2020 (7) TMI 133 - HC - Income Tax

Time limit for completion of assessment and reassessment u/s 153 - Fresh Order passed in remand proceedings - whether order passed by the assessing officer is beyond the period of limitation as prescribed under Section 153(2A)? - HELD THAT - As perused the submissions of the assessee, the paper book etc. from which it could not derived whether the assessee has received from MPSEB an amount to the extent of 85% of the cost of the equipment. Therefore, obviously, the CITA) has accepted the arguments of the assessee of its face value. The various circumstances as existing in the instant case go to raise a lot of doubt in the entire transaction. One aspect that is absent in the instant case is the enquiry from the State Electricity Board with reference to the sale invoice raised on the assessee, the lease agreement entered into with the assessee payment of 20% of ₹ 4.93 Crores to the assessee and the answer to the question whether the assessee received 85% of ₹ 4.93 Crores or not. We are therefore, of the view that the matter requires reexamination at the level of the assessing officer. The order of remand has been issued with a view to give effect to the findings of the tribunal and neither the order of assessment has been set aside nor the assessing officer has been directed to carry out fresh assessment. Order passed by the tribunal is a remand on a limited issue as indicated in para 12 of the order. Therefore, the provisions of Section 153(3) of the Act apply to the fact situation of the case and the tribunal therefore, committed an error of law in holding that the order passed by the Commissioner of Income Tax (Appeals) was passed under Section 153(2A) of the Act. Substantial questions of law framed by bench of this court are answered in favour of revenue and against assessee.

Summary

Issues:
1. Interpretation of Sections 153(2A) and 153(3) of the Income Tax Act, 1961.
2. Assessment validity and limitation period for passing fresh assessment orders.

Analysis:
Issue 1: Interpretation of Sections 153(2A) and 153(3) of the Income Tax Act, 1961
The appeals before the Karnataka High Court under Section 260A of the Income Tax Act, 1961 involved the interpretation of Sections 153(2A) and 153(3) of the Act. The primary contention revolved around whether the order passed by the Tribunal fell under Section 153(2A) or Section 153(3) of the Act. The crux of the matter was determining if the order was a limited remand or a complete setting aside of the original assessment.

Issue 2: Assessment validity and limitation period for passing fresh assessment orders
The case pertained to the Assessment year 1996-97, where the assessing officer had disallowed certain claims made by the assessee in the original assessment. Subsequently, the matter was remanded by the Tribunal for reconsideration of specific issues. The key question was whether the assessing officer's order dated 15.12.2009, giving effect to the Tribunal's findings, was within the prescribed limitation period under Section 153(2A) or if it fell under the purview of Section 153(3) of the Act.

The High Court analyzed the facts and the Tribunal's order, emphasizing that the remand was limited to specific issues and did not entail a complete setting aside of the original assessment. Consequently, the Court held that the provisions of Section 153(3) applied to the case, contrary to the Tribunal's interpretation under Section 153(2A). The Court highlighted the need for assessments to be completed within a reasonable time, even when no specific limitation is prescribed.

In conclusion, the High Court ruled in favor of the revenue, quashing the Tribunal's orders and remitting the matter for a fresh decision on merits. The Court's decision clarified the application of Sections 153(2A) and 153(3) in the context of the case, emphasizing the importance of interpreting statutory provisions accurately to ensure timely and lawful assessments under the Income Tax Act, 1961.