2008 (5) TMI 695 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment orders being time-barred under section 153(2) of the Income-tax Act.
2. Computation of the limitation period for completing reassessment.
3. Applicability of amended provisions of section 153(2) as per Finance Act, 2001.
4. Exclusion of the period during which assessment proceedings were stayed by the court.
5. Relevance of the date of the court's order versus the date of receipt of the court's order by the Assessing Officer.

Detailed Analysis:

1. Validity of the Assessment Orders Being Time-Barred:
The appeals were filed by the revenue against the orders of CIT(A) for the assessment years 1994-95, 1995-96, and 1996-97, contending that the assessment orders passed by the Assessing Officer were null and void as they were time-barred under section 153(2) of the Income-tax Act. The CIT(A) held that the assessment orders were time-barred after considering the period of stay granted by the Hon'ble Allahabad High Court and the relevant provisions of section 153(2).

2. Computation of the Limitation Period for Completing Reassessment:
The CIT(A) observed that the period available to the Assessing Officer to complete reassessment was one year from the end of the financial year in which the notice under section 148 was served, excluding the period of stay granted by the court. The CIT(A) rejected the Assessing Officer's contention that the period of stay should be deemed extended until the date of knowledge of the dismissal of the writ petition by the Assessing Officer. The CIT(A) emphasized that the material date was the date of the court's order, not the date of its receipt by the Assessing Officer.

3. Applicability of Amended Provisions of Section 153(2) as per Finance Act, 2001:
The CIT(A) applied the amended provisions of section 153(2) brought by the Finance Act, 2001, which reduced the time limit for completing reassessment to one year. The CIT(A) cited departmental circulars and judicial precedents to support the application of the amended provisions. The ITAT agreed with the CIT(A) that the amended provisions were applicable at the time of framing the assessment, and not the provisions as they stood when the notice under section 148 was served.

4. Exclusion of the Period During Which Assessment Proceedings Were Stayed by the Court:
The CIT(A) excluded the period of stay granted by the Hon'ble Allahabad High Court while computing the limitation period. The CIT(A) noted that the stay orders were vacated on specific dates, and the remaining period for completing the assessment had to be calculated from the date of the court's order. The CIT(A) concluded that the assessments were time-barred as they were completed beyond the permissible period after excluding the stay period.

5. Relevance of the Date of the Court's Order Versus the Date of Receipt of the Court's Order by the Assessing Officer:
The CIT(A) and the ITAT both held that the relevant date for computing the limitation period was the date of the court's order, not the date of receipt of the order by the Assessing Officer. The CIT(A) emphasized that the date of pronouncement in open court was material, and the date of knowledge of the order by the Assessing Officer was immaterial.

Conclusion:
The ITAT upheld the CIT(A)'s decision that the assessment orders were time-barred under section 153(2) of the Income-tax Act. The ITAT agreed with the CIT(A) on the computation of the limitation period, the applicability of the amended provisions of section 153(2), and the exclusion of the stay period. The ITAT confirmed that the relevant date for computing the limitation period was the date of the court's order. Consequently, the appeals of the revenue were dismissed.