA SUGAR MILLS PVT. LTD.                               APPELLANT(S)

                                VERSUS

COMMISSIONER OF INCOME -A WARD, GORAKHPUR                      RESPONDENT(S)


                               J U D G M E N T

A.K. SIKRI,J.



      Leave granted in SLP(C) No. 13766/2011.

2.    The Commissioner  of  Income  Tax,  Gujarat  Central,  Ahmedabad-  the
appellant (hereinafter referred to as “the Revenue”), is  aggrieved  by  the
judgment dated 20.01.2005 passed by the High Court of  Gujarat  whereby  the
High Court has dismissed the appeal of the Revenue affirming  the  order  of
the Income Tax  Appellate  Tribunal  (hereinafter  referred  to  as  “ITAT”)
holding that the assessment order dated 01.09.1984 passed by  the  Assessing
Officer in respect of Assessment  Year  1981-82  was  time  barred.  We  may
mention at the outset that in terms of Section 153 of the  Income  Tax  Act,
1961 (hereinafter referred to as “the Act”), time limit  for  completion  of
the assessment to be made under Sections 143 or 144 of the  Act  is  at  any
time after the expiry of two years from the end of the  Assessment  Year  in
which the income is first assessable, where Assessment  Year  is  commencing
on or after 01.04.1969. On this reckoning,  the  date  by  which  assessment
should have been  carried  out  by  the  Assessing  Officer  in  respect  of
Assessment Year 1981-82 was 31.03.1984. The assessment order  was,  however,
passed on 01.09.1984. The Revenue claimed that  this  assessment  order  was
still within the prescribed period of limitation because of the reason  that
on 13.03.1984 draft assessment order was passed pertaining to the  aforesaid
Assessment Year and forwarded  to  the  Inspecting  Assistant  Commissioner,
Central Range-II, Ahmedabad  (hereinafter  referred  to  as  “the  IAC”)  on
13.03.1984 (i.e. before  31.03.1984).  The  IAC  issued  instructions  under
Section 144B of the Act on  31.08.1984  and  based  on  that  the  Assessing
Officer framed the assessment on 01.09.1984 under Section 143(3) of the  Act
read with Section 144B of the Act.

3.    The position that was taken by the Revenue was that the   period  from
13.03.1984 to 31.03.1984, when the matter was before  the  IAC,  had  to  be
excluded while computing the period of limitation of two years and once  the
period is excluded the assessment order was  passed  within  the  period  of
limitation. The contention of the respondent/assessee, on  the  other  hand,
was that, by  order  dated  29.08.1983,  the  Commissioner  of  Income  Tax,
Central, Ahmedabad (hereinafter referred  to  as  “the  CIT”)  passed  under
Section 125A(1) of the Act had assigned all the powers and functions of  the
Income Tax Officer, Central Circle, Jamnagar  (hereinafter  referred  to  as
“the ITO”) to the IAC. This order was passed specifically  in  the  case  of
the respondent herein which became effective from 01.09.1983. It  was  their
submission that once, by virtue of  the  aforesaid  order  dated  29.08.1983
passed by the CIT, the IAC is conferred concurrent jurisdiction, along  with
ITO, empowering him to make assessment order in the case  of  the  assessee,
there was no question of forwarding the draft assessment order  by  the  ITO
to the IAC and this unnecessary and superfluous exercise would not enure  to
the advantage of the Revenue giving  it  the  benefit  of  the  period  from
13.03.1984 to 31.08.1984 while calculating the period of limitation  of  two
years provided under Section 153 of the Act.  In  nutshell,  the  submission
was that the conferment of the powers of  the  Assessing  Officer  upon  the
IAC, he is in the same position as the ITO and draft assessment order  could
not be sent to him who was brought at par with the ITO.

4.    The Assessing Officer was not amused by the  aforesaid  contention  of
the assessee and repelled the same resulting in framing  of  the  assessment
order  dated  01.09.1984.  However,  the  ITAT  found  force  in  the   said
submission of the assessee and allowed the appeal thereby setting aside  the
assessment order. The High Court, as pointed  out  above,  has  upheld  this
view of  the  ITAT,  resulting  in  the  dismissal  of  the  appeal  of  the
appellant.

