(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 B [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 c 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: D 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 E 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 F

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 G 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 H 867 868 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 (ii) any provision of this Act requiring approval or sanction of the Inspecting Assistant Commissioner will not be applicable. [Para 14] [879-C-E)

c 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 D 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 E 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 F 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. G 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 H 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; 880-A-C] 2.4 Sub-Section (7) of Sectionl44B, 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 B ITO" in pursuance of an order made under Section 125 or Section 125A. [Para 18] [880-E-F]

2.5 In the instant case, it is not the IAC who exercised the powers or performed the functions of the ITO, even when such a power was conferred upon him, concurrently with the ITO. C [Para 16) [879-G-H] CIT v. Shree Digvijay Woollen Mills Ltd. (1995) 212 ITR 310 - approved. Commissioner of Income tax v. Saraya Sugar Mills P. Ltd. (2011) 336 ITR 572 (All) - referred to. D Case Law Reference (1995) 212 ITR 310 approved Para 19 (2011) 336 ITR 572 (All) referred to Para 20 E CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2984 of 2008. From the Judgment and Order dated 12.01.2005 of the High Court of Gujarat at Ahmedabad in Income Tax Reference No. 193 of 1992 WITH F SLP(C)No.13766of2011. K. Radhakrishna, Rupesh Kumar, Ms. Niranjana Singh, Ms. Anil Katiyar, Bhargava V. Desai, Ms. Saumya Mehrotra, Ms. Shweta Garg, Rakesh Garg and A. G. Garg, Advocates for the appearing parties. G The Judgment of the Court was delivered by A.K. SIKRI,J. I. Leave granted in SLP(C) No. 13766/2011. 2. The Commissioner oflncome Tax, Gujarat Central, Ahmedabad-the appellant (hereinafter referred to as "the Revenue"), is aggrieved by H 870 SUPREME COURT REPORTS [20 I 6) 4 S.C.R.

A 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 "!TAT") holdingthatthe assessment order dated 0 I .09. I 984 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 B I 53 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 c 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 OJ .09.1984. The Revenue claimed that this assessment order was still within the prescribed period oflimitation because of the reason that on 13 .03 .1984 draft assessment order was passed pertaining to the aforesaid D Assessment Year and forwarded to the Inspecting Assistant Commissioner, Central Range-II, Ahmedabad (hereinafter referred to as "the !AC") on 13 .03.1984 (i.e. before 31 .03 .1984 ). The !AC issued instructions under Section 1448 of the Act on 3 I .08. I 984 and based on that the Assessing Officer framed the assessment on OJ .09.1984 under E Section 143(3) of the Act read with Section 1448 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 !AC, had to be excluded while computing the period oflimitation of two years and once the period is excluded the assessment order was passed within F the period of limitation. The contention of the respondent/assessee, on the other hand, was that, by order dated 29.08. I 983, the Commissioner of Income Tax, Central, Ahmedabad (hereinafter referred to as "the CIT") passed under Section I 25A( I) 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 G 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. I 983 passed by the CIT, the !AC is conferred concurrent jurisdiction, along with ITO, empowering him to make assessment order in the case of the assessee, there was no question of H forwarding the draft assessment order by the ITO to the IAC and this COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 871 SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. [A.K. SIKRl,J.]

unnecessary and superfluous exercise would not enure to the advantage A of the Revenue giving it the benefit of the period from 13 .03 .1984 to 31.08.1984 while calculating the period oflimitation 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 Bsent 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 !TAT found force in the said submission of the assessee and allowed the appeal thereby csetting 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 ofSLP(C) No.13766/2011 which is preferred by the assessee-DM/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 !AC till the date ofreceiving the instructions from the !AC under Section 1448 of the Act. We are, thus, faced with two E conflicting views and to decide as to which High Court has correctly decided the issue oflimitation. 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 F 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: G "153. Time-limit for completion of assessments and reassessments. - (I) No order of assessment shall be made under section 143 or section 144 at any ti me after - (a) the expiry of - ... (iii) two years from the end of the assessment year in which the H 872 SUPREME COURT REPORTS [2016] 4 S.C.R.

