2020 (10) TMI 412 - AT - Income Tax

Validity of exercise of revisional jurisdiction u/s 263 - time limit for completion of assessment, reassessment and re-computation - time limit to do so as provided in Sec.153(3) as well as Sec. 153(5) expired - HELD THAT - The provisions of Section 153 provide time limit for completion of assessment, reassessment and re-computation. As per sub section (3), an order of fresh assessment pursuant to Section 263, setting aside or cancelling an assessment, may be made at any time before the expiry of 9 months from the end of financial year in which order u/s 263 has been passed by revisional authority. This period, in assessee s case is 31/12/2019. The proviso to the said sub-section extending the time limit to 12 months is not applicable since revisional order has been passed prior to 01/04/2019. As per sub-section (5), where effect to an order u/s 263 was to be given by Assessing officer, wholly or partly, otherwise than by making a fresh assessment or reassessment, such effect shall be given within a period of 3 months from the end of the month in which the order u/s 263 has been passed by revisional authority. As per proviso to this sub-section (5), where it is not possible for Ld. AO to give effect to such order within the aforesaid period for reasons beyond his control, the prescribed authority may allow an additional period of 6 months to give effect to that order. Allowing this extended period to assessee s case, the time limit to pass the consequential order would be 31/05/2019. Viewing from any angle, the time limit to pass consequential order has already been expired and the same has become time-barred. In fact, no such order has been passed till date. Consequently, the plea of Ld. Sr. Counsel has to be accepted and therefore, the appeal would stand dismissed as being infructuous.

Summary

Issues: Validity of exercise of revisional jurisdiction u/s 263 by Pr. Commissioner of Income-Tax-2 for AY 2013-14

Analysis:

Issue 1: Revisional Jurisdiction u/s 263
The appeal by the assessee contests the validity of the exercise of revisional jurisdiction u/s 263 by the Principal Commissioner of Income-Tax-2, Mumbai. The directions given in the order dated 29/08/2018 include disallowing expenses on penalties to foreign authorities and class action settlement consideration, as well as re-examining claims of DTAA credit and derivative transactions. The Senior Counsel for the assessee argued that no consequential order had been passed by the Assessing Officer (AO) within the specified time limit, rendering the appeal infructuous. The AO was directed to appear before the bench with a factual report, which confirmed that the consequential order had not been passed yet.

Issue 2: Time Limit for Consequential Order
The AO's failure to pass the consequential order within the specified time limit raised concerns regarding the validity of the revisional jurisdiction exercised under section 263. The provisions of Section 153 regarding the time limit for completing assessments, reassessments, and re-computations were analyzed. It was noted that the time limit for passing the consequential order had already expired, making the appeal time-barred and infructuous. The AO's inability to pass the order within the extended period further supported the dismissal of the appeal.

Conclusion
Considering the expiration of the time limit for passing the consequential order and the failure to do so to date, the appeal was dismissed as infructuous. The judgment highlighted the importance of adhering to specified time limits in revising assessments and giving effect to revisional orders. The dismissal of the appeal underscored the significance of timely compliance with procedural requirements in tax matters to ensure legal validity and avoid time-barred actions.