5.    Before proceeding further, we may mention that in the  appeal  arising
out of SLP(C) No.13766/2011 which is preferred by the  assessee-M/s.  Saraya
Sugar Mills Pvt. Ltd., in the same circumstances, on the same question,  the
Allahabad High Court has taken a contrary view. The High Court of  Allahabad
has found merit in the stand taken by the Revenue and  excluded  the  period
during which the draft assessment was forwarded to the IAC till the date  of
receiving the instructions from the IAC under Section 144B of  the  Act.  We
are, thus, faced with two conflicting views and to decide as to  which  High
Court has correctly decided the issue of limitation.

6.    We have already stated, in detail, the facts of Civil Appeal No.  2984
of 2008. Before we embark upon our detailed  discussion  on  the  issue,  we
would like to place on record the relevant provisions of the Act which  have
bearing on the issue. As mentioned above, Section 153 prescribes  limitation
of two years for making assessment under Section 143 or Section 144  of  the
Act. Avoiding those portions  of  these  Sections  with  which  we  are  not
concerned, the material provisions are re-produced below:

"153. Time-limit for completion of assessments and reassessments. -  (1)  No
order of assessment shall be made under section 143 or section  144  at  any
time after -

(a) the expiry of - ...

(iii) two years from the end of the assessment year in which the income  was
first  assessable,  where  such  assessment  year  is  an  assessment   year
commencing on or after the 1st day of April, 1969; or....

whichever is latest. . . .

(3) The provisions of sub-sections (1)  and  (2)  shall  not  apply  to  the
following classes of assessments, reassessments  and  re-computations  which
may, subject to the provisions of sub-section  (2A),  be  completed  at  any
time - ...

(ii) where the assessment, reassessment or re-computation is : made  on  the
assessee or any person in consequence of or to give effect  to  any  finding
or direction contained in an order under section 250, 254, 260, 262, 263  or
264 or in an order of any court in a proceeding otherwise  than  by  way  of
appeal or reference under this Act;...

Explanation 1. - In computing the period of limitation for the  purposes  of
this section - . . .

(iv) the period (not exceeding one hundred and eighty days) commencing  from
the date on which the Income-tax Officer forwards the draft order under sub-
section (1) of section 144B to the assessee and  ending  with  the  date  on
which the Income-tax Officer receives the  directions  from  the  Inspecting
Assistant Commissioner under sub-section (4) of that section, or, in a  case
where no objections to the draft order are received  from  the  assessee,  a
period of thirty days, or  (iva)  the  period  (not  exceeding  sixty  days)
commencing from the date  on  which  the  Income-tax  Officer  received  the
declaration under sub-section (1) of section 158A and ending with  the  date
on which the order under sub-section (3) of that section  is  made  by  him,
or. . . .

shall be excluded. . . ."


7.    Section 123 of the Act lays down  the  jurisdiction  of  the  IAC  and
reads as under:

"123.  Jurisdiction  of  Inspecting  Assistant  Commissioners  -   (1)   The
Inspecting Assistant Commissioners shall perform their functions in  respect
of such areas or of such persons or classes of persons or  of  such  incomes
or classes  of  income  or  of  such  cases  or  classes  of  cases  as  the
Commissioner may direct.

(2) Where any directions issued under sub-section (1) have assigned  to  two
or more Inspecting Assistant  Commissioners,  the  same  area  or  the  same
persons or classes of persons or the same incomes or classes  of  income  or
the same cases or classes of cases, they shall have concurrent  jurisdiction
and shall perform such functions in relation to the said area or persons  or
classes of persons or incomes or classes of income or cases  or  classes  of
cases as the Commissioner may, by  general  or  special  order  in  writing,
specify, for the distribution and allocation of the work to be performed.”


8.    Section 124, on the other hand, deals with  the  jurisdiction  of  the
Income Tax Officer and reads as under:

“124. Jurisdiction of Income-tax Officers. - (1) Income-tax  Officers  shall
perform their functions in respect of such  areas  or  of  such  persons  or
classes of persons or of such incomes or classes of income or of such  cases
or classes of cases as the Commissioner may direct.