A income was first assessable, where such assessment year is an assessment year commencing en or after the l st day of April, 1969; or.... whichever is latest .... (3) The provisions of sub-sections ( 1) and (2) shall not apply to B the following classes of assessments, reassessments and re-com-putations which may, subject to the prov is ions 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 c effect to any finding or direction contained in an order under sec-tion 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 oflimitation for the pur-D poses of this section - ...

(iv) the period (not exceeding one hundred and eighty days) com-mencing from the date on which the Income-tax Officer forwards the draft order under sub-section (1) of section 1448 to the as-sessee and ending with the date on which the Income-tax Officer E receives the directions from the Inspecting Assistant Commis-sioner 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 re-ceived the declaration under sub-section ( 1) of section 15 8A and F 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 Jays down the jurisdiction of the !AC and G reads as under: "123. Jurisdiction oflnspectingAssistant 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 cla:;scs of mcome or of such cases or H classes of cases as the Commissioner may direct. COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 873 SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. [A.K. SlKRl,J.]

(2) Where any directions issued under sub-section (I) have assigned to A 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 concur-rent jurisdiction and shall perform such functions in relation to the said area or persons or classes of persons or incomes or classes of income Bor 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: c "124. Jurisdiction of Income-tax Officers. - (I) Income-tax Of-ficers 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 Commis-sioner may direct. D

(2) Where any directions issued under sub-section (I) have as-signed to two or more Income-tax Officers, the same area orthe 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 rela-tion to the said area, or persons or classes of persons, or incomes E or classes of income, or cases or classes of cases, in accordance with such general or special orders in writing as the Commis-sioner or the Inspecting Assistant Commissioner authorised by the Commissioner in this behalf may make for the purpose of facilitating the performance of such functions. F (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 G 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 H 874 SUPREME COURT REPORTS [2016] 4 S.C.R.

A Income-tax Officer has jurisdiction to assess any person, the ques-tion shall be determined by the Commissioner; or where the ques-tion is one relating to areas within the jurisdiction of different Com-missioners, by the Commissioners concerned or, if they are not in agreement, by the Board. B (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 (I) of section 139 or after the completion of the assessment, whichever is earlier:-c (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 asses-see calls in question the jurisdiction.of an Income-tax Officer, D then the Income- tax Officer shall, if not satisfied with the cor-rectness 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 sec-tion 130A, every Income-tax Officer shall have all the powers E conferred by or under this Act on an Income-tax Officer in re-spect 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 F 125A of the Act, to which we shall aClvert 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 G important provisions directly relevant for the controversy in issue are contained in Chapter XIV, namely, Sections I 44A and 1448 of the Act. Section 144A authorises the IAC to issue directions in certain cases and Sections 1448 provides that in certain cases reference is to be made to the IAC by the ITO before framing the final assessment order. Under H Section 144A, the !AC may, on his own motion or on a reference being COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 875 SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. [A.K. SIKRl,J.]

made to him by the ITO or on the application of an assessee, call for and A 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 Bare binding on the ITO. I 0. Section 1448 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 csub-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 !AC, after considering the draft order and the objections, is empowered to issue such directions as he D thinks fit for the guidance of the ITOto complete the assessment. I I .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 (I) of Section 1448 to the assessee and ending with the date on which the ITO receives the directions from the IAC E under sub-Section (4) of Section 1448, is to be excluded while computing the period oflimitation.

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 F 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 !AC. 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 !AC as well. G "12SA. Concurrent jurisdiction oflnspectingAssistant Commis-sioner 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 H 876 SUPREME COURT REPORTS [2016] 4 S.C.R. A 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 Com-missioner exercises concurrent jurisdiction with one or more In-B come-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 c 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 D particular proceeding or the initiation ofany proceeding under this Act: Provided that no instructions, which are prejudicial to the asses-see, shall be issued before an opportunity is given to the assessee to be heard. E Explanation. - For the purposes of this sub-section, no instruction as to the lines on which an investigation connected with the as-sessment should be made shall be deemed to be an instruction prejudicial to the assessee.

