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TMI Blog2019 (12) TMI 1677X X X X Extracts X X X X X X X X Extracts X X X X ..... e limit for passing the impugned order indeed expired on expiry of four years from the end of the financial year, in which, the original order sought to be rectified was passed i.e. on 31.3.2009. As relying on Ashu Engineers Plastic Pvt Ltd [ 2011 (4) TMI 1519 - ITAT MUMBAI] we are of the view that the rectification order passed u/s 154 is clearly beyond the prescribed limitation of period provided u/s 154(7). Appeal of the assessee is allowed. - Shri Pawan Singh (JM) Shri Rifaur Rahman (AM) For the Appellant : Shri Dharmesh Shah AR For the Respondent : Shri Mohammed Rizwan Add. CITSr DR ORDER PER PAWAN SINGH, JM : 1. This appeal by assessee is directed against the order of learned CIT(A)- 5, Mumbai dated 29-12-2017, in confirming the order of assessing officer passed under section 154 of income tax Act (Act), passed on 08-07-2014 for assessment year 2008-09. The assessee has raised the following grounds of appeal:- 1. The Ld. CIT(A) has erred in law and in facts in not appreciating that the assessing Officer passed the rectification order u/s. 154 of the Act in violation of the principles of natural justice without providing adequate opportunity of being heard to the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out by the assessee in its application dated 26-08-2010 by passing order u/s 154 dated 13- 03-2012. The AO again issued show cause notice u/s 154 for rectification of assessment order. In the show cause notice the AO noted the assessee claimed deduction of Rs. 26,85,210/- paid under the head dividend distribution tax paid u/s 115O of the IT Act for computing book profit u/s 115JB which in not correct. The tax u/s 115JB being higher than normal income tax pad as per 115JB. 5. The assessee filed its reply dated 16-12-2013 raising objection against proposed rectification vide reply dated 16-12-2013. The contents of the reply are extracted by AO on page 1 of the impugned order. The reply of assessee was not accepted by AO. The AO rectified the assessment order thereby raising demand of Rs.41,220/- vide order dated 08-07- 2014. Aggrieved by the rectification order, the assessee filed appeal before Ld. CIT(A) but without success. Further aggrieved by the order of ld. CIT(A), the assessee has filed this appeal before the Tribunal. 6. We have considered the submission of both the parties, perused the record carefully. The Ld. AR of the assessee submits that the assessee has raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g cases:- Ashu Engineers Plastics Pvt Ltd ITA No.3453/Mum/2010 dt 29.04.2011, ITO vs BFIL Finance Ltd ITA No.3828/Mum/2015 dt 27.11.2017, DCIT vs Godrej Industries ITA No.4339/Mum/2015 dt 7.4.2017, CIT vs Sekseria Cotton Mills Ltd 124 ITR 570 (Bom), CIT vs Shriram Engineering Construction Co Ltd 330 ITR 568 (Mad) 10. On the other hand, the Ld. DR for the revenue strongly relied upon the orders of the AO / CIT(A). The ld. DR for the revenue submits that for the purpose of second rectification order, the limitation should be considered from 13.03.2012. 11. We have considered the rival submissions of the parties and perused the orders of lower authorities. There is no dispute that assessment order / intimation us/ 143(1)(a) was rectified at the behest of assessee on its application dated 26-08-2010 vide order dated 13-03-2012. The AO issued fresh show cause notice u/s 154 on the ground that dividend distribution tax paid u/s 115O for computing book profit u/s 115JB is not correct. The tax u/s 115JB being higher than normal income-tax, the assessee should have paid tax as per section 115JB. The assessee filed reply and besides other contentions, the assessee stated that dividend distri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case was where an order of an authority is rectified, whether the original order merges with the order of rectification, and whether, in the event of second rectification, the period of limitation for such subsequent rectification should be reckoned from the date of the original order or the date of the order of first rectification. After an elaborate survey of judicial precedents on the issue. Their Lordships concluded that if the subject matter of subsequent rectification is not the subject matter of first rectification, the period of limitation will have to be calculated from the date of original order In view of these discussions, it is clear that the legal position is that the time limit for rectification of mistake under section 154(7) is to be considered from the date of the original order or in subsequent rectification order only if the said rectification order dealing with the same which is sought to be rectified. In this view of the matter and having noted that the first rectification order dealt with entirely different issue i.e. excess allowance of TDS credit, it is clear that the time limit for passing the impugned order indeed expired on expiry of four years