(2) Where any directions issued under sub-section (1) have assigned  to  two
or more Income-tax Officers, the same area or the same  persons  or  classes
of persons or the same incomes or classes of income or  the  same  cases  or
classes of cases, they shall have concurrent jurisdiction and shall  perform
their functions in relation to the said  area,  or  persons  or  classes  of
persons, or incomes or classes of income, or cases or classes of  cases,  in
accordance  with  such  general  or  special  orders  in  writing   as   the
Commissioner or the Inspecting  Assistant  Commissioner  authorised  by  the
Commissioner in this behalf may make for the  purpose  of  facilitating  the
performance of such functions.

(3) Within the limits of the area assigned to him,  the  Income-tax  Officer
shall have jurisdiction -

(a) in respect of any person carrying on a business or  profession,  if  the
place at which he carries on his business or profession  is  situate  within
the area, or where his business or profession is carried on in  more  places
than one, if the principal place of his business or  profession  is  situate
within the area, and

(b) in respect of any other person residing within the area.

(4) Where a question arises under this section as to whether  an  Income-tax
Officer has jurisdiction  to  assess  any  person,  the  question  shall  be
determined by the Commissioner; or where the question  is  one  relating  to
areas  within  the  jurisdiction  of   different   Commissioners,   by   the
Commissioners concerned or, if they are not in agreement, by the Board.

(5) No person shall be entitled to call in question the jurisdiction  of  an
Income-tax Officer -

(a) after the expiry of one month from the date  on  which  he  has  made  a
return under sub-section (1) of section 139 or after the completion  of  the
assessment, whichever is earlier :-

(b) where he has made no such return, after the expiry of the  time  allowed
by the notice under sub-section (2) of section 139 or under section 148  for
the making of the return.

(6) Subject to the provisions of sub-section (5), where  an  assessee  calls
in question the jurisdiction of an Income-tax Officer, then the Income-  tax
Officer shall, if not satisfied with the correctness  of  the  claim,  refer
the matter for determination under  sub-section  (4)  before  assessment  is
made.

(7) Notwithstanding anything contained in this section or in  section  130A,
every Income-tax Officer shall have all the powers  conferred  by  or  under
this Act on an Income-tax Officer in  respect  of  any  income  accruing  or
arising or received within the area for which he is appointed.



9.    Likewise, Section  125  of  the  Act  prescribes  the  powers  of  the
Commissioner with respect to specified areas, cases,  persons  etc.  Section
125A of the Act, to which we shall advert at a later  stage,  discusses  the
concurrent  jurisdiction  of  IAC  and  ITO  under  certain   circumstances.
Further, Section 130A of the  Act  deals  with  competency  of  the  ITO  to
perform any function or functions  under  certain  specified  circumstances.
Sections  131   to  136  provide  for  various  powers  of  the  Income  Tax
Authorities with which we  are  not  concerned  in  the  present  case.  The
important provisions directly relevant for  the  controversy  in  issue  are
contained in Chapter XIV,  namely,  Sections  144A  and  144B  of  the  Act.
Section 144A authorises the IAC to issue directions  in  certain  cases  and
Sections 144B provides that in certain cases reference is to be made to  the
IAC by the ITO before framing the  final  assessment  order.  Under  Section
144A, the IAC may, on his own motion or on a reference being made to him  by
the ITO or on the application of an  assessee,  call  for  and  examine  the
record of any proceedings in which the assessment  is  pending  and,  if  he
considers that, having regard to the  nature  of  the  case  or  the  amount
involved or for any other reason, it is necessary or expedient so to do,  he
may issue such directions as he thinks fit for the guidance of  the  ITO  to
enable him to complete the assessment. Directions so issued are  binding  on
the ITO.

10.   Section 144B of the Act deals with a situation where the  ITO  intends
to pass an assessment order which is in variation  to  the  income  or  loss
that is shown in  the  return  of  the  assessee  and  the  amount  of  such
variation exceeds the amount that can be  fixed  by  the  Board  under  sub-
Section (6) thereof.  In such a situation, the ITO is  under  obligation  to
first forward a draft of the proposed order of assessment  to  the  assessee
who can file his objections within 7 days thereof and if the objections  are
received,  the  ITO  is  to  forward  the  draft  order  together  with  the
objections to the IAC. The IAC, after considering the draft  order  and  the
objections, is empowered to issue such directions as he thinks fit  for  the
guidance of the ITO to complete the assessment.