(4) Where an order is made under sub-section (l) and the In- F specting Assistant Commissioner exercises the powers or per-forms 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 con-G strued 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 Com-H COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 877 SAURASTHRACEMENT & CHEM. INDUSTRIES LTD. [A.K. SIKRl,J.] missioners have jurisdiction in respect of such areas or of such A persons or classes of persons or of s\.tch 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 func- 8 tions as per the order in writing made by the Commissioner speci-fying for the distribution and allocation of the work to be per-formed.

(ii) Similarly, under section 124( I), the Income-tax Officers are also required to perform their functions as per the direction of the c Commissioner. If there are two or more Income-tax Officers, they are having concurrent jurisdiction and are required to per-form 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 D Income-tax Officer shall have jurisdiction in respect of any per-son carrying on business or profession, ifthe 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, ifthe principal place of his business or profession is situate E within the area and in respect of any other person residing within the area. Sub-section (4) provides as to who shall decide the dis-pute arising with regard to the jurisdiction of an Income-tax Of-ficer to assess any person. Sub-section ( 5) provides that no per-son shall be entitled to call in question the jurisdiction of an In-come-tax Officer beyond the time-limit prescribed therein; F

(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 G of any specified person or class of persons, be exercised by the Inspecting Assistant Commissioner. By an order of the Commis-sionerunder section 125( I )(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-H 878 SUPREME COURT REPORTS [2016] 4 S.C.R. A 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 Commis-sioner. Where such order is made under section 125(2)(a), any provision of the Act requiring approval or sanction of the Inspect-ing Assistant Commissioner will not be applicable.B

(iv) Section l 25A carves out further exception with regard to the jurisdiction of an Income-tax Officer. It does not oust the jurisdic-tion oflncome Tax Officer but confers concurrent jurisdiction on the Inspecting Assistant Commissioner. It provides that the Com-missioner may, be general or special order in writing, direct thatc 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 Assis-D tant Commissioner. Sub-section (2) of section I 25A also empow-ers the Inspecting Assistant Commissioner to issue direction to the Income-tax Officer and the Income-taxOfficer 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 E instructions as may be issued to him for his guidance by the In-specting 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 clari-fies that no instructions which are prejudicial to the assessee shall F 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 I 25A with the submission that on the conferment of the concurrent jurisdiction, provisions of the Act requiring approval and the G sanction of the IAC are not applied and, therefore, the provisions of Section 1448 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 H COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 879 SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. [A.K. SIKRl,J.] available to the IAC, Central Range II, Ahmedabad, the IAC, Central A 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. B 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 c

(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 D Income-tax Officer shall be construed as references to the In-spectingAssistant Commissioner, and (ii) any provision of this Act requiring approval or sanction ofthe Inspecting Assistant Commissioner will not be applicable. E 15. Hence, the provision of the Act requiring the approval or sanc-tion 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 sec-tion I 25A( I) empowering the Inspecting Assistant Commissioner to perform the functions of an Income-tax Officer, yet if he has not exer- F ciseq the power or performed the function of an Income-tax Officer, the provisions requiring approval or sanction of the Inspecting Assistant Com-missioner 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 G 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 125 A of the Act is' that even when the IAC H 880 SUPREME COURT REPORTS [2016] 4 S.C.R. A 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 B 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 ifthe !AC exercises powers or performs the functions of an ITO. What is important is the c 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 D we reproduce hereunder the entire provision:

"(7) Nothing in this section shall apply to a case where an In-specting Assistant Commissioner exercises the powers or per-forms the functions of an income-tax Officer in pursuance of an order made under section 125 or section 125A." E 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 I 25A. 19. In the instant case, as already noted above, no such power was F 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 3 IO], which has taken the view that we have expressed above. We agree with the view taken in CIT vs. G Shree Digvijay Woollen Mills Ltd. thereby allowing Civil Appeal No. 2984 of2008 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 H COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 881 SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. [A.K. SIKRI,J.]

