M.V.R. Prasad, A.M. - (1.) BY this petition, the petitioner-assessee requests for stay of assessment proceedings directed by the CIT, to be taken up, in his order under Section 263, dt. 22nd Feb., 2002, for the asst. yr. 1987-88. In other words, it is not an application for stay of demand, but for the stay of assessment proceedings.
(2.) During the course of hearing, the learned counsel for the assessee explained that there was an assessment order dt. 31st March, 2000, passed under Section 143(3) r/w Section 148 for the asst. yr. 1987-88, and when the matter reached the level of the Tribunal, the Tribunal vide its order dt. 28th Feb., 2002, in ITA No. 150/Hyd/2001 remanded the matter to the CIT(A) to consider the plea of the assessee that the said assessment was time-barred. It is also mentioned that on an earlier occasion, the CIT had initiated proceedings under Section 263 on one of the issues covered by the impugned order under Section 263, i.e., withdraw of depreciation of Rs. 6,08,737, but those proceedings were dropped after being satisfied with the stand of the assessee that the depreciation was allowable as claimed, ft is pleaded that the impugned order under Section 263 is totally unjustified, as on the same issue, proceedings were dropped on an earlier occasion. It is also pleaded that as the very validity of the assessment made is under question on the ground of limitation taking action under Section 263, in respect of assessment, which is under question, is totally unjustified, and if the consequential assessment is to be made in pursuance of the impugned order under Section 263, it would only mean prolongation of litigation, without justification. So, it is requested that the assessment proceedings should be stayed. The learned Departmental Representative, on the other hand, mentioned that this is not a case where any harassment is caused to the assessee, by way of demand. He submitted that the plea taken by the learned counsel for the assessee, can be agitated only during regular appellate proceedings and there is no justification for preventing the Department from proceeding in the matter and raising legitimate demand during such proceedings. He also pointed out that the period of stay, if any, granted by this Tribunal, would not extend the period of limitation for making assessment in terms of Section 153(2A), and so, the balance of advantage lies in allowing the Department to proceed with the matter.
(3.) WE are in agreement with the plea taken by the learned Departmental Representative. WE see no reason to interfere with the assessment proceedings at this stage. Even in the case of ITO v. Khalid Mehdi Khan (1977) 110 1TR 79 (AP), relied on by the learned counsel for assessee before us, Hon'ble Andhra Pradesh High Court observed as under: "......However, it is obvious that the provision contained in Sub-section (2A) shall have to be an additional factor which the Tribunal has to take into consideration while passing an order of stay or other interlocutory order pending the appeal, before it. In other words, while granting the stay or any other interlocutory order, the Tribunal shall have to keep in mind the period of limitation prescribed in Section 153(2A) of the Act and pass orders in the light of the same. It is always open to the Department to bring to the notice of the Tribunal the particular difficulties, if any, it would face in case a stay is granted, and the Tribunal shall of course consider the said plea and all other relevant circumstances and shall exercise its power having regard to them and in the light of the principles enunciated by the Supreme Court in ITO v. Mohammed Kunhi (1969) 71 ITR 815 (SC)....." The period of limitation governing the fresh assessment in pursuance of order under Section 263 has been reduced to one year from the earlier period of two years, by Finance Act, 2000 w.e.f. 1st April, 2001. The impugned order under Section 263 was passed on 22nd Feb., 2002, and so, the period of limitation is governed by the amended provisions of Section 153(2A), restricting the period to one year. The Hon'ble Andhra Pradesh High Court in the said decision of ITO v. Khalid Mehdi Khan (supra) reiterated the position that the Tribunal is not a Court for the purposes of Clause (2) of Expln. (1) to Section 253, and so, the period of stay granted by the Tribunal does not extend the period of limitation. In the light of the truncated period of limitation, we see no reason to interfere with the assessment proceedings taken up in pursuance of the impugned order under Section 263.;