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2011 (12) TMI 426 - AT - Income TaxLimitation period of Completing Assessment u/s 153(1) - AO passed the assessment orders before the expiration of the limitation period but the said orders were sent for communication to the assessee after the expiry of the time limit for passing the assessment orders. Ld. CIT (A) held that the said assessment orders are barred by limitation and accordingly are ineffective and non-est in law as per sec. 153(1) - HELD THAT - The said Assessment orders, though made on time, were served on the assessee after 85 days from the date of order. Also, there is no material in the assessment record which could indicate that initiative was taken by the AO to serve the assessment orders along with demand notice immediately after passing of the assessment orders. The decisions in the cases of B.J. SHELAT VERSUS STATE OF GUJARAT 1978 (3) TMI 209 - SUPREME COURT , as well as the decision of hon'ble Kolkata High Court, in the case of MOHENDRA J. THACKER AND CO. VERSUS COMMISSIONER OF INCOME-TAX, WEST BENGAL 1981 (6) TMI 13 - CALCUTTA HIGH COURT , were followed, where it was categorically held that the communication is a condition precedent to an order of assessment becoming effective. Thus, the impugned orders passed by the ld. CIT(A) are perfectly valid and sustainable for legal scrutiny. Thus, upheld. Decision in favour of Assessee.
Issues Involved:
1. Interpretation of Section 153(1) of the Income-tax Act, 1961 regarding the time limit for making and serving assessment orders. 2. Validity of assessment orders and demand notices served after the statutory period. 3. Opportunity for the Assessing Officer to produce evidence during appellate proceedings. 4. Reliance on judicial precedents by the Commissioner of Income-tax (Appeals). Detailed Analysis: Issue 1: Interpretation of Section 153(1) of the Income-tax Act, 1961 The Department contended that the Commissioner of Income-tax (Appeals) erred in interpreting Section 153(1) by holding that assessment orders and demand notices must be served within the statutory period for them to be valid. The Department argued that the statute only requires the orders to be made within the period, not necessarily served. The Tribunal found that the assessment orders were indeed made on December 29, 2009, but were served on the assessee on March 26, 2010, beyond the statutory period. The Tribunal upheld the Commissioner of Income-tax (Appeals)'s interpretation that for an assessment order to be effective, it must be communicated within the limitation period. Issue 2: Validity of Assessment Orders and Demand Notices Served After the Statutory Period The assessee argued that the assessment orders, although made within the statutory period, were not served until after the period had expired, rendering them invalid. The Tribunal supported this view, referencing judicial precedents that an order becomes effective only upon communication. The Tribunal noted that there was an unexplained delay of approximately three months in serving the orders, leading to the conclusion that the orders were non est and ineffective in law. Issue 3: Opportunity for the Assessing Officer to Produce Evidence During Appellate Proceedings The Department claimed that the Commissioner of Income-tax (Appeals) did not provide the Assessing Officer an opportunity to produce evidence proving that the assessment orders were made within the prescribed time. The Tribunal found no indication in the assessment record that the Assessing Officer took steps to serve the orders promptly after making them. The Tribunal upheld the Commissioner of Income-tax (Appeals)'s decision, noting the lack of evidence to justify the delay. Issue 4: Reliance on Judicial Precedents by the Commissioner of Income-tax (Appeals) The Department argued that the Commissioner of Income-tax (Appeals) inappropriately relied on the decision of the Income-tax Appellate Tribunal, Jodhpur Bench, and ignored other relevant judicial decisions. The Tribunal reviewed the cited cases and found them distinguishable based on the facts, particularly the length of the delay in serving the orders. The Tribunal emphasized the principle established by higher courts that communication is essential for an order to be effective. The Tribunal upheld the Commissioner of Income-tax (Appeals)'s reliance on precedents that supported the requirement for timely communication of assessment orders. Conclusion: The Tribunal dismissed the Department's appeals and upheld the Commissioner of Income-tax (Appeals)'s orders, concluding that the assessment orders were barred by limitation due to the delayed service. The cross-objections filed by the assessee, supporting the Commissioner of Income-tax (Appeals)'s decisions, were also disposed of accordingly. The Tribunal reinforced the importance of timely communication of assessment orders for their validity under Section 153(1) of the Income-tax Act, 1961.
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