11.   From the reading of Section 153, the period (not exceeding  180  days)
commencing from the date on which the ITO forwards  the  draft  order  under
sub-Section (1) of Section 144B to the assessee  and ending  with  the  date
on which the ITO receives the directions from the IAC under sub-Section  (4)
of  Section  144B,  is  to  be  excluded  while  computing  the  period   of
limitation.

12.   There is no quarrel up to this stage. However, as pointed out  in  the
earlier portion of this judgment, as per  the  assessee  when  the  IAC  was
vested/empowered  with same powers as that of ITO, by specific order of  the
CIT in respect of the respondent/assessee itself and with the conferring  of
said powers the IAC and ITO had concerned jurisdiction  over  the  assessee,
there was no reason to send the draft assessment order by  the  ITO  to  the
IAC. To  appreciate  this  contention,  we  at  this  stage,  reproduce  the
provisions of Section 125A of the Act under which concurrent powers  can  be
assigned to the IAC as well.

“125A. Concurrent jurisdiction  of  Inspecting  Assistant  Commissioner  and
Income-tax Officer. - (1) The Commissioner may, by general or special  order
in writing, direct that all or any of the powers or functions conferred  on,
or assigned to, the Income-tax Officer or Income-tax Officers  by  or  under
this Act in respect of any area,  or  persons  or  classes  of  persons,  or
incomes or classes of income,  or  cases  or  classes  of  cases,  shall  be
exercised  or   performed   concurrently   by   the   Inspecting   Assistant
Commissioner.

(2) Where  under  sub-section  (1),  an  Inspecting  Assistant  Commissioner
exercises concurrent jurisdiction with one or more  Income-tax  Officers  in
respect of any area, or  persons  or  classes  of  persons,  or  incomes  or
classes of income, or cases or classes of cases, the Income-tax  Officer  or
Income-tax Officers shall exercise the  powers  and  perform  the  functions
under this Act in relation-thereto as the Inspecting Assistant  Commissioner
may direct.

(3) Without prejudice to the generality of the provisions contained in  sub-
section (3) of section 119, every Income-tax Officer shall also observe  and
follow such instructions as may be issued to him for  his  guidance  by  the
Inspecting Assistant Commissioner within whose jurisdiction he performs  his
functions in relation to any particular proceeding or the initiation of  any
proceeding under this Act :

Provided that no instructions, which are prejudicial to the assessee,  shall
be issued before an opportunity is given to the assessee to be heard.

Explanation. - For the purposes of this sub-section, no  instruction  as  to
the lines on which an investigation connected with the assessment should  be
made shall be deemed to be an instruction prejudicial to the assessee.

(4) Where an  order  is  made  under  sub-section  (1)  and  the  Inspecting
Assistant Commissioner exercises the powers or performs the functions of  an
Income-tax Officer in relation  to  any  area,  or  persons  or  classes  of
persons, or incomes or classes of income, or  cases  or  classes  of  cases,
references in this Act or in any rule  made  thereunder  to  the  Income-tax
Officer shall  be  construed  as  references  to  the  Inspecting  Assistant
Commissioner and any provision of this Act requiring  approval  or  sanction
of the Inspecting Assistant Commissioner shall not apply.



12. From the aforesaid sections, it is apparent:



(i) Under section 123 of the Act,  the  Inspecting  Assistant  Commissioners
have jurisdiction in respect of such areas or of such persons or classes  of
persons or of such incomes or classes of income or of such cases or  classes
of cases as per the direction of the Commissioner. Where there  are  two  or
more  Inspecting  Assistant  Commissioners,  they  are   having   concurrent
jurisdiction and are required to exercise their  powers  and  perform  their
functions as per the order in writing made by  the  Commissioner  specifying
for the distribution and allocation of the work to be performed.

(ii) Similarly, under section  124(1),  the  Income-tax  Officers  are  also
required  to  perform  their  functions  as  per  the   direction   of   the
Commissioner. If there are two or more Income-tax Officers, they are  having
concurrent jurisdiction and are required to perform their functions  as  per
the general or special  orders  in  writing  made  by  the  Commissioner  or
Inspecting Assistant Commissioner authorised by  the  Commissioner  in  this
behalf. Sub-section  (3)  provides  that  within  the  limits  of  the  area
assigned to him, the Income-tax Officer shall have jurisdiction  in  respect
of any person carrying on business or profession, if the place at  which  he
carries on his business or profession is situate within the area,  or  where
his business or profession is carried on in more places  than  one,  if  the
principal place of his business or profession is  situate  within  the  area
and in respect of any other person residing  within  the  area.  Sub-section
(4) provides as to who shall decide the dispute arising with regard  to  the
jurisdiction of an Income-tax Officer to assess any person. Sub-section  (5)
provides  that  no  person  shall  be  entitled  to  call  in  question  the
jurisdiction of an  Income-tax  Officer  beyond  the  time-limit  prescribed
therein;



