Limitation under s.254(2) starts from actual receipt when order not properly served at updated assessee address

HC held that the assessee was not properly served in the Department's appeal before the ITAT, as notice was sent to its former address instead of the updated address disclosed in Form 35. Consequently, the assessee had no notice or knowledge of the ITAT order. HC ruled that limitation under s.254(2) commences from the date of actual receipt of the order, not from its pronouncement, where there is no valid service. The miscellaneous application was therefore within time. The HC found the ITAT's dismissal for non-prosecution and refusal to recall unsustainable, quashed the impugned order, and allowed the petition.

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Issues involved:
Challenge to ITAT order under Section 254(2) for recall, Delay in filing application, Change of address affecting service, Interpretation of limitation period, Communication of orders under Section 254(3) and Rule 35, Applicability of Division Bench judgment.

Analysis:

1. The petitioner filed a writ petition challenging the ITAT's order dismissing their application under Section 254(2) for recall of an ex-parte order. The ITAT held the application was time-barred as it was filed after six months from the date of the impugned order. The petitioner argued that their change of address affected service, and they were not served notice of the appeal before the ITAT due to the address discrepancy.

2. The High Court noted that the limitation period should start from the actual receipt of the order, not from the date the order was pronounced by the Tribunal. Referring to the Division Bench judgment in 'Golden Times Services Pvt. Ltd. Vs. DCIT,' the Court emphasized that the date of knowledge of the order is crucial for calculating the limitation period under Section 254(2).

3. The Court highlighted the importance of communication of orders under Section 254(3) and Rule 35, stating that the date of communication or knowledge of the orders sought to be rectified is critical for commencing the limitation period. The ITAT failed to consider whether the affected party was aware of the order passed, leading to an erroneous application of the limitation provision.

4. Considering the Division Bench judgment and the failure of the ITAT to address the communication issue, the High Court quashed the impugned order and set aside the ex-parte order. The Court directed the ITAT to hear and dispose of the matter on merits after providing both parties an opportunity of hearing.

5. Additionally, the petitioner expressed intent to apply under the 'Vivad Se Vishwas' Amnesty Scheme, which was accepted by the Court, binding the matter accordingly. The judgment highlighted the significance of proper service and communication in legal proceedings, ensuring that parties have adequate knowledge and opportunity to avail remedies within the stipulated timeframes.

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