2024 (2) TMI 1046 - HC - Income Tax

Validity of draft assessment order and final assessment order as barred by limitation u/s 153(2A) - Scope of the word received - Tribunal held the draft assessment order and final assessment order passed by the AO are barred by limitation u/s 153(2A) HELD THAT - We note that although the Full Bench of the Court in Odeon Builders 2017 (3) TMI 1266 - DELHI HIGH COURT was concerned with Section 260A of the Act, there are certain significant observations appearing in that decision of the Court which would have a material bearing on the question which is proposed for our consideration - Full Bench also considered the contention of the Revenue that unless the jurisdictional Commissioner receives a copy of the order of the ITAT, the limitation prescribed in the aforenoted provision for filing an appeal would not commence. It becomes pertinent to note that Section 260A also employs the expression is received and thus stands at par with Section 153(2A). Full Bench proceeded to reject the contention of the Department that the receipt of the order of the ITAT must be considered as being service upon the jurisdictional Commissioner holding that the acceptance of such a view would amount to rewriting 153(2A) and construing that provision contemplating receipt of the order by the concerned Commissioner or Principal Commissioner of Income Tax. Full Bench had unequivocally found that while examining the issue of limitation, one would have to pose the question of when the Department became aware of the order and not when the concerned Commissioner or Principal Commissioner may have been served or had derived knowledge. It proceeded further to observe that once a responsible officer of the Department becomes aware of the order, the period of limitation would commence form that point in time. In GE Energy Parts 2019 (8) TMI 1068 - DELHI HIGH COURT what is relevant is when the Commissioner of Income-tax (Judicial) representing the Department before the Income-tax Appellate Tribunal received the order, which in any event is generally made available in the public domain soon after the order is pronounced. This is the purport of the decision of the Full Bench of this court in CIT v. Odeon Builders P. Ltd. (supra), the ratio decidendi of which will apply to the case on hand as well since the language of section 260A(1) and section 275(1)(a) of the Act is identical. ITAT has while passing the orders impugned before us proceeded on the basis of the principles enunciated in the aforenoted two decisions. We thus find no justification to interfere with the view as expressed. The appeal raises no substantial question of law

Summary

Issues Involved:
1. Whether the draft assessment order and final assessment order passed by the Assessing Officer are barred by limitation under Section 153(2A) of the Income Tax Act, 1961.

Summary:

Issue 1: Limitation under Section 153(2A)

The Commissioner of Income Tax challenged the order of the Income Tax Appellate Tribunal (ITAT) dated 24 November 2021, which held that the draft and final assessment orders framed by the Assessing Officer (AO) for the Assessment Years (AYs) 2006-07 and 2005-06 were barred by limitation as per Section 153(2A). The ITAT accepted the respondent's contention that the term "received" in Section 153(2A) includes the AO's knowledge of the ITAT order. The AO had full knowledge of the ITAT order dated 20 February 2015, and thus, the period for drawing a draft and final assessment order should be computed from that date. The ITAT concluded that the draft orders dated 27 December 2016 and final assessment orders dated 30 October 2017 were barred by limitation.

Arguments by Appellant:

Mr. Bhatia argued that the ITAT erred in interpreting "received" as equivalent to the AO's knowledge of the ITAT order. He contended that the word "received" should not be construed to mean knowledge derived by the Commissioner, as it would amount to rewriting Section 153(2A).

Arguments by Respondent:

Mr. Pardiwalla contended that the issue is settled by the Full Bench judgment in Odeon Builders and the subsequent decision in GE Energy Parts. He argued that the AO had full knowledge of the ITAT order by 12 March 2015, and thus, the limitation period should be computed from that date.

Court's Analysis:

The court referred to the Full Bench decision in Odeon Builders, which emphasized that the period of limitation should commence from when the Department becomes aware of the ITAT order, not when the concerned Commissioner receives it. The court also considered the GE Energy Parts case, where it was held that the limitation period begins when the Department has knowledge of the ITAT order.

Conclusion:

The court found no justification to interfere with the ITAT's view, which was based on the principles enunciated in the aforementioned decisions. The appeal raised no substantial question of law and was dismissed.