2013 (8) TMI 439 - AT - Income Tax

Validity of assessment orders - Assessment orders server after expiry of period of limitation - the assessment orders in these cases though made on December 31 2009 those were served on the assessee on May 10 2010 i.e. after 130 days from the date of order. - Held that - It is found that undisputedly the assessment orders though passed before the period of limitation contemplated under the relevant provisions of law the copies of the orders were served to the assessee after the expiration of the limitation provided under the relevant provision. - assessments are barred by limitation - appeals of the assessee are allowed on question of law - Following decision of Shanti Lal Godawat v. Asst. CIT 2009 (7) TMI 829 - ITAT JODHPUR and K. Joseph Jacob v. Agricultural Income-tax Officer 1990 (11) TMI 75 - KERALA High Court - Decided against Revenue.

Issues Involved:
1. Limitation period for the assessment orders.
2. Validity of the assessment orders based on delayed communication.
3. Merits of the additions made by the Assessing Officer.

Detailed Analysis:

Limitation Period for the Assessment Orders:
The primary issue revolves around whether the assessment orders passed by the Assessing Officer on December 31, 2009, and served on May 10, 2010, were within the statutory limitation period as per section 153(2) of the Income-tax Act, 1961. The Commissioner of Income-tax (Appeals) concluded that the orders were barred by limitation due to the delay in communication, rendering them non est and ineffective under law. This was challenged by the Department, asserting that the orders were passed within the statutory time limit and that service of the orders is not a condition precedent for their effectiveness.

Validity of the Assessment Orders Based on Delayed Communication:
The Commissioner of Income-tax (Appeals) held that the assessment orders must be communicated to the assessees within the limitation period to be effective. This view was supported by various judicial pronouncements, including the apex court's decision in B. J. Shelat v. State of Gujarat, which held that an order takes effect only upon communication. The learned Departmental representative cited several cases to argue that delayed communication does not invalidate the assessment orders, but these cases were distinguished based on their facts, particularly the shorter delays involved compared to the present case's 130-day delay.

Merits of the Additions Made by the Assessing Officer:
Since the Commissioner of Income-tax (Appeals) quashed the assessment orders on the ground of limitation, the merits of the additions made by the Assessing Officer were not adjudicated. The assessees raised additional grounds to challenge the merits of the additions in case the appeals of the Department were allowed. However, the Tribunal upheld the Commissioner of Income-tax (Appeals)'s decision, rendering the discussion on the merits of the additions moot.

Conclusion:
The Tribunal upheld the Commissioner of Income-tax (Appeals)'s orders, concluding that the assessment orders were barred by limitation due to delayed communication. The appeals filed by the Department were dismissed, and the cross-objections filed by the assessees were disposed of accordingly. The Tribunal relied on judicial precedents that emphasize the necessity of communication for an order to be effective, thus supporting the view that the delayed service rendered the assessment orders non est and ineffective under law.

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