2024 (2) TMI 1381 - HC - Income Tax

Validity of Revision proceedings u/s 263 - period of limitation - whether the period of limitation for passing u/s 263 has to be reckoned from the date of original assessment order or from the date of reassessment order? - HELD THAT - As decided in Industrial Development Bank of India Ltd. 2023 (6) TMI 1047 - SUPREME COURT once an Order of Assessment is re-opened the previous order of assessment will be held to be set aside and the whole proceedings would start afresh but the same would not mean that even when the subject matter of re-assessment is distinct and different the entire proceedings of assessment would be deemed to have been re-opened. Meaning thereby only in a case where the issues before the Commissioner at the time of exercising powers u/s 263 of the Act relate to the subject matter of re-assessment the limitation would start from the date of Re-assessment Order. However if the subject matter of the re-assessment is distinct and different in that case the relevant date for the purpose of determination of period of limitation for exercising powers u/s 263 of the Act would be the date of the original Assessment Order. Thus for the purposes of exercising powers u/s 263 the period of limitation for passing the order has to be reckoned from the date of original assessment order and not from the date of reassessment order. Decided in favour of assessee.

Summary

Issues involved: Determination of the period of limitation for passing orders u/s 263 of the Income Tax Act, 1961.

Summary:
The High Court considered a petition requesting early listing based on a recent Supreme Court decision. The main issue was whether the period of limitation for passing orders u/s 263 of the Income Tax Act should be calculated from the original assessment order or the reassessment order. The Supreme Court's ruling in Commissioner of Income Tax Vs. Industrial Development Bank of India Ltd. clarified that the limitation starts from the original assessment order, not the reassessment order. This decision was supported by a previous case law. Consequently, the High Court held that the notice in question was without jurisdiction and time-barred, and thus set it aside. The respondents did not dispute this legal position, leading to the petition being allowed.