2021 (4) TMI 547 - HC - Income Tax

Assessment u/s 153 - Time limit for completion of assessments and reassessments - draft order barred by limitation or not? - HELD THAT - The proceedings were stayed for a period from 08.12.2011 to 07.03.2012 i.e., for a period of 103 days and if period of 103 days is added, and a period of 60 days as prescribed in proviso to Section 153(4) is added, the draft order ought to have been passed by the Assessing Officer upto 06.05.2012, whereas, in the instant case, the draft order has been passed on 05.07.2012 and therefore, the draft order is barred by limitation and no fault can be found with the finding of the tribunal. In view of preceding analysis, the substantial questions of law are answered against the revenue and in favour of the assessee.

Summary

Issues:
1. Interpretation of Section 153(3)(ii) for making an assessment order for the first time.
2. Computing limitation period for giving effect to court directions in a writ petition under Section 153(1)(a) versus Section 153(3)(ii).

Issue 1: Interpretation of Section 153(3)(ii)
The case involved an appeal under Section 260A of the Income Tax Act, 1961, pertaining to the Assessment Year 2008-09. The tribunal had held that the draft assessment completed by the Assessing Officer was beyond the period of limitation. The revenue contended that the tribunal erred in computing the limitation period by not considering Section 153(3)(ii) of the Act. The assessee argued that the draft assessment order should have been passed earlier, and no direction was issued by the court that could trigger Section 153(3)(ii). Relevant case laws were cited by both parties to support their arguments.

Issue 2: Computing Limitation Period
The Assessing Officer passed the draft assessment order on 05.07.2012, beyond the period of limitation. The tribunal excluded certain time periods provided under Section 153(1)(a) and held the assessments to be barred by limitation. The court analyzed the order dated 07.03.2012 passed in a writ petition, which did not contain any finding or direction necessary for disposal. It was noted that the proceedings were stayed for 103 days, and when added to the prescribed 60 days, the draft order should have been passed by 06.05.2012. As the draft order was passed on 05.07.2012, it was deemed to be barred by limitation. Citing relevant Supreme Court decisions, the court concluded that the tribunal's finding was correct, and the appeal was dismissed.

In conclusion, the court ruled in favor of the assessee, holding that the draft assessment order was indeed barred by limitation. The court's detailed analysis of the statutory provisions and relevant case laws supported its decision to dismiss the appeal filed by the revenue.