2016 (2) TMI 794 - AT - Income Tax

Validity of assessment - rectification of mistake - barred by limitation u/s. 153(2A) - Held that - No assessment is possible after the expiry of period of limitation, the provisions of section 153(2A) of the Act are absolute and they impose a fetter on income tax authorities to make a set-aside assessment after the expiry of periods mentioned in this sub-section. This is a statutory fetter which is not for the assessee to relax or waive or vice versa. The power to make assessment lapses completely upon the expiry of the periods mentioned in the section. The argument of Ld. DR that the assessee s case falls u/s. 153(3), which, inter alia, lays down that the provisions of sub-section 1 and 2 of section 153 shall not apply to assessments made on the assessee in order to give effect to any direction contained in an order u/s. 254 of the Act. But in the present case, the Tribunal has completely set aside the assessment on the abovementioned issue and directed the AO to reframe the assessment afresh. This provision of section 153(3), in the given facts of the case, is subject to the provisions of section 153(2A) of the Act. In other words, if a matter falls u/s. 153(2A) of the Act i.e. if the Tribunal has set aside or cancelled the assessment, then the fresh order by the AO of assessment shall be passed within the period as prescribed u/s. 153(2A) of the Act. Here, in the present case, assessee s case clearly falls under the 2 nd proviso to section 153(2A) of the Act. Therefore, in the present case, framing of order of assessment by the AO, of set aside assessment after expiry of limitation in terms of section 153(2A) of the Act is invalid. This ground of assessee s appeal on limitation is allowed. - Decided in favour of assessee.

Summary

Issues:
1. Whether the assessment is barred by limitation u/s. 153(2A) of the Income Tax Act, 1961?

Analysis:

The appeal before the Appellate Tribunal ITAT Kolkata arose from the order of CIT(A), Central-1, Kolkata regarding the assessment framed by JCIT(OSD), Central Circle-III, Kolkata for AY 2004-05. The primary issue raised by the assessee was the limitation of the assessment under section 153(2A) of the Act. The assessee contended that the order was invalid for not following the directions of the Hon'ble Tribunal and that the assessment should be considered barred by limitation. The Tribunal noted that the original assessment was set aside by ITAT for verification of certain facts related to the deduction u/s. 33AC. The subsequent assessment by the AO was challenged by the assessee on the grounds of limitation. The Tribunal examined the provisions of section 153(2A) and referred to a similar case where it was held that the time limit for fresh assessment after a Tribunal's order is absolute and cannot be extended. The Tribunal emphasized that the power to make assessment lapses upon the expiry of the specified period, and in this case, the assessment was invalid due to being beyond the limitation period. The Tribunal further clarified that the provisions of section 153(3) do not apply when the assessment is set aside by the Tribunal, falling under section 153(2A). Consequently, the Tribunal allowed the assessee's appeal on the limitation issue, rendering the assessment order invalid due to being time-barred.

Since the Tribunal found in favor of the assessee on the limitation issue, it deemed the assessment order as invalid. Therefore, the Tribunal did not delve into the merit of the case, as the limitation issue made the other issues moot. The Tribunal's decision was based on the statutory provisions of section 153(2A) of the Act, which impose a strict time limit on making fresh assessments after a Tribunal's order. The Tribunal's ruling emphasized the importance of adhering to the prescribed time limits in such cases, highlighting the absolute nature of the limitation period. As a result, the Tribunal allowed the assessee's appeal, concluding that the assessment order was barred by limitation and therefore invalid.