COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL versus SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD.

Citation: [2016] 4 S.C.R. 867 · Decided: 02-05-2016 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Disposed off

Judgment (excerpt)

(2016] 4 S.C.R. 867 
COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL 
A 
v. 
SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. 
(Civil Appeal No. 2984 of2008) 
MAY02,2016 
[A.K. SIKRI AND ROHINTON FALi NARIMAN, JJ.J 
Income Tax Act, 1961 - ss.124, 125A, 144B and 153 -
Limitation for completion of assess111ent - Computation of- Exclusion 
of the period, fro111 the date of draft order uls. 144B{I) sent by ITO 
to Inspecting Assistant Commissioner (IAC), to the date ITO receives 
direction fro111 IAC u/s 144B(4) - Whether the exclusion period is 
applicable when the IAC is conferred concurrent jurisdiction as 
ITO u/s. 125A - In the present case, plea of assessee that 1AC having 
been conferred with power of JTO approval of IAC was not 
applicable and hence the assessment order was time-barred - Held: 
Mere confer111ent of power of ITO on JAC would not denude the 
IAC of his power u/s 144B - Power of IAC u/s 1448 would not 
apply only when the IAC exercises the powers or performs the 
functions of an ITO in pursuance of order uls. 125 or s.125A -
!AC had not exercised the powers or performed the fimction of an 
JTO - Therefore, the period during which the draft assessment order 
· was pending with hi111, would be excluded from li111itation period -
Thus, the assessment order is not ti111e-barred. 
Allowing the appeal of the Revenue and dismissing that of 
the assessee, the Court 
HELD: 1. From the reading of Section 153 of Income Tax 
Act, 1961, 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 of the Act 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. [Para 11) [875-E] 
2.1 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 
867 
B 
c 
D 
E 
F 
G 
H 
868 
SUPREME COURT REPORTS 
[2016] 4 S.C.R. 
A 
(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 
B 
the Income-tax Officer shall be construed as references to the 
Inspecting Assistant Commissioner, and 
c 
D 
E 
F 
G 
H 
(ii) any provision of this Act requiring approval or sanction 
of the Inspecting Assistant Commissioner will not be applicable. 
[Para 14] [879-C-E) 
2.2 Hence, the provision of the Act requiring the approval 
or sanction of the Inspecting Assistant Commissioner (IAC) 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(l) 
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 IAC are issued 
as provided under sub-section (2), then provisions requiring 
approval or sanction of the IAC will not be applicable. [Para 15) 
[879-E-G) 
2.3 Even when the IAC is given the same powers and 
functions which arc 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 docs 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 
COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 
869 
SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. 
not merely conferment of the powers that are borne out from the 
A 
bare reading of sub-Section (4) of Section 125B. 
(Para 16) [879-H; 

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