(iii) In section 125,  an  exception  is  carved  out  with  regard  to  the
jurisdiction of an Income-tax Officer which provides that  the  Commissioner
may by general or special order in writing direct that the powers  conferred
on the Income-tax Officer by or under the  Act  shall,  in  respect  of  any
specified case or class of cases or of any  specified  person  or  class  of
persons, be exercised by the Inspecting Assistant Commissioner. By an  order
of the Commissioner under  section  125(1)(a),  the  Income-tax  Officer  is
divested of his jurisdiction to deal with the specified  case  or  class  of
cases or specified person or persons.  Hence,  even  though  the  Income-tax
Officer is having jurisdiction in respect of any specified case  or  person,
the Commissioner is empowered to  direct  that  the  said  powers  shall  be
exercised by the Inspecting Assistant  Commissioner.  Where  such  order  is
made under section 125(2)(a), any provision of the  Act  requiring  approval
or  sanction  of  the  Inspecting  Assistant  Commissioner   will   not   be
applicable.



(iv)  Section  125A  carves  out  further  exception  with  regard  to   the
jurisdiction of an Income-tax Officer. It does not oust the jurisdiction  of
Income Tax Officer but confers concurrent  jurisdiction  on  the  Inspecting
Assistant Commissioner. It provides that the Commissioner  may,  be  general
or special order in writing, direct  that  all  or  any  of  the  powers  or
functions conferred on, or assigned to, the Income-tax  Officer  or  Income-
tax Officers by or under this Act in respect  of  any  are,  or  persons  of
classes of persons, or incomes or classes of income, or cases or classes  of
cases, shall be  exercised  or  performed  concurrently  by  the  Inspecting
Assistant Commissioner. Sub-section (2) of section 125A  also  empowers  the
Inspecting Assistant Commissioner  to  issue  direction  to  the  Income-tax
Officer and the Income-tax Officer is required to exercise  his  powers  and
perform his functions under the Act as per the said  direction.  Sub-section
(3) thereto clarifies that  the  Income-tax  Officer  is  also  required  to
observe and follow such instructions  as  may  be  issued  to  him  for  his
guidance by the Inspecting Assistant Commissioner within whose  jurisdiction
he performs his functions in relation to any particular proceedings  or  the
initiation of any proceeding under the Act. The proviso  clarifies  that  no
instructions which are prejudicial to the assessee shall  be  issued  before
an opportunity is given to the assessee to be heard.“



13.   Thrust of the counsel for the  assessee  was  on  sub-Section  (4)  of
Section 125A with the submission that on the conferment  of  the  concurrent
jurisdiction, provisions of the Act requiring approval and the  sanction  of
the IAC are not applied and,  therefore,  the  provisions  of  Section  144B
seize to apply and should not have been invoked by the ITO in   the  instant
case. It was also argued that the High Court in the  impugned  judgment  has
rightly  discussed  that  with  the  passing  of  a  specific  order   dated
29.08.1983 by the CIT directing that all the powers and  functions  assigned
to the ITO, Central Circle, Jamnagar  are  thereby  available  to  the  IAC,
Central Range II, Ahmedabad,  the  IAC,  Central  Range  II,  Ahmedabad  was
brought at par with the ITO, insofar as it pertains  to  the  assessment  of
the assessee herein and he did not remain an Officer higher in  status  than
ITO insofar as assessment of the assesse is concerned and  for  this  reason
also no such reference to the IAC was called for.