Allahabad High Court is dismissed affirming the view in the said case A which is reported as Commissioner o(lncome tax vs. Saraya Sugar Mills P. Ltd. [2011] 336 ITR 572 (All). 21. The Revenue shall be entitled to costs in both the appeals. K~lpana K. T~ipat_!iy Appeals disposed. B

(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 B [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 c 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: D 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 E 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 F

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 G 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 H 867 868 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 (ii) any provision of this Act requiring approval or sanction of the Inspecting Assistant Commissioner will not be applicable. [Para 14] [879-C-E)

c 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 D 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 E 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 F 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. G 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 H 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; 880-A-C] 2.4 Sub-Section (7) of Sectionl44B, 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 B ITO" in pursuance of an order made under Section 125 or Section 125A. [Para 18] [880-E-F]

2.5 In the instant case, it is not the IAC who exercised the powers or performed the functions of the ITO, even when such a power was conferred upon him, concurrently with the ITO. C [Para 16) [879-G-H] CIT v. Shree Digvijay Woollen Mills Ltd. (1995) 212 ITR 310 - approved. Commissioner of Income tax v. Saraya Sugar Mills P. Ltd. (2011) 336 ITR 572 (All) - referred to. D Case Law Reference (1995) 212 ITR 310 approved Para 19 (2011) 336 ITR 572 (All) referred to Para 20 E CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2984 of 2008. From the Judgment and Order dated 12.01.2005 of the High Court of Gujarat at Ahmedabad in Income Tax Reference No. 193 of 1992 WITH F SLP(C)No.13766of2011. K. Radhakrishna, Rupesh Kumar, Ms. Niranjana Singh, Ms. Anil Katiyar, Bhargava V. Desai, Ms. Saumya Mehrotra, Ms. Shweta Garg, Rakesh Garg and A. G. Garg, Advocates for the appearing parties. G The Judgment of the Court was delivered by A.K. SIKRI,J. I. Leave granted in SLP(C) No. 13766/2011. 2. The Commissioner oflncome Tax, Gujarat Central, Ahmedabad-the appellant (hereinafter referred to as "the Revenue"), is aggrieved by H 870 SUPREME COURT REPORTS [20 I 6) 4 S.C.R.

A 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 "!TAT") holdingthatthe assessment order dated 0 I .09. I 984 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 B I 53 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 c 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 OJ .09.1984. The Revenue claimed that this assessment order was still within the prescribed period oflimitation because of the reason that on 13 .03 .1984 draft assessment order was passed pertaining to the aforesaid D Assessment Year and forwarded to the Inspecting Assistant Commissioner, Central Range-II, Ahmedabad (hereinafter referred to as "the !AC") on 13 .03.1984 (i.e. before 31 .03 .1984 ). The !AC issued instructions under Section 1448 of the Act on 3 I .08. I 984 and based on that the Assessing Officer framed the assessment on OJ .09.1984 under E Section 143(3) of the Act read with Section 1448 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 !AC, had to be excluded while computing the period oflimitation of two years and once the period is excluded the assessment order was passed within F the period of limitation. The contention of the respondent/assessee, on the other hand, was that, by order dated 29.08. I 983, the Commissioner of Income Tax, Central, Ahmedabad (hereinafter referred to as "the CIT") passed under Section I 25A( I) 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 G 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. I 983 passed by the CIT, the !AC is conferred concurrent jurisdiction, along with ITO, empowering him to make assessment order in the case of the assessee, there was no question of H forwarding the draft assessment order by the ITO to the IAC and this COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 871 SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. [A.K. SIKRl,J.]

unnecessary and superfluous exercise would not enure to the advantage A of the Revenue giving it the benefit of the period from 13 .03 .1984 to 31.08.1984 while calculating the period oflimitation 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 Bsent 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 !TAT found force in the said submission of the assessee and allowed the appeal thereby csetting 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 ofSLP(C) No.13766/2011 which is preferred by the assessee-DM/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 !AC till the date ofreceiving the instructions from the !AC under Section 1448 of the Act. We are, thus, faced with two E conflicting views and to decide as to which High Court has correctly decided the issue oflimitation. 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 F 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: G "153. Time-limit for completion of assessments and reassessments. - (I) No order of assessment shall be made under section 143 or section 144 at any ti me after - (a) the expiry of - ... (iii) two years from the end of the assessment year in which the H 872 SUPREME COURT REPORTS [2016] 4 S.C.R.

