2018 (7) TMI 938 - AT - Income Tax

Assessee's Appeal Allowed: Assessment Order Deemed Time-Barred

The appellate tribunal allowed the appeal of the assessee, holding that the assessment order was time-barred under section 153(2A) of the IT Act. The ... Limitation period for passing the order under section 254/143(3) - period of limitation - Held that:- CIT(A) reproduced Section 153(2A) in his findings as reproduced above. According to the provisions of Section 153(2A), an assessment order, pursuant to the Order under section 254 of the Act has to be made before expiry of one year from the end of the financial year in which order under section 254 of the Act is received by the Department. In this case, the A.O. made addition of ₹ 9 lakhs only in the original reassessment order which is set aside by the Tribunal and the issue of ₹ 9 lakhs was restored to the file of A.O. vide order dated 08.06.2010. Therefore, limitation period for passing the order under section 254/143(3) expired on 31.03.2012 whereas, the impugned assessment order was passed on 28.03.2014, therefore, it is time barred. The assessment order passed by the A.O. is time barred and as such, the entire proceedings have been vitiated and void abinitio Issues:1. Time limitation for passing assessment order under section 254 of the IT Act.2. Justification of addition of Rs. 9 lakhs under section 68.3. Interpretation of provisions of section 153(2A) of the Income Tax Act.Issue 1: Time limitation for passing assessment order under section 254 of the IT ActThe case involved an appeal against the assessment order for the A.Y. 2001-2002. The original return declared an income of Rs. 26,98,700, which was later revised to Rs. 46,98,702. Subsequently, the ITAT granted relief of Rs. 20 lakh to the assessee, resulting in the final income being recalculated to Rs. 26,98,700. The case was reopened under section 148, and an addition of Rs. 9,00,000 was made due to unexplained funds received. The assessee contended that the assessment order was barred by limitation under section 153(2A) of the IT Act. The ITAT had directed the AO to decide the issue afresh, but the AO passed the order after the prescribed time limit, leading to the conclusion that the assessment order was time-barred.Issue 2: Justification of addition of Rs. 9 lakhs under section 68The assessee challenged the addition of Rs. 9 lakhs under section 68, arguing that the Tribunal had directed the AO to decide the issue afresh after providing adequate opportunity to the assessee. The assessee maintained that sufficient evidence was produced before the AO and requested the issuance of summons under section 131 to verify the transaction. The CIT(A) rejected the claim that the impugned order was time-barred and upheld the addition. However, the ITAT held that the assessment order was time-barred, citing provisions of section 153(2A) of the IT Act, and quashed the orders of the authorities below, setting aside the addition.Issue 3: Interpretation of provisions of section 153(2A) of the Income Tax ActThe ITAT interpreted the provisions of section 153(2A) of the Income Tax Act to determine the time limitation for passing the assessment order under section 254. The ITAT noted that the time limit prescribed in section 153(2A) applied only when a fresh assessment was directed after setting aside or canceling the entire assessment order under appeal. Since only a limited issue was to be decided by the AO based on the ITAT's directions, the time limit under section 153(2A) was deemed inapplicable. The ITAT relied on the decision of the jurisdictional Delhi High Court in a similar case to support the assessee's contention that the assessment order was time-barred, leading to the allowance of the appeal.In conclusion, the appellate tribunal allowed the appeal of the assessee, holding that the assessment order was time-barred under section 153(2A) of the IT Act. The tribunal quashed the orders of the authorities below, including the addition of Rs. 9 lakhs, based on the interpretation of the relevant provisions and the direction provided by the ITAT.