14.   These arguments are  without  any  force  and  the  result  which  the
respondent/assessee wants does not flow from the reading of Section 125A  of
the Act. A bare reading  of  sub-Section(4)  of  Section  125A  of  the  Act
provides that where-
(a) an order is made under sub-section (1), and

(b) the Inspecting Assistant Commissioner exercises the powers  or  performs
the functions of an Income-tax Officer in relation to any area,  or  persons
or classes of persons, or incomes or classes of income, or cases or  classes
of cases, -

(i) references in this Act or in any rule made thereunder to the  Income-tax
Officer shall  be  construed  as  references  to  the  Inspecting  Assistant
Commissioner, and

(ii) any provision of  this  Act  requiring  approval  or  sanction  of  the
Inspecting Assistant Commissioner will not be applicable.





15.   Hence, the provision of the Act requiring the approval or sanction  of
the Inspecting Assistant Commissioner will not be applicable only  in  those
cases where both the aforementioned conditions (a) and  (b)  are  satisfied.
It would mean that, even though an  order  is  made  under  section  125A(1)
empowering the Inspecting Assistant Commissioner to  perform  the  functions
of an Income-tax  Officer,  yet  if  he  has  not  exercised  the  power  or
performed the function of an Income-tax Officer,  the  provisions  requiring
approval or sanction  of  the  Inspecting  Assistant  Commissioner  will  be
applicable. Sub-section (4) nowhere provides that,  if  some  directions  by
the Inspecting Assistant Commissioner are  issued  as  provided  under  sub-
section  (2),  then  provisions  requiring  approval  or  sanction  of   the
Inspecting Assistant Commissioner will not be applicable.


16.   In the instant case, we find that it is not the IAC who exercises  the
powers or performs the functions of the ITO, even  when  such  a  power  was
conferred upon him, concurrently with the ITO.  The significant  feature  of
Section 125A of the Act is that even when the IAC is given the  same  powers
and functions which are to be performed by the ITO in relation to  any  area
or classes  or person or income or classes of income or cases or classes  of
cases, on the conferment of such powers, the ITO does not stand  denuded  of
those  powers.  With  conferment  of  such  powers  on  the  IAC  gives  him
“concurrent” jurisdiction which means that both, ITO as  well  as  the  IAC,
are empowered to  exercise  those  functions  including  passing  assessment
order. It is still open to the ITO to assume the jurisdiction and  pass  the
order in case the IAC does not exercise  those  powers  in  respect  of  the
assessment year. Provisions of Section 144B would not apply only if the  IAC
exercises powers or performs the functions of an ITO. What is  important  is
the actual exercise of powers and not merely conferment of the  powers  that
are borne out from the bare reading of sub-Section (4) of Section 125B.

17.   The position becomes abundantly  clear  when  we  read  Section  144B,
particularly, sub-Section (7) thereof, though for the  sake  of  clarity  we
reproduce hereunder the entire provision:

“(7) Nothing in this section shall apply  to  a  case  where  an  Inspecting
Assistant Commissioner exercises the powers or performs the functions of  an
income-tax Officer in pursuance of  an  order  made  under  section  125  or
section 125A."





18.   Sub-Section (7), in no uncertain terms, mentions  that   Section  144B
will not apply only in that case where the  IAC  “exercises  the  powers  or
performs the functions of an ITO”  in  pursuance  of  an  order  made  under
Section 125 or Section 125A.


19.   In the instant case,  as  already  noted  above,  no  such  power  was
exercised or function of an ITO was performed by the IAC. We would  like  to
point out here that the High Court of Gujarat while  dismissing  the  appeal
of the Revenue failed to take into account the earlier judgment of  the  Co-
ordinate Bench of the High Court in CIT vs.  Shree  Digvijay  Woollen  Mills
Ltd. [1995] 212 ITR 310], which has taken the view that  we  have  expressed
above. We agree with the view taken in CIT vs. Shree Digvijay Woollen  Mills
Ltd. thereby allowing Civil Appeal No. 2984 of 2008 and  setting  aside  the
impugned judgment.


20.     For   these   reasons,   the   Civil   Appeal   arising    out    of
SLP(C)No.13766/2011 filed  by  the  assesee  against  the  judgment  of  the
Allahabad High Court is dismissed affirming the view in the said case  which
is reported as Commissioner of Income tax vs. Saraya  Sugar  Mills  P.  Ltd.
[2011] 336 ITR 572 (All).

21.   The Revenue shall be entitled to costs in both the appeals.

                                                    ......................J.
                                                               [A.K. SIKRI]


                                                    ......................J.
                                                    [ROHINTON FALI NARIMAN]
NEW DELHI;
MAY 02, 2016.