2019 (1) TMI 286 - AT - Income Tax

Validity of the assessment u/s 143(3) - period of limitation - assessment was completed u/s 143(3) by an order dated 04.03.2012, the said order was served on the assessee on 05.12.2013 with inordinate delay of 9 months - Held that - In the instant case, there was a delay of 9 months in serving the demand notice and the assessment order on the assessee. The department did not explain the reasons for service of the said notice and the assessment order with 9 months delay. Therefore, we hold that there is no material to believe that the assessment order was passed on 04.03.2013. Accordingly, we hold that the assessment order passed u/s 143(3) is barred by limitation and the same is annulled and the appeal of the assessee is allowed.

Summary

Issues: Validity of assessment order passed under section 143(3) of the Income Tax Act, 1961 due to delay in serving the order.

Analysis:
1. The appellant challenged the assessment order passed under section 143(3) of the Income Tax Act, 1961, for the Assessment Year 2010-11, citing a delay in serving the order. The order was stated to have been passed on 04.03.2013 but was served on the assessee on 05.12.2013, causing a delay of 9 months. The appellant contended that the delay rendered the order invalid as it exceeded the limitation period specified in the Act.

2. The Commissioner of Income Tax (Appeals) upheld the validity of the assessment order, stating that there is no time limit specified in the Act for serving the assessment order. The Commissioner relied on a decision of the Hon’ble High Court of Calcutta to support this stance, emphasizing that the service of the assessment order and demand notice does not invalidate the order even if served with a delay within the limitation period.

3. The appellant argued before the Tribunal that the delay in serving the assessment order raised doubts about the order's validity, as it was served after the time limit allowed under the Act. The Departmental Representative supported the Commissioner's decision.

4. The Tribunal analyzed the case, noting that while there is a limitation period for passing the assessment order, there is no specific time limit for serving the order under section 143(3). However, the order must be served within a reasonable time, as established by various high court decisions. The Tribunal found that the department failed to provide evidence that the order was passed on 04.03.2013, and did not justify the 9-month delay in serving the order.

5. Relying on legal precedents, including a decision by the Hon’ble Supreme Court, the Tribunal concluded that the delay in serving the assessment order and demand notice for 9 months without any explanation from the department indicated that the order was not passed within the time limit allowed under section 143(3). Consequently, the Tribunal annulled the assessment order, holding it to be barred by limitation.

6. As a result of annulling the assessment order, the Tribunal deemed it unnecessary to adjudicate the issue on merits, and therefore allowed the appeal of the assessee. The appeal was allowed, and the order was pronounced on 3rd January 2019.