2021 (12) TMI 262 - HC - Income Tax

High Court affirms Tribunal ruling on Income Tax Act Section 263; emphasizes importance of limitation period

The High Court of Calcutta upheld the Income Tax Appellate Tribunal's decision in an appeal concerning the Commissioner of Income Tax's power under ... Revision u/s 263 by CIT - justifying the legislative intent of Section 115 JB and 115 JAA - HELD THAT:- Tribunal took note of the decision of the Hon’ble Supreme Court in CIT vs. Alagendran Finance Limited [2007 (7) TMI 304 - SUPREME COURT] and held that the order passed by the CIT u/s 263(2) is hopelessly barred by limitation. The Tribunal rightly held that the period of limitation for the assessment year 2007-08 has to be reckoned from the date of the order passed by the AO under Section 143(3) read with Section 263 i.e. 8th December, 2011 and not from the date of the order passed by the AO under Section 143(3) read with Section 263 and 251 dated 29th November, 2012. Thus, we find that the Tribunal rightly allowed by the appeal filed by the assessee. Issues:- Appeal against order passed by Income Tax Appellate Tribunal- Interpretation of Section 263 of the Income Tax Act- Validity of Commissioner of Income Tax's power under Section 263- Consideration of MAT Credit under Section 115JAA- Application of limitation period for assessment yearsAnalysis:The High Court of Calcutta heard an appeal filed by the revenue against the order of the Income Tax Appellate Tribunal concerning assessment years 2007-08 to 2010-11. The main issue revolved around the Commissioner of Income Tax's exercise of power under Section 263 of the Income Tax Act. The Tribunal had considered whether the Commissioner could set aside the Assessing Officer's order under the guise of revising the assessment order. The Tribunal found that the MAT Credit was correctly allowed by the Assessing Officer in the original assessment, and any alleged error was in the initial order, not the subsequent one. The Court concurred with the Tribunal's findings, emphasizing the importance of the limitation period for assessment years. It cited a Supreme Court decision and held that the Commissioner's order under Section 263(2) was time-barred, as the period should be reckoned from the date of the original order, not the revised one. Consequently, the Court upheld the Tribunal's decision to allow the appeal filed by the assessee.In conclusion, the High Court found no error in the Tribunal's order and dismissed the revenue's appeal. The substantial question of law was answered against the revenue, and the stay application was closed. The judgment clarified the correct application of Section 263, the significance of the limitation period, and the proper interpretation of MAT Credit under Section 115JAA. This case serves as a precedent for determining the Commissioner's power under Section 263 and highlights the importance of adhering to statutory limitations in tax assessments.