2024 (4) TMI 714 - HC - Income Tax

Rectification of mistake - period of limitation - To give appeal effect of orders passed by the ITAT and issue a refund. - whether the limitation period for the remand by the ITAT would have to be strictly construed to begin from the date when the order of the ITAT is received by the concerned authority through an appropriate mechanism, particularly in light of the provisions of Section 254 r.w.s.153(3) of the Act and the judgment rendered by this Court in Odeon Buildwell 2017 (3) TMI 1266 - DELHI HIGH COURT ? HELD THAT - The legal landscape in the present lis relates to sub-Section 3 to Section 153 of the Act which stipulates that an order for fresh assessment pursuant to an order u/s 254 or Section 263 or Section 264 of the Act may be made at any time before the expiry of a period of nine months. The said provision further encapsulates that the aforesaid period has to be calculated from the end of the financial year in which the order u/s 254 is received by the authorities mentioned in the said Section. Evidently, from the extract of the relevant portion of the judgment in Odeon Buildwell (supra) in the preceding paragraph, it is seen that the contextual interpretation of the phrase received postulates the time when are the parties notified about the pronouncement and are represented at that instant in the open court. As held that the solitary reason of non-receiving of the order by the concerned authority cannot consequently make the period of limitation cease to run. Court further noted that once a responsible authority including the Department s Representative is aware of the order, the communication of the order is purely an administrative arrangement which has to be carried out internally within the Department. Recently, in the case of Lakhpatrai Agarwal 2023 (2) TMI 533 - BOMBAY HIGH COURT has held that the legislative intent behind the enactment of Section 254(3) of the Act does not prescribe shifting of the onus of proving the receipt of the order under the said provision on the assessee. As safely concluded that the expression received employed in Section 153(3) of the Act would not strictly mean that a certified copy of the order of the ITAT, in the given facts and circumstances, ought to have been necessarily supplied to the concerned authority through an appropriate mechanism devised by the respondents. Further, sub-Section 3 to Section 254 of the Act casts a duty upon the ITAT to send the copy of the orders passed under Section 254 of the Act to the assessee as well as to the Principal Commissioner or Commissioner. A conspectus of Section 254 read with Section 153(3) of the Act would reveal that the said provisions cannot be made applicable to the detriment of the petitioner in the case at hand. There is no force in the argument put forth by the respondents that the order was not received by the concerned authority through appropriate channel. In any case, as decided in Odeon Buildwell (supra), the ground raised by the respondents is only an internal arrangement of the Department and the same cannot be stretched to mean that it is a valid ground for the extension of the limitation period. The underlying rationale of the Legislature behind the enactment of Section 153(3) and setting the limitation therein, cannot be envisaged to expand the time limit for passing of a fresh assessment. Rather, the said provision entails a strict adherence to the time period within which the remand order in the present case should have been complied with by the respondents. Taking into consideration the ITAT s response that the concerned order was sent on 24 October, 2018, the Department ought to have passed the order to give the appeal effect within twelve months from then. However, the same has not been done by the Department till date. Since the respondents have failed to comply with the order of the ITAT in passing a fresh assessment order within the stipulated time, the instant writ petition is allowed.

Summary

Issues Involved:
1. Whether the respondents failed to give appeal effect to the ITAT orders.
2. Whether the respondents should issue a refund of Rs. 25,44,671/- along with interest.
3. Whether the respondents should de-freeze the petitioner's bank accounts and release the attached properties.

Summary:

Issue 1: Failure to Give Appeal Effect to ITAT Orders

The petitioner filed a writ petition u/s 226 and 227 of the Constitution of India seeking a writ of mandamus directing the respondents to give appeal effect to the ITAT orders in ITA No. 787/DEL/2014 & ITA No. 5517/DEL/2017 for A.Y. 2008-09. The petitioner contended that despite the ITAT order being communicated to the concerned authority of the Income Tax Department within the stipulated time, the respondents failed to pass a fresh assessment order. The respondents argued that the ITAT order never reached the concerned authority, and the limitation period u/s 153(3) of the Act would start only when the order is received by the Principal Commissioner or Commissioner. The Court held that the expression "received" in Section 153(3) does not strictly mean a certified copy must be supplied through an appropriate mechanism and that the Department was aware of the ITAT order. Therefore, the respondents' failure to pass a fresh assessment order within the stipulated time led to the allowance of the writ petition.

Issue 2: Refund of Rs. 25,44,671/-

The petitioner argued that the total demand for all AYs against them is Rs. 40,22,661/-, whereas an amount of Rs. 65,67,332/- is already lying with the respondents, making the retention of Rs. 25,44,671/- contrary to law. The Court directed the respondents to refund the amount of Rs. 25,44,671/- along with applicable interest as per law.

Issue 3: De-freezing Bank Accounts and Releasing Attached Properties

The petitioner sought the de-freezing of three bank accounts and the release of two attached properties. The Court directed the respondents to de-freeze the bank accounts and release the properties within two weeks of the judgment.

Conclusion:

The writ petition was allowed with directions to the respondents to remove the demands reflected in the ITBA portal, refund Rs. 25,44,671/- with interest, de-freeze the bank accounts, and release the attached properties within two weeks.