Delhi HC confirms draft and final assessment orders barred by limitation under Section 153(2A) following Odeon Builders precedent

Delhi HC upheld ITAT's ruling that draft and final assessment orders were barred by limitation under Section 153(2A). The court applied the Odeon Builders precedent, holding that limitation period commences when any responsible departmental officer becomes aware of the order, not when the jurisdictional Commissioner receives it. The court rejected the Revenue's contention that receipt must be by the specific Commissioner, finding this would improperly rewrite the statutory provision. No substantial question of law was raised.

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Issues Involved:
1. Whether the draft assessment order and final assessment order passed by the Assessing Officer are barred by limitation under Section 153(2A) of the Income Tax Act, 1961.

Summary:

Issue 1: Limitation under Section 153(2A)

The Commissioner of Income Tax challenged the order of the Income Tax Appellate Tribunal (ITAT) dated 24 November 2021, which held that the draft and final assessment orders framed by the Assessing Officer (AO) for the Assessment Years (AYs) 2006-07 and 2005-06 were barred by limitation as per Section 153(2A). The ITAT accepted the respondent's contention that the term "received" in Section 153(2A) includes the AO's knowledge of the ITAT order. The AO had full knowledge of the ITAT order dated 20 February 2015, and thus, the period for drawing a draft and final assessment order should be computed from that date. The ITAT concluded that the draft orders dated 27 December 2016 and final assessment orders dated 30 October 2017 were barred by limitation.

Arguments by Appellant:

Mr. Bhatia argued that the ITAT erred in interpreting "received" as equivalent to the AO's knowledge of the ITAT order. He contended that the word "received" should not be construed to mean knowledge derived by the Commissioner, as it would amount to rewriting Section 153(2A).

Arguments by Respondent:

Mr. Pardiwalla contended that the issue is settled by the Full Bench judgment in Odeon Builders and the subsequent decision in GE Energy Parts. He argued that the AO had full knowledge of the ITAT order by 12 March 2015, and thus, the limitation period should be computed from that date.

Court's Analysis:

The court referred to the Full Bench decision in Odeon Builders, which emphasized that the period of limitation should commence from when the Department becomes aware of the ITAT order, not when the concerned Commissioner receives it. The court also considered the GE Energy Parts case, where it was held that the limitation period begins when the Department has knowledge of the ITAT order.

Conclusion:

The court found no justification to interfere with the ITAT's view, which was based on the principles enunciated in the aforementioned decisions. The appeal raised no substantial question of law and was dismissed.

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