2021 (4) TMI 681 - AT - Income Tax

Validity of assessment order passed u/s.158BC r.w.s. 143(3), r.w.s 254 - Time limit for completion of assessments and reassessments - assessee submitted that block assessment order passed by the Assessing Officer is without jurisdiction and out of time - HELD THAT - We are of the considered view that provisions of section 153(3) of the Act has no application and provisions of section 153(2A) should be applied as discussed in preceding paragraphs. As per amended provisions of section 153(2A) of the Act, time limit for completion of assessment in pursuant to order of the appeal Commissioner u/s 250 or Appellate Tribunal u/s. 254 is one year from the end of the financial year in which such an order was received by Office of Commissioner / PCIT. In this case, order of the Appellate Tribunal was passed on 04.10.2000 and such an order was received by the Office of the Commissioner on 10.11.2000. As per the amended provisions of section 153(2A), the impugned assessment order ought to have been passed on or before 31.03.2002. Because of the intervening order of the High Court in writ and stay of proceedings on 08.03.2002 and subsequent disposal of said Writ Petition on 14.12.2018 (communicated to O/o.PCIT on 13.02.2019), the period covered under operation of stay shall be excluded while computing period of limitation, as per Explanation 1(ii) to section 153 of the Act and if such period is excluded, then the Assessing Officer will get 60 days clear time for completion of assessment, in view of explanation referred to in section 153 of the Act, because balance time available as on date of interim order passed by High Court was 23 days, which is less than 60 days. Since the order of Hon ble High Court in Writ Petition was received in the Office of PCIT on 13.02.2019 and the Assessing Officer has sixty days clear time to pass order giving effect order and if such 60 days is considered for limitation period, then the Assessing Officer ought to have passed assessment order on 14.04.2019. In this case, the impugned order was passed on 31.12.2019. Therefore, we are of the considered view that the assessment order passed u/s. 158BC r.w.s 143(3) / 254 dated 31.12.2019 is barred by limitation and liable to be quashed. Accordingly, the assessment order is quashed. - Decided in favour of assessee.

Issues Involved:

1. Validity of the assessment order passed u/s 158BC r.w.s 143(3) r.w.s 254 of the Income Tax Act, 1961.
2. Applicability of the time limit for completion of assessment as per section 153(2A) of the Act.
3. Whether the assessment order is barred by limitation.
4. Application of sub-section (3) of section 153.
5. The impact of the Hon’ble Madras High Court’s stay order and its subsequent vacation on the limitation period.
6. Whether the additions made by the Assessing Officer in the assessment are sustainable.

Detailed Analysis:

1. Validity of the Assessment Order:

The assessee challenged the assessment order passed by the Assessing Officer on 31.12.2019, arguing it was out of time and without jurisdiction. The Tribunal had earlier set aside the original assessment order dated 30.07.1997 and directed the Assessing Officer to redo the assessment after considering all relevant materials and following principles of natural justice.

2. Applicability of the Time Limit for Completion of Assessment:

The key issue was whether the time limit for completing the assessment was governed by the amended provisions of section 153(2A) of the Income Tax Act, which reduced the time limit from two years to one year for orders received by the Commissioner on or after 01.04.2000. The Tribunal's order was received by the Commissioner on 10.11.2000, thus falling under the amended provisions.

3. Whether the Assessment Order is Barred by Limitation:

The Tribunal found that the assessment order passed on 31.12.2019 was barred by limitation. The amended section 153(2A) required the assessment to be completed within one year from the end of the financial year in which the Tribunal's order was received, i.e., by 31.03.2002. However, due to the stay order by the Hon’ble Madras High Court from 08.03.2002 to 14.12.2018, the period of stay was excluded, providing an additional 60 days for completion of the assessment, extending the deadline to 14.04.2019. The assessment order passed on 31.12.2019 was thus beyond the permissible period.

4. Application of Sub-section (3) of Section 153:

The Assessing Officer erroneously applied sub-section (3) of section 153, which provides no specific time limit for assessments made in compliance with court orders. However, the Tribunal clarified that the assessment was set aside for de novo consideration by the Tribunal, not merely for giving effect to a finding or direction. Therefore, section 153(2A), not section 153(3), was applicable.

5. Impact of the Hon’ble Madras High Court’s Stay Order:

The stay order by the Hon’ble Madras High Court and its subsequent vacation were crucial in determining the limitation period. The Tribunal noted that the stay period should be excluded from the limitation calculation, providing an additional 60 days after the stay was vacated on 14.12.2018, extending the deadline to 14.04.2019.

6. Additions Made by the Assessing Officer:

Since the assessment order was annulled due to being barred by limitation, the Tribunal did not need to adjudicate on the various additions made by the Assessing Officer. These grounds were dismissed as infructuous.

Conclusion:

The Tribunal concluded that the assessment order passed by the Assessing Officer on 31.12.2019 was barred by limitation as per the amended provisions of section 153(2A) of the Income Tax Act. Consequently, the assessment order was quashed, and other grounds challenging the additions were dismissed as academic. The appeal filed by the assessee was allowed.

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