2020 (12) TMI 1085 - HC - Income Tax

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 ... Rectification petition u/s 254 - period of limitation - HELD THAT:- Address of the appellant mentioned in the appeal before the ITAT by the respondent/Department was its former address and not the new address, which had been mentioned in the appeal filed by the petitioner before the Commissioner, Income Tax (Appellate) in form No. 35. Consequently, the petitioner was never served in the appeal filed by the Department before the ITAT. This Court is also of the view that the ITAT has erroneously concluded that the miscellaneous application filed by the petitioner was barred by limitation under Section 254(2) of the Act inasmuch as the petitioner had filed the miscellaneous application within six months of actual receipt of the order. If the petitioner/assessee had no notice and no knowledge of the order passed by the ITAT, it cannot be said that the limitation would start from the date the order was pronounced by the Tribunal. Issue raised in the present petition is squarely covered in favour of the petitioner/assessee by way of the Division Bench judgment of this Court in ‘Golden Times Services Pvt. Ltd. Vs. DCIT’ [2020 (1) TMI 971 - DELHI HIGH COURT]. Course adopted by the ITAT at the first instance, by dismissing the appeal for non-prosecution, and then compounding the same by refusing to entertain the application for recall of the order, cannot be sustained. We, therefore have no hesitation in quashing the impugned order. Accordingly, the present petition is allowed. 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.