- (1.) THOUGH this case was listed for admission, at the request and with the consent of learned counsel for the petitioner and learned counsel for the Revenue, it is taken up for final disposal.
(2.) THE petitioner was assessed to income-tax for the assessment year 1984-85 under Section 144 of the Income-tax Act, 1961 (for short, "the Act"). THE said assessment was assailed in appeal before the Commissioner of Income-tax (Appeals) (in short, "the CIT (A)"), Orissa, Cuttack, in Income-tax Appeal No. 523/ORS/90-91. By order dated January 31, 1991, the Commissioner of Income-tax (Appeals) set aside the assessment and directed de novo assessment, after giving a fresh opportunity to the appellant-petitioner to state his case. THE petitioner has filed second appeal before the Income-tux Appellate Tribunal, Cuttack Bench (in short, "the Tribunal'"). By notice dated January 18, 1995, the Assistant Commissioner of Income-tax, Circle-II, Bhubaneswar, issued notice to the petitioner to give explanations and comments regarding unexplained investment in house properly construction. THE notice was issued in pursuance of the direction given by the Commissioner of Income-tax (Appeals). According to the Assistant Commissioner, the assessment was likely to get time-barred and, therefore, he requested the petitioner to submit his explanation and comments within seven days from the date of receipt of the letter/notice. THE petitioner filed an application for adjournment on the ground that the matter is pending before the Tribunal and he is likely to be prejudiced in case of assessment during the pendency of his appeal before the Tribunal. THE petitioner's case is that the said prayer has not been considered by the Assistant Commissioner as yet and steps have been taken to complete the assessment. THE petitioner also filed an application purported to be one under Section 144A of the Act before the Deputy Commissioner of Income-tax, Bhubaneshwar Range, for issuance of a direction to the Assessing Officer as regards the assessment. By order dated February 17, 1903, the application was rejected. The petitioner's grievance is twofold : (1) If any final assessment pursuant to the direction given by the first appellate authority is made, that would affect the result of the appeal before the Tribunal, and the same would be infructuous. (2) The disposal of the application under Section 144A of the Act without granting an opportunity to the petitioner of being heard is an act in violation of the principles of natural justice. Learned counsel for the Revenue, on the other hand, contended that, in terms of Section 153(2A), the assessment is to be completed within two years from the end of the financial year in which the order directing the fresh assessment was passed by the Commissioner of Income-tax (Appeals). The appellate order having been passed on January 31, 1991, the order of assessment in terms of the direction by the first appellate authority has to be completed by March 31, 1993. We find from a reading of Section 153 that the Assessing Officer is technically correct in holding that the fresh assessment pursuant to the direction given by the Commissioner of Income-tax (Appeals) has to be completed before the expiry of two years from the end of the financial year in which the order directing fresh assessment was passed under Section 250 of the Act. Where some modification is made by the Tribunal while disposing of an appeal under Section 254 of the Act, the period of fresh assessment in terms of a direction given by the Tribunal shall begin from the date of passing of the second appellate order. If the Tribunal upholds the order passed by the Commissioner of Income-tax (Appeals), obviously the said order merges with the second appellate order and a fresh period of limitation starts running. In case any order is passed by the Tribunal, the same has to be given effect and the provisions of Sub-section (3) of Section 153 apply. The further question is whether completion of assessment by the Assessing Officer would render the appeal before the Tribunal infructuous. We direct that the assessment may be completed but the demand notice shall not be served on the assessee till the disposal of the second appeal. Fresh assessment shall not be treated as a factor against the assessee by the Tribunal when hearing the second appeal. The same has to be disposed of on the merits unfettered by completion of fresh assessment by the Assessing Officer. The appeal does not become infructuous by the passing of an order in pursuance of the order of remand (see Shiromani Gurdwara Parbandhah Committee v. Raja Shiv Rattan Dev Singh, AIR 1955 SC 576). The principle has been recognised by the Privy Council in Shama Purshad Roy Chowdery v. Hurro Purshad Roy Chowdery [1865] 10 MIA 203 (PC). It is stated by learned counsel appearing for the assessee that the result of the assessment for the year 1985-86 would affect the assessment relating to 1984-85 and without taking up the assessment for 1985-86, any proceeding in respect of the assessment year 1984-85 would be an exercise in futility. The Assessing Officer shall consider this aspect while dealing with the assessment for 1984-85. The writ application is disposed of accordingly. ;