2005 (1) TMI 318 - AT - Income Tax

Block assessment proceedings - barred by limitation - whether the present fresh assessment made by the Assessing Officer is within the time limit provided u/s 153(2A) of the Act - HELD THAT - In the instant case the Tribunal s order u/s 254 dated 1-6-2000 was received by the Chief Commissioner or Commissioner within financial 2000-01 and as such the fresh assessment order in pursuance of the Tribunal s order u/sn 254 dated 1-6-2000 was required to be made before the end of 31-3-2002 as per provisions contained in sub-section (2A) of section 153 which is mutatis mutandis is applied to the block assessment proceedings are clarified by the Board that the provisions relating to regular I.T. proceedings shall be applied to the assessment to be made under Chapter XIVB save as otherwise provided in that Chapter XIVB of the Act. It is clear that the time limit for making fresh assessments referred to in sub-section (2A) of section 153 is not lifted by sub-section (3) of section 153 of the Act. It is further clear that for the purpose of applicability of section 153(2 A) it is not necessary that the whole assessment should be set aside to complete the same de novo. Even if fresh assessment is to be made in respect of any one issue in pursuant to the order under section 250 or section 254 or section 263 or section 264 the provisions of section (2A) of section 153 would be applicable for the purpose of completing the fresh assessment on the said issue which has been set aside for fresh adjudication. Thus we are of the opinion that the fresh assessment order dated 28-3-2003 in pursuance to the Tribunal s order dated 1-6-2000 is barred by limitation inasmuch as it has not been made within one year from the end of the financial year in which the Tribunal s order dated 1-6-2000 was received by the Commissioner or the Chief Commissioner. In the result the assessment order is found to be barred by limitation. Since we have hold that the assessment order passed by the Assessing Officer on 28-03-2003 is beyond the prescribed period of limitation and is thus bad in law we need not to decide the other grounds raised by the assessee on merit of the various additions made by the Assessing Officer. In the result the appeal filed by the assessee is allowed by holding the impugned assessment is time barred and is thus cancelled.

Summary

Issues Involved:
1. Whether the reassessment order passed by the Assessing Officer (AO) is barred by limitation u/s 153(2A) of the IT Act.
2. Merits of various additions made by the AO.

Summary:

Issue 1: Limitation of Reassessment Order
The assessee appealed against the reassessment order dated 28-03-2003 for the block period from 1-4-1995 to 3-11-1995, arguing that it was barred by limitation as per the amended provisions of section 153(2A) of the IT Act, 1961. The original block assessment was made on 29-11-1996 following a search conducted on 3-11-1995. The Tribunal, in its order dated 01-06-2000, set aside certain points for fresh adjudication by the AO, who completed the fresh assessment on 28-03-2003. The assessee contended that the fresh assessment should have been completed within one year from the end of the financial year 2000-01, i.e., by 31-03-2002, as per section 153(2A). The Tribunal's subsequent order dated 08-10-2001 did not relate to these issues and thus did not affect the limitation period. The Tribunal agreed with the assessee, holding that the fresh assessment order dated 28-03-2003 was beyond the prescribed period and thus barred by limitation. The Tribunal cited various judicial precedents and clarified that section 158BE does not prescribe a time limit for fresh assessments following an order u/s 250/254/263/264, and hence section 153(2A) applies.

Issue 2: Merits of Additions Made by AO
Since the reassessment order was found to be time-barred, the Tribunal did not address the merits of the various additions made by the AO.

Conclusion:
The appeal filed by the assessee was allowed, and the impugned assessment was canceled as time-barred.