2023 (7) TMI 1216 - HC - Income Tax

Court affirms Tribunal's decision on time limits for tax assessments, emphasizing legal consistency and timely compliance.

Income Tax Officer, TDS Circle, Begusarai Versus Indian Oil Corporation Ltd. Chief Finance Manager Barauni Refinery, Indian Oil Corporation Ltd., Begusarai.

The Court upheld the Tribunal's decision to set aside the Assessing Officer's order as beyond a reasonable time of four years, despite no specific ... Orders u/s 201(1) and 201(1A) - period of limitation - Tribunal setting aside the order passed by the Assessing Officer finding it to be beyond four years - HELD THAT:- Insofar as the reasonable time, as held by the Hon’ble Supreme Court, it is trite that when no period of limitation is prescribed by a statute, even then the Department cannot pass orders after the expiry of a reasonable period. It has also been held in various decisions that the reasonable period can be understood from the provisions of the subject statute, disclosing the scheme of the statute, where limitation is provided with respect to other actions by the Department. The various High Courts, as referred to above, deemed reasonable time to be four years, as is coming out from the various provisions of the Income Tax Act itself. True, the provision was amended bringing in a limitation of four years, in 2010 and then later extended to six years and seven years. Providing a specific period of limitation by the Union Parliament indicates, though it is not applicable to the subject assessment orders, the wisdom of the legislature. The presumable object behind that is not to leave the matter to the vagaries of the Department officials. It is also pertinent that at first the reasonable limitation period prescribed by the Union Parliament was four years; which was the reasonable time, as deemed by the various High Courts. We refer to Union of India v. Kaumudini Narayan Dalal [2000 (12) TMI 101 - SC ORDER] Commissioner of Income Tax v. Narendra Doshi [2001 (7) TMI 10 - SUPREME COURT], Commissioner of Income Tax v. Shivsagar Estate [2002 (7) TMI 103 - SC ORDER] and Berger Paints India Ltd. v. Commissioner of Income Tax [2004 (2) TMI 4 - SUPREME COURT] The established principle is that, if the Revenue has not challenged a declaration of law laid down by a High Court and accepted it in the case of one assessee, then it is not open to the Revenue to challenge its correctness in the case of other assessees, without just cause. Decided in favour of the assessee. Issues involved: The judgment deals with the question of law regarding the justification of the Income Tax Appellate Tribunal setting aside an order passed by the Assessing Officer as being beyond four years, in the absence of a specific limitation provided under Sections 201(1) and 201(1A) of the Income Tax Act, 1961. The assessment years in question are 2002-03 and 2003-04, and the appeals arise from a common order on an identical issue.Details of the Judgment:1. Reframed Question of Law: The central issue in the case was whether the Tribunal was justified in setting aside the order passed by the Assessing Officer, considering it to be beyond a reasonable time of four years, despite the absence of a specific limitation under Sections 201(1) and 201(1A) of the Income Tax Act, 1961.2. Assessment Orders and Limitation: The assessment orders under Sections 201(1) and 201(1A) of the Act were passed on 27.04.2007 without any statutory limitation for such orders. The Tribunal found that passing the orders after four years from the relevant financial years was beyond a reasonable period as per the provisions of the Act.3. Judicial Precedents: The Tribunal considered judgments from various High Courts, including Delhi, Himachal Pradesh, Bombay, Telangana, Andhra Pradesh, Karnataka, and Gujarat, which set aside similar orders passed after four years. On the other hand, the Revenue relied on decisions from the Calcutta High Court and the Punjab & Haryana High Court, which held that the period of limitation does not apply to tax deducted at source (TDS).4. Merger of Orders: There was an incidental issue regarding the merger of the Assessing Officer's order with that of the Tribunal when the matter was remanded. The Tribunal correctly found that the earlier order specifically addressed the limitation issue, allowing the assessee to raise the contention at a later stage if prejudicial orders were passed on remand.5. Reasonable Time and Legislative Intent: The judgment emphasized that even in the absence of a specific limitation period in the statute, the Department cannot pass orders after an unreasonable period. The Union Parliament later introduced a limitation of four years, indicating the legislative intent to avoid delays and uncertainties in tax matters.6. Precedents and Final Decision: Citing various Supreme Court and High Court decisions, the Court ruled against the Revenue, favoring the assessee. The judgment highlighted the importance of consistency in applying legal principles across different cases and rejected the appeals filed by the Revenue.In conclusion, the Court's decision upheld the Tribunal's ruling on the limitation issue, emphasizing the importance of adhering to reasonable timeframes in tax assessments and respecting established legal principles.