Reassessment and TP adjustment quashed as time-barred; Section 153(2A) applies despite later Section 153(3) amendment

HC held that the reassessment proceedings and consequential TP adjustment order passed by the AO were barred by limitation under Section 153(2A) of the Income-tax Act. It ruled that Section 153(2A) squarely applied where an assessment is set aside or remanded, even if only partially, and that the subsequent amendment to Section 153(3) w.e.f. 01.04.2016 did not dilute or render redundant Section 153(2A). As the AO passed the consequential order beyond the prescribed period, the authority stood denuded of jurisdiction. The impugned proceedings and orders were therefore unsustainable in law and were quashed.

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Issues: (i) Whether a consequential assessment order passed after the time period prescribed by Section 153(2A) of the Income-tax Act, 1961 is valid; (ii) Whether a remand by the Appellate Tribunal which directs fresh consideration on any issue attracts Section 153(2A) or falls under Section 153(3) of the Income-tax Act, 1961.

Issue (i): Whether a consequential assessment order passed beyond the period prescribed by Section 153(2A) is sustainable.

Analysis: Section 153(2A) prescribes a specific time limit for passing a fresh assessment where an assessment is set aside or cancelled by specified appellate orders. The statutory scheme of Section 153, read with the amendment to subsection (3), demonstrates the legislature's intent to subject fresh assessments pursuant to appellate setting aside to the time limit in subsection (2A). Judicial precedents interpret this time limit as operative and capable of rendering delayed consequential orders time-barred.

Conclusion: The consequential assessment order passed beyond the period prescribed by Section 153(2A) is time-barred and not sustainable; conclusion is in favour of the assessee.

Issue (ii): Whether a partial remand by the Tribunal that requires fresh consideration of any issue falls within Section 153(2A) or within Section 153(3).

Analysis: The purpose and textual interplay between subsections (2A) and (3) indicate that subsection (2A) governs cases where a fresh assessment is necessitated by an appellate setting aside, even if only certain issues are remitted for fresh consideration. Amendment to subsection (3) making it subject to subsection (2A) reinforces that where a remand results in a fresh assessment on any issue, subsection (2A)'s time limit applies; subsection (3) applies where only consequential compliance, not a fresh assessment, is required.

Conclusion: A remand directing fresh consideration of any issue attracts Section 153(2A); conclusion is in favour of the assessee.

Final Conclusion: The delayed consequential orders impugned were beyond the limitation prescribed by Section 153(2A) and are set aside; the writ petitions are allowed.

Ratio Decidendi: Where an appellate order remits any issue for fresh consideration such that a fresh assessment is required, the time limit prescribed by Section 153(2A) of the Income-tax Act, 1961 applies and a consequential assessment made after that period is time-barred.

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