2019 (8) TMI 1054 - AT - Income Tax

Revision u/s 263 - period of limitation - limitation provide for passing of order - impact of unreasonable delay in service of order - HELD THAT - In the instant case though the Ld.PCIT stated to have passed the order on 27.03.2017 the department could not place any evidence to show that the order was dispatched for service to the assessee within reasonable time. The proceedings would be completed only after passing he order and communicated the same to the assessee. Unless the communication is sent to the assessee by serving the order it could not be held to be passed and does not serve the intended purpose. The department could not demonstrate with tangible evidence that the order was passed within time limit permitted in the act and failed to explain the reasons for such a long delay in serving the order to the assessee. Even to the AO the order was served on the on 18.12.2017 which supports the contention of the assessee that the order was back dated. No other evidence was produced by the departmental representative to show that the cited order was passed u/s 263 before 31.03.2017 and sent for dispatch within a reasonable time. Delay involved in the instant case was more than 9 months which is unreasonable and the department could not explain the reasons for such long delay in serving the order to the assessee as well as the AO we hold that the order was passed beyond the time limit allowed under the Act hence the order passed u/s 263 was unsustainable and quashed. Accordingly the appeal of the assessee is allowed.

Summary

Issues:
1. Validity of the order passed under section 263 by the Pr.CIT-1 and whether it was barred by limitation.

Analysis:
The appeal was filed by the assessee against the order of the Pr.Commissioner of Income Tax [Pr.CIT]-1, Visakhapatnam for the Assessment Year 2012-13. The main issue raised in Ground No. 1 was regarding the order passed under section 263 by the Ld Pr.CIT-1 and whether it was barred by limitation. The assessee contended that the order was served after the prescribed time limit of 31.03.2017, thus making it invalid. The Ld.AR provided evidence of the order being served on 26.12.2017, nine months after the alleged passing of the order. The department argued that the order was passed before the deadline and hence valid. The Tribunal examined the evidence presented and found that the order was indeed served after a significant delay of 9 months, both to the assessee and the Assessing Officer. The department failed to provide a reasonable explanation for the delay in serving the order.

The Tribunal referred to previous judgments, including one by the Hon'ble Supreme Court, emphasizing the importance of timely communication of orders to the parties involved. It was noted that in similar cases, orders served after significant delays were deemed invalid. The Tribunal highlighted the necessity of serving orders within a reasonable time frame, as held by various High Courts. The department's reliance on a Supreme Court decision was found inapplicable to the present case due to the unexplained delay in serving the order. The Tribunal concluded that the order passed under section 263 was unsustainable and quashed, ultimately allowing the appeal of the assessee.

The judgment emphasized the importance of adherence to statutory timelines in passing and communicating orders under the Income Tax Act. It underscored that the effectiveness of an order lies in its timely communication to the concerned parties, ensuring procedural fairness and compliance with legal requirements. The decision also reiterated the principle that delays in serving orders beyond the prescribed limits can render them invalid, as established by precedent judgments. The Tribunal's detailed analysis and reliance on legal precedents provided a robust basis for allowing the appeal and annulling the order passed under section 263.