2014 (6) TMI 885 - AT - Income Tax

Validity of assessment order passed - Bar of limitation - Held that - time limit for completing the assessment is within 9 months from the end of the relevant assessment year in which the order is passed by the Commissioner of Income-tax under section 263. In the present case, the order was passed by the Commissioner of Income-tax under section 263 on March 8, 2010 and, therefore, the time limit for passing the consequential order expires on December 31, 2010. Under these facts, we are of the considered opinion that the Commissioner of Income-tax (Appeals) has rightly held that this assessment order is passed by the Assessing Officer after the expiry of the limitation and therefore, he has rightly annulled this assessment order. - Decided against Revenue.

Issues:
1. Validity of assessment order under section 13(3)/263 of the Income-tax Act, 1961.
2. Opportunity of being heard under section 250 of the Income-tax Act, 1961.
3. Applicability of time limit under section 153(2A) of the Income-tax Act, 1961.
4. Appeal against the order of the Commissioner of Income-tax (Appeals).
5. Interpretation of the second proviso to sub-section (2A) of section 153.

Analysis:
1. The appeal before the Appellate Tribunal concerned the Revenue's challenge against the order passed by the Commissioner of Income-tax (Appeals)-II, Kanpur, related to the assessment year 2006-2007. The Revenue contended that the assessment order was annulled by the Commissioner without considering the assessee's cooperation during the assessment proceedings. The Tribunal reviewed the facts, including the dates of proceedings and cooperation, and upheld the Commissioner's decision, emphasizing the importance of adhering to statutory timelines.

2. The Revenue further argued that the Commissioner erred in annulling the assessment order without granting an opportunity to be heard under section 250 of the Income-tax Act, 1961. The Tribunal examined the procedural aspects and found that the Commissioner's decision was based on the assessment order being beyond the statutory time limit, rather than a lack of opportunity to be heard. As a result, the Tribunal upheld the annulment of the assessment order.

3. The issue of the time limit for completing the assessment under section 153(2A) was crucial in this case. The Tribunal analyzed the relevant provisions and noted that the assessment order in question was passed after the expiry of the limitation period set by the statute. By considering the date of the Commissioner's order under section 263 and the subsequent assessment completion date, the Tribunal affirmed the Commissioner's decision to annul the assessment order due to exceeding the prescribed time limit.

4. The Tribunal also addressed the appeal filed by the assessee against the assessment order. The Commissioner of Income-tax (Appeals) had relied on judicial pronouncements to support the decision to annul the assessment order based on statutory limitations. The Tribunal reviewed these arguments and upheld the decision, emphasizing the importance of adhering to legal provisions and precedents in tax matters.

5. Lastly, the Tribunal interpreted the second proviso to sub-section (2A) of section 153 to clarify the time limit for completing assessments. By examining the specific language of the provision and its applicability to the case at hand, the Tribunal concluded that the assessment order was rightly annulled by the Commissioner of Income-tax (Appeals) due to exceeding the prescribed time limit. Consequently, the Tribunal dismissed the appeal of the Revenue, affirming the decision of the lower authorities.

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