2024 (9) TMI 579 - AT - Income Tax

Rectification u/s 154 - Period of limitation - HELD THAT - The assessment order was passed on 18/02/2016, the last date of passing order under section 154 of the Act was 31/03/2020. Hence, the order passed on 26/03/2021, is beyond limitation and cannot be sustained. On 29/10/2019, the order giving effect to section 250 of the Act was passed and that particular order was never sought to be rectified in contradistinction to the submissions made by the learned D.R. Hence, the issue raised by the Revenue in Grounds no.1, 2 and 3, has no merit and it is accordingly dismissed.

Summary

Issues:
Sustainability of order under section 154 of the Income Tax Act, 1961 based on limitation.

Analysis:
The appeal was filed by the Revenue challenging the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2013-14. The Revenue raised grounds questioning the sustainability of the order under section 154 of the Income Tax Act, specifically regarding the limitation period. The key issue for adjudication was whether the order passed under section 154 was sustainable based on the limitation period set forth in the Act.

The impugned order passed by the Commissioner of Income Tax (Appeals) highlighted that the rectification order under section 154 was made after the expiry of four years from the end of the financial year in which the original order was passed. The order sought to be rectified was related to the assessment completed on 18/02/2016, with the rectification order passed on 26/03/2021, beyond the limitation period. The Commissioner referred to relevant provisions of section 154(7) of the Act, emphasizing the time limit for rectification. The Commissioner also cited a judicial decision where a rectification order passed after the limitation period was quashed, establishing the legal position on the issue.

The Tribunal dismissed the Revenue's appeal, stating that the order passed on 26/03/2021 was beyond the limitation period and could not be sustained. It was noted that the order under section 250 of the Act passed on 29/10/2019 was not sought to be rectified, contrary to the Revenue's submissions. The Tribunal found no merit in the grounds raised by the Revenue and accordingly dismissed the appeal. The judgment reaffirmed the importance of adhering to the statutory limitation period for rectification orders under section 154 of the Act.

In conclusion, the Tribunal upheld the decision that the rectification order passed under section 154 was barred by limitation, in line with the provisions of section 154(7) of the Act and previous judicial decisions. The judgment emphasized the significance of complying with the statutory timelines for rectification orders to ensure the validity and sustainability of such actions under the Income Tax Act.