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Tribunal Overturns AO Order for Timing Violation Under Income Tax Act Section 153(3), Favoring Assessee. The Tribunal allowed the appeal in favor of the assessee, M/s. Ejaz Tanning Co., ruling that the order by the AO dated 26.02.2016 was quashed for being ...
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Tribunal Overturns AO Order for Timing Violation Under Income Tax Act Section 153(3), Favoring Assessee.
The Tribunal allowed the appeal in favor of the assessee, M/s. Ejaz Tanning Co., ruling that the order by the AO dated 26.02.2016 was quashed for being beyond the time limit specified under section 153(3) of the Income Tax Act, 1961. The Tribunal determined that the order was not made within the required nine-month period following the financial year in which the section 263 order was passed. The decision was pronounced on 23rd December 2020 at Chennai.
Issues: 1. Barred by limitation u/s.153(5) of the Act.
Detailed Analysis: The appeal was filed against the order of the Commissioner of Income Tax (Appeals)-5, Chennai, for the assessment year 2011-12. The assessment of M/s. Ejaz Tanning Co., the assessee, was revised under section 263 of the Income Tax Act, 1961, by the CIT(A), Chennai-9. The AO passed an order on 26.02.2016 determining the income at Rs.2,37,76,280. The assessee contended that the order dated 26.02.2016 was barred by limitation under section 153(5) of the Act and requested to quash the order. The dispute revolved around the time limit for passing an order of fresh assessment in compliance with a section 263 order. The Tribunal noted that as per sub-section (3) of Section 153, an order of fresh assessment pursuant to a section 263 order must be made within nine months from the end of the financial year in which the section 263 order is passed. The Tribunal found that the order passed by the AO on 26.02.2016 was beyond the time limit specified in section 153(3) of the Act. Consequently, the Tribunal upheld the plea made by the assessee and quashed the order dated 26.02.2016.
Final Decision: The Tribunal allowed the assessee's appeal, ruling in favor of the assessee. The order of the AO dated 26.02.2016 was quashed as it was found to be beyond the time limit allowed under section 153(3) of the Act. The decision was pronounced on 23rd December 2020 at Chennai.
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