2017 (1) TMI 1296 - HC - Income Tax

Assessment made beyond the period of limitation - applicability of Section 153 (2A) for ascertaining the limitation period - Held that - Tribunal has held that assessment was made beyond the period of limitation relying on Gujrat High Court judgment in CIT Vs Purshottamdas T. Patel 1993 (8) TMI 21 - GUJARAT High Court As appellant, submitted that there was no order of setting aside original assessment and therefore, provisions of Section 153(2A) will not apply but it is case covered by Section 153(3) wherein no period of limitation has been provided. However, learned counsel for appellant could not dispute that the order passed by Tribunal directed Assessing Authority to decide issues afresh and pursuant thereto fresh assessment has been made by Assessing Officer meaning thereby it was not a case under Section 153(3) hence, in our view no substantial question of law has arisen.

Summary

Issues:
1. Interpretation of Section 153(2A) for limitation period in income tax assessment.
2. Applicability of Section 153(3) in the assessment process.
3. Validity of the assessment order based on the limitation period.

Analysis:

Issue 1: Interpretation of Section 153(2A)
The appeal raised questions regarding the correctness of applying Section 153(2A) for determining the limitation period for a consequential order by the Assessing Officer. The Tribunal had set aside the appellate order of the CIT(A) but not the original assessment order. The Revenue contended that the Tribunal erred in upholding the applicability of Section 153(2A) in this scenario. However, the Assessee argued that the assessment order was time-barred under Section 153(2A), and thus, the Tribunal rightly set it aside. The High Court noted the sequence of events, including the Tribunal's directions to the Assessing Officer, and concluded that no substantial question of law arose from the impugned judgment.

Issue 2: Applicability of Section 153(3)
Another contention was whether the Tribunal should have considered the applicability of Section 153(3) to the consequential order passed by the Assessing Officer. The Revenue argued that the Tribunal erred in not adjudicating on this aspect. However, the High Court observed that the circumstances did not fall under Section 153(3) as the Assessing Officer was directed to reevaluate the issues, indicating that it was not a case under Section 153(3). Therefore, the Court found no substantial question of law in this regard.

Issue 3: Validity of the assessment order
The assessment process revealed that the original assessment order was not set aside, and the subsequent assessment was completed after the expiration of the limitation period. The High Court acknowledged that the assessment was indeed made beyond the prescribed period, relying on a precedent from the Gujarat High Court. The Assessee's argument that Section 153(2A) did not apply due to the absence of an order setting aside the original assessment was countered by the fact that the Tribunal's directions necessitated a fresh assessment. Consequently, the Court dismissed the appeal, affirming the Tribunal's decision on the limitation issue.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the application of relevant provisions of the Income Tax Act and the specific circumstances of the case to determine the validity of the assessment order and the associated limitation period.