A income was first assessable, where such assessment year is an assessment year commencing en or after the l st day of April, 1969; or.... whichever is latest .... (3) The provisions of sub-sections ( 1) and (2) shall not apply to B the following classes of assessments, reassessments and re-com-putations which may, subject to the prov is ions 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 c effect to any finding or direction contained in an order under sec-tion 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 oflimitation for the pur-D poses of this section - ...

(iv) the period (not exceeding one hundred and eighty days) com-mencing from the date on which the Income-tax Officer forwards the draft order under sub-section (1) of section 1448 to the as-sessee and ending with the date on which the Income-tax Officer E receives the directions from the Inspecting Assistant Commis-sioner 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 re-ceived the declaration under sub-section ( 1) of section 15 8A and F 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 Jays down the jurisdiction of the !AC and G reads as under: "123. Jurisdiction oflnspectingAssistant 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 cla:;scs of mcome or of such cases or H classes of cases as the Commissioner may direct. COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 873 SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. [A.K. SlKRl,J.]

(2) Where any directions issued under sub-section (I) have assigned to A 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 concur-rent jurisdiction and shall perform such functions in relation to the said area or persons or classes of persons or incomes or classes of income Bor 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: c "124. Jurisdiction of Income-tax Officers. - (I) Income-tax Of-ficers 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 Commis-sioner may direct. D

(2) Where any directions issued under sub-section (I) have as-signed to two or more Income-tax Officers, the same area orthe 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 rela-tion to the said area, or persons or classes of persons, or incomes E or classes of income, or cases or classes of cases, in accordance with such general or special orders in writing as the Commis-sioner or the Inspecting Assistant Commissioner authorised by the Commissioner in this behalf may make for the purpose of facilitating the performance of such functions. F (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 G 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 H 874 SUPREME COURT REPORTS [2016] 4 S.C.R.

A Income-tax Officer has jurisdiction to assess any person, the ques-tion shall be determined by the Commissioner; or where the ques-tion is one relating to areas within the jurisdiction of different Com-missioners, by the Commissioners concerned or, if they are not in agreement, by the Board. B (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 (I) of section 139 or after the completion of the assessment, whichever is earlier:-c (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 asses-see calls in question the jurisdiction.of an Income-tax Officer, D then the Income- tax Officer shall, if not satisfied with the cor-rectness 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 sec-tion 130A, every Income-tax Officer shall have all the powers E conferred by or under this Act on an Income-tax Officer in re-spect 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 F 125A of the Act, to which we shall aClvert 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 G important provisions directly relevant for the controversy in issue are contained in Chapter XIV, namely, Sections I 44A and 1448 of the Act. Section 144A authorises the IAC to issue directions in certain cases and Sections 1448 provides that in certain cases reference is to be made to the IAC by the ITO before framing the final assessment order. Under H Section 144A, the !AC may, on his own motion or on a reference being COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 875 SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. [A.K. SIKRl,J.]

made to him by the ITO or on the application of an assessee, call for and A 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 Bare binding on the ITO. I 0. Section 1448 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 csub-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 !AC, after considering the draft order and the objections, is empowered to issue such directions as he D thinks fit for the guidance of the ITOto complete the assessment. I I .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 (I) of Section 1448 to the assessee and ending with the date on which the ITO receives the directions from the IAC E under sub-Section (4) of Section 1448, is to be excluded while computing the period oflimitation.

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 F 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 !AC. 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 !AC as well. G "12SA. Concurrent jurisdiction oflnspectingAssistant Commis-sioner 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 H 876 SUPREME COURT REPORTS [2016] 4 S.C.R. A 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 Com-missioner exercises concurrent jurisdiction with one or more In-B come-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 c 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 D particular proceeding or the initiation ofany proceeding under this Act: Provided that no instructions, which are prejudicial to the asses-see, shall be issued before an opportunity is given to the assessee to be heard. E Explanation. - For the purposes of this sub-section, no instruction as to the lines on which an investigation connected with the as-sessment should be made shall be deemed to be an instruction prejudicial to the assessee.

