2020 (12) TMI 995 - HC - Income Tax

Rectification u/s 254 - Period of limitation - HELD THAT - In the present case, the order was passed on September 09, 2018, and the copy of order was admittedly served upon the assessee on December 05, 2018. Tribunal should have excluded the time period between September 09, 2018, to December 05, 2018, in computing the period of limitation.Tribunal was wrong in not applying the exclusion period in computing the period of limitation and rejecting the application being barred by limitation. If Section 254(2) is read with Sections 254(3) and 268 of the Act and no hardship or unreasonableness can be found in the scheme of the Act. The Court need not make a violence to the words of Section 254(2) by substituting the word within the end of the month in which the order was passed by the word the date on which the order was served . Such interpretation is absolutely uncalled for when the application has been served upon an assessee in terms of Section 254(3) of the Act. Since it is not necessary to interpret Section 254(2) differently to avoid hardship or absurdity or uncertainty, the judgment in D. Saibaba case has no applicability to the present case. The controversy with regard to whether pronouncement of a judgment in open court amounts to communication of the order is much ado about nothing since the order complained of in this case was served upon the assessee in terms of Section 254(3) of the Act. The appeal is, accordingly, allowed. The Tribunal below is directed to hear out the application under Section 254(2) taken out by the assessee on merit.

Issues:
1. Interpretation of limitation period under Section 254(2) of the Income Tax Act, 1961.
2. Determining the starting point for calculating the period of limitation for filing an application for rectification.
3. Whether the date of order or the date of service should be considered for computing the limitation period.
4. Application of Section 268 of the Income Tax Act in exclusion of time for serving the order.
5. Relevance of pronouncement of order in open court for communication to the parties involved.

Analysis:
1. The judgment involved an appeal under Section 260 A of the Income Tax Act, 1961 against an order of the Income Tax Appellate Tribunal regarding an application under Section 254(2) of the Act for the Assessment Year 2009-2010.
2. The Tribunal held that the application by the assessee for rectification was barred by limitation due to a delay of 66 days in filing the application.
3. The assessee argued that the limitation period should be counted from the date of service of the order, not the date of pronouncement in open court, citing a Supreme Court judgment for support.
4. The Revenue contended that the limitation period under Section 254 of the Act is clear and should not be extended beyond what is prescribed by the statute.
5. The Court analyzed Section 268 of the Income Tax Act, which provides for exclusion of time taken for serving the order, and concluded that the Tribunal erred in not excluding the time period between the date of the order and the date of service to compute the limitation period.
6. It was emphasized that the starting point for limitation should be the date of communication of the order, as per Section 254(3) of the Act, and not the date of pronouncement in open court.
7. The judgment highlighted the importance of interpreting statutory provisions as they are without introducing changes that could lead to uncertainty or absurdity, especially when the Act provides for serving the order to the assessee.
8. The Court disagreed with a previous judgment for not considering Section 268 of the Act but concurred with the ultimate conclusion, allowing the appeal and directing the Tribunal to hear the application on merit within a specified timeframe.

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