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2015 (10) TMI 2018 - AT - Income TaxRevision u/s 263 - CIT(A) directed the Assessing Officer to make a fresh assessment considering the computation of income as per provisions of section 11 of the Act and adjudicate properly the issue restored back by the Tribunal with certain directions - whether the case of the assessee certainly falls under clause (ii) of sub-section (3) of section 153? - period of limitation for initiation of rectification proceedings - Held that - In the instant case, the Tribunal vide order dated 30.1.2009 directed the Assessing Officer to adjudicate the issue relating to the claim of exemption under section 11 of the Act and keeping in view registration under section 12A of the Act granted to the assessee without setting aside or cancelling the assessment order. It is also obvious from the record that when original assessment was framed, registration under section 12A of the Act was not available to the assessee, therefore, there was no question of adjudication of claim of exemption under section 11 of the Act and the Assessing Officer has computed the income as per the relevant provisions of the Act. Since the Assessing Officer has acted in accordance with law, the assessment order cannot be called to be illegal or irregular and that is why the Tribunal has not set aside or cancelled the assessment order. But on account of change of circumstances, the Tribunal has directed the Assessing Officer to adjudicate the issue of claim of exemption under section 11 of the Act in the light of registration under section 12A of the Act granted to the assessee. Since the Tribunal has neither set aside nor cancelled the assessment order and issued directions for compliance to the Assessing Officer, the case of the assessee certainly falls under clause (ii) of sub-section (3) of section 153 of the Act and for this subsection, no time limit is prescribed under the Act. Therefore, it cannot be said that the order passed by the Assessing Officer was barred by limitation. But from a careful perusal of the order passed by the Assessing Officer, we find that the Assessing Officer has simply computed the quantum of refund instead of adjudicating the claim of exemption raised under section 11 of the Act in the light of grant of registration under section 12A of the Act to the assessee as per the directions of the Tribunal. While allowing benefit of section 11 of the Act, the Assessing Officer is also required to examine whether the conditions prescribed under section 13 of the Act is fulfilled or not. But the Assessing Officer did not do this exercise and has computed the refund claimed by the assessee. Therefore, the order of the Assessing Officer is certainly erroneous and prejudicial to the interest of the Revenue which was rightly set aside by the ld. Commissioner of Income-tax. As already held in the foregoing paragraphs that the assessment orders passed by the Assessing Officer vide his order dated 8.8.2013 are not barred by time, as no time limit is prescribed for passing an order under section 153(3)(ii) of the Act. We accordingly find no infirmity in the orders of the ld. Commissioner of Income-tax, who has rightly set aside the orders of the Assessing Officer, as it was not passed in compliance of the directions of the Tribunal. We accordingly confirm the orders of the ld. Commissioner of Income-tax in both the assessment years. - Decided against assessee.
Issues Involved:
1. Validity of invoking jurisdiction under section 263 by the Commissioner of Income-tax. 2. Applicability of the limitation period under section 153(2A) versus section 153(3)(ii) of the Income-tax Act. 3. Correctness of the Assessing Officer's compliance with the Tribunal's directions regarding exemption under section 11 of the Act. 4. Legality and enforceability of the Assessing Officer's order dated 08.08.2013. Issue-wise Detailed Analysis: 1. Validity of invoking jurisdiction under section 263 by the Commissioner of Income-tax: The Commissioner of Income-tax (CIT) invoked jurisdiction under section 263 of the Income-tax Act, setting aside the Assessing Officer's (AO) order dated 08.08.2013, which determined the refund payable to the appellant for AY 2001-02. The CIT held that the AO's order was erroneous and prejudicial to the interests of the revenue because it failed to comply with the Tribunal's directions to adjudicate the issue of exemption under section 11 of the Act. The CIT noted that the AO recomputed the refund amount without examining the conditions prescribed under section 13 of the Act. The Tribunal upheld the CIT's invocation of section 263, stating that the AO's order was erroneous and prejudicial to the revenue. 2. Applicability of the limitation period under section 153(2A) versus section 153(3)(ii) of the Income-tax Act: The appellant argued that the AO's order dated 08.08.2013 was barred by limitation under section 153(2A), which requires a fresh assessment to be made within one year from the end of the financial year in which the Tribunal's order is received. However, the CIT and the Tribunal held that section 153(3)(ii) applied in this case, as the Tribunal's order did not set aside or cancel the original assessment but directed the AO to re-adjudicate the issue of exemption under section 11. Section 153(3)(ii) does not prescribe a time limit for such orders. The Tribunal concluded that the AO's order was not barred by limitation and the CIT's action under section 263 was valid. 3. Correctness of the Assessing Officer's compliance with the Tribunal's directions regarding exemption under section 11 of the Act: The Tribunal found that the AO did not comply with the Tribunal's directions to adjudicate the issue of exemption under section 11 in light of the registration granted under section 12A. Instead, the AO recomputed the refund amount without examining whether the conditions prescribed under section 13 were fulfilled. The Tribunal held that the AO's failure to follow the Tribunal's directions rendered the order erroneous and prejudicial to the revenue, justifying the CIT's invocation of section 263. 4. Legality and enforceability of the Assessing Officer's order dated 08.08.2013: The appellant contended that the AO's order dated 08.08.2013 had no legal sanctity as it was barred by limitation. However, the Tribunal held that the order was not barred by limitation under section 153(3)(ii) and had legal sanctity. The Tribunal also noted that if the AO's order were considered invalid, the refund granted could be recovered from the assessee. The Tribunal confirmed the CIT's orders setting aside the AO's order and directing the AO to make a fresh assessment considering the provisions of section 11 and the Tribunal's directions. Conclusion: The Tribunal dismissed the appeals, upholding the CIT's invocation of section 263 and the setting aside of the AO's order dated 08.08.2013. The Tribunal directed the AO to make a fresh assessment in compliance with the Tribunal's directions and the provisions of section 11 of the Act.
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