(4) Where an order is made under sub-section (l) and the In- F specting Assistant Commissioner exercises the powers or per-forms 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 con-G strued 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 Com-H COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 877 SAURASTHRACEMENT & CHEM. INDUSTRIES LTD. [A.K. SIKRl,J.] missioners have jurisdiction in respect of such areas or of such A persons or classes of persons or of s\.tch 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 func- 8 tions as per the order in writing made by the Commissioner speci-fying for the distribution and allocation of the work to be per-formed.

(ii) Similarly, under section 124( I), the Income-tax Officers are also required to perform their functions as per the direction of the c Commissioner. If there are two or more Income-tax Officers, they are having concurrent jurisdiction and are required to per-form 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 D Income-tax Officer shall have jurisdiction in respect of any per-son carrying on business or profession, ifthe 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, ifthe principal place of his business or profession is situate E within the area and in respect of any other person residing within the area. Sub-section (4) provides as to who shall decide the dis-pute arising with regard to the jurisdiction of an Income-tax Of-ficer to assess any person. Sub-section ( 5) provides that no per-son shall be entitled to call in question the jurisdiction of an In-come-tax Officer beyond the time-limit prescribed therein; F

(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 G of any specified person or class of persons, be exercised by the Inspecting Assistant Commissioner. By an order of the Commis-sionerunder section 125( I )(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-H 878 SUPREME COURT REPORTS [2016] 4 S.C.R. A 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 Commis-sioner. Where such order is made under section 125(2)(a), any provision of the Act requiring approval or sanction of the Inspect-ing Assistant Commissioner will not be applicable.B

(iv) Section l 25A carves out further exception with regard to the jurisdiction of an Income-tax Officer. It does not oust the jurisdic-tion oflncome Tax Officer but confers concurrent jurisdiction on the Inspecting Assistant Commissioner. It provides that the Com-missioner may, be general or special order in writing, direct thatc 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 Assis-D tant Commissioner. Sub-section (2) of section I 25A also empow-ers the Inspecting Assistant Commissioner to issue direction to the Income-tax Officer and the Income-taxOfficer 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 E instructions as may be issued to him for his guidance by the In-specting 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 clari-fies that no instructions which are prejudicial to the assessee shall F 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 I 25A with the submission that on the conferment of the concurrent jurisdiction, provisions of the Act requiring approval and the G sanction of the IAC are not applied and, therefore, the provisions of Section 1448 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 H COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 879 SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. [A.K. SIKRl,J.] available to the IAC, Central Range II, Ahmedabad, the IAC, Central A 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. B 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 c

(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 D Income-tax Officer shall be construed as references to the In-spectingAssistant Commissioner, and (ii) any provision of this Act requiring approval or sanction ofthe Inspecting Assistant Commissioner will not be applicable. E 15. Hence, the provision of the Act requiring the approval or sanc-tion 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 sec-tion I 25A( I) empowering the Inspecting Assistant Commissioner to perform the functions of an Income-tax Officer, yet if he has not exer- F ciseq the power or performed the function of an Income-tax Officer, the provisions requiring approval or sanction of the Inspecting Assistant Com-missioner 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 G 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 125 A of the Act is' that even when the IAC H 880 SUPREME COURT REPORTS [2016] 4 S.C.R. A 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 B 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 ifthe !AC exercises powers or performs the functions of an ITO. What is important is the c 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 D we reproduce hereunder the entire provision:

"(7) Nothing in this section shall apply to a case where an In-specting Assistant Commissioner exercises the powers or per-forms the functions of an income-tax Officer in pursuance of an order made under section 125 or section 125A." E 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 I 25A. 19. In the instant case, as already noted above, no such power was F 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 3 IO], which has taken the view that we have expressed above. We agree with the view taken in CIT vs. G Shree Digvijay Woollen Mills Ltd. thereby allowing Civil Appeal No. 2984 of2008 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 H COMMISSIONER OF INCOME TAX, GUJARAT CENTRAL v. 881 SAURASTHRA CEMENT & CHEM. INDUSTRIES LTD. [A.K. SIKRI,J.]

Allahabad High Court is dismissed affirming the view in the said case A which is reported as Commissioner o(lncome tax vs. Saraya Sugar Mills P. Ltd. [2011] 336 ITR 572 (All). 21. The Revenue shall be entitled to costs in both the appeals. K~lpana K. T~ipat_!iy Appeals disposed. B