from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to intimation under section 154(l)(b) as well. In any event, even when no time limit is set out in the statute, a reasonable time limit is to be applied. While on this aspect of the matter, it will be useful to take note of a co-ordinate Bench decision in the case of Sibonarayan Patra vs ITO (54 TTJ 644 (CTK), wherein, somewhat identical issue came up for consideration before the Tribunal. Even in the absence of any time barring limitation set out in the Statue, the co-ordinate Bench held that in proceedings under the Income tax Act must have a reasonable time limit and it cannot be open any one to proceed on the basis of proceedings, which can be initiated at any stage. Speaking through one of us (i.e. learned Vice President], the co-ordinate Bench has observed as follows: 9. It is the case of the learned Departmental Representative that s. 275 deals with procedural law and in the case of procedural law, the provisions as it stood at the time of initiation of penalty proceedings are applicable as there is no vested right to the assessee in such matters. We have given careful consideration to the submissions of the learned Departmental Representative. The amended provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the end of the month in which penalty proceedings were initiated, whichever is later. On a reading of the provisions of s. 275(c) along with the Notes on Clauses, we are of opinion that the amended cl. (c) is no different from the unamended cl. (c) of s. 275(1) of the Act and the legislature only intended to reduce the period of limitation which was hitherto two years from the end of the financial year. Thus, to our mind, the same interpretation which was placed on the unamended cl. (1) of s. 275 applies to the provisions of amended w.e.f. 1st April, 1989. We may further observe that even accepting for a moment that there is no time-limit prescribed under the Act for initiating penalty proceedings under s. 271B/275 of the Act, as rightly submitted by the learned counsel for the assessee, by taking the spirit of the provisions of s. 275 fixing the timelimit for initiation of penalty proceedings under s. 271(l)(aJ, 271(l)(b), etc. in the case of the assessee, penalty proceedings have to be initiated by the AO within a reasonable period of time and any proceeding initiated after an abnormal delay, is liable to be treated as invalid in law. Admittedly, the assessments were completed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d opinion this contention raised on behalf of the revenue is bereft of any force for the simple reason that certainty is the hallmark of any proceedings. It is beyond our comprehension that how, in the absence of any time limitation provided in the section, the action can be taken in indefinite period. It is wholly impermissible to argue that unlimited time limit be granted to the revenue for taking action under this section. The sword of taxing authorities cannot be allowed to hang, forever, over the head of the tax payers. If this proposition of the learned D.R. is accepted that will give license to the authorities to take action even after 30, 40 or 50 years. The canons of limitation are ordinarily provided expressly in the Act and in their absence, they are to be impliedly inferred by taking into consideration the scheme of the relevant provisions. 9. In view of the above discussions, the hyper technical plea of the learned Departmental Representative is only fit to be rejected. Learned Departmental Representative as indeed the authorities below have also relied on in the case of Hind Wire Industries Ltd v.CIT,[supra] but then it is a case in which the subject matter of first r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee u/s.115JB. This omission was identified at a subsequent date accordingly AO has passed the order to rectify the same. The impugned order so passed by the AO was dated 21/01/2014, which is much beyond the limitation period to be reckoned from the end of the Financial Year 2007-08. Even though AO has mentioned in his order that the order is passed to give the effect to the order of CIT(A)'s order. However, in fact the rectification has been made in respect of mistake committed by him in the order passed u/s. 143(3) dated 28/15/2007. Accordingly, we do not find any infirmity in the order of CIT(A) for holding that the order passed u/s. 154 was time barred under the provisions of Section 154(7) of the Act. The issue under consideration is also squarely covered by the decision of Bombay High Court in case of Sakseria Cotton Mills Ltd., 124 ITR 570 wherein it was held that rectification of mistakeperiod of limitation u/s. 154(7) will apply from the date of original order of the ITO and not from the date of ITO's order giving effect to the AAC's order in respect of points not the subject matter of the order u/s. 154. 10. In view of the above, we do not find any in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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