2024 (8) TMI 815 - AT - Income Tax

Validity of rectification order u/s 154 as barred by limitation - violation of principle of natural justice and in contravention to the provisions of section 154(3) - HELD THAT - No copy of the notice under Section 154 of the Act dated 01.12.2015 is available on record, neither there is any evidence for service of this notice on the assessee available in the file. The assessee had categorically denied the receipt of any notice under Section 154 dated 01.12.2015. Since, no such notice dated 01.12.2015 nor any acknowledgement for service of this notice is found available on the case records, the contention of the assessee is found to be correct. Since, we do not find any evidence of allowing any opportunity to the assessee before passing order under Section 154 of the Act, the order is found to be in contravention to the provisions of the Act and against the principle of natural justice. Period of limitation - The Revenue was required to explain this inordinate time gap in the service of order under Section 154 of the Act, but no convincing explanation has been brought on record. It is found from the case record that the order under Section 143(3) of the Act dated 05.06.2014 was served on the assessee on 06.03.2014, the evidence for which is available on record. When the earlier order was served so promptly on the assessee, the Revenue has failed to explain as to why the order under Section 154 of the Act dated 19.03.2018 was served on the assessee after such a long gap of 3 months. In view of these facts as well as the date of order as appearing in ITD data base, we are of the considered opinion that the order u/s 154 was not actually passed on 19.03.2018 as we do not find any evidence of passing of this order on the case records. Therefore, we find considerable force in the contention of the assessee that the order was barred by limitation as it was not passed within the permissible time limit of four years. we are of the considered opinion that the findings of the Ld. CIT(A) to uphold the order under Section 154 of the Act dated 19.03.2018 cannot be held as correct. The AO s order was passed in violation of principle of natural justice and in contravention to the provisions of section 154(3) of the Act and was also not passed on the date as appearing in the order. Date of order 01.06.2018 as appearing in ITD database unequivocally establishes that the order was barred by limitation. Therefore, the order u/s 154 passed by the AO, is cancelled. Assessee appeal allowed.

Summary

Issues:
1. Rectification order under Section 154 of the Income Tax Act.
2. Violation of natural justice and limitation in passing the rectification order.
3. Opportunity of being heard before passing the order.
4. Date discrepancy in the order under Section 154.
5. Appeal against the order under Section 154.

Analysis:

1. The appeal was filed against the rectification order under Section 154 of the Income Tax Act for the Assessment Year 2011-12, where the AO revised the income of the assessee and disallowed unabsorbed brought forward depreciation claimed by the assessee for A.Y. 2009-10.

2. The main contentions raised by the assessee were that the rectification order was against the principles of natural justice and was barred by limitation. The assessee argued that no opportunity was given before passing the order, and there were discrepancies in the dates mentioned in the order and the actual date of passing the order.

3. The Tribunal directed the Revenue to produce case records to verify the contentions raised by the assessee. It was found that there was no evidence of serving the notice under Section 154 dated 01.12.2015 to the assessee, which was mentioned in the order. The Tribunal concluded that no opportunity was provided to the assessee before passing the order, contravening Section 154(3) of the Act and principles of natural justice.

4. The order under Section 154 allegedly passed on 19.03.2018 had a discrepancy in dates, as it was uploaded in the ITD database with a date of 01.06.2018. The Tribunal noted a significant delay in serving the order to the assessee, raising questions about the validity of the order and the explanation provided by the Revenue.

5. Considering the violations of natural justice, the limitation issue, and the discrepancies in dates, the Tribunal held that the order under Section 154 of the Act dated 19.03.2018 was cancelled, and the appeal by the assessee was allowed, emphasizing the importance of adhering to procedural fairness and statutory timelines in tax assessments.