Assessment orders passed beyond Section 153(3) time limit declared void and non est in limitation case

ITAT Delhi held that assessment orders passed beyond the statutory time limit under Section 153(3) are void and non est. The limitation period begins from the date of receipt of appellate order by the Departmental representative. Following Delhi HC precedents in Surendra Kumar Jain and Odeon Builders cases, the Tribunal ruled that once an order is listed for pronouncement, the department is deemed aware. Since the appellate order dated 28.02.2019 was received on 28.03.2019, the limitation period expired on 31.12.2019. Assessment orders framed on 23.04.2021 were therefore invalid, and the assessee's appeal was allowed.

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1. ISSUES PRESENTED and CONSIDERED

The core legal issue considered by the Tribunal in these consolidated appeals is whether the assessment orders passed under section 153A read with section 254/143(3) of the Income Tax Act, 1961, are barred by limitation under section 153(3) of the Act. Specifically, the Tribunal examined:

• The point of commencement of the limitation period under section 153(3) for passing fresh assessment orders pursuant to appellate orders under section 254(1) of the Act.
• Whether the date of service of the appellate order on the Commissioner of Income Tax (Appeals) or the Departmental Representative triggers the limitation period.
• The applicability of statutory extensions of limitation period due to the COVID-19 pandemic.
• The legal consequences of passing assessment orders beyond the prescribed limitation period under section 153(3).

2. ISSUE-WISE DETAILED ANALYSIS

Issue: Bar of limitation under section 153(3) of the Income Tax Act for passing fresh assessment orders pursuant to appellate orders under section 254(1)

Relevant legal framework and precedents:

Section 153(3) of the Income Tax Act prescribes that a fresh assessment order in pursuance of an appellate order under section 254 or orders under sections 263 or 264 must be made within nine months from the end of the financial year in which the appellate order is received by the Principal Chief Commissioner or Commissioner or other designated authorities. The proviso extends this period to twelve months where the order is received on or after 1st April 2019.

The limitation period is thus computed from the date of receipt of the appellate order by the designated authorities, not merely from the date when the appellate order is passed or served on any other authority.

Judicial precedents relied upon include:

• Surendra Kumar Jain, Virendra Kumar Jain vs Pr.CIT (Central-III), New Delhi & Anr. (2018) 408 ITR 328 (Del.) - The Delhi High Court held that limitation begins from the date when the departmental representative (DR) receives the copy of the ITAT order. The Court emphasized that once the order is listed for pronouncement, the DR or CIT (Judicial) is deemed aware of the order and the limitation period starts from the date of receipt by the DR.
• CIT vs Odeon Builders (P.) Ltd. 393 ITR 27 (Delhi) - A Full Bench decision affirming that the limitation period commences on receipt of the appellate order by the departmental representative.
• CIT vs Sudhir Choudhrie (2005) 278 ITR 490 (Delhi) - Division Bench decision consistent with the above principle.
• Huawei Telecommunications India Company Pvt. Ltd. vs ACIT, W.P.(C) 7792/2024 judgment dated 28.11.2024 and CIT(IT) v. Qualcomm Incorporated (2024) 159 Taxmann.com 717(Del.) - Recent decisions endorsing the principle that limitation runs from the date the appellate order is received by the designated authority.

Court's interpretation and reasoning:

The Tribunal analyzed the facts and the timeline of service of the appellate order dated 28.02.2019 passed by the ITAT in the first round of proceedings. The order was served on the office of the CIT-DR on 28.03.2019, as evidenced by information obtained under the RTI Act. The Tribunal held that this date of service on the CIT-DR is the relevant date for triggering the limitation period under section 153(3).

The Revenue contended that the limitation period should start only from the date the appellate order was received by the Commissioner of Income Tax (Central-3) on 08.04.2019, not from the date of service on the CIT-DR. The Tribunal rejected this argument, holding that the receipt by the departmental representative is the operative event for commencement of limitation, consistent with judicial precedents.

The Tribunal further observed that the statutory limitation period available under section 153(3) was nine months from the end of the financial year in which the order was received, extended to twelve months for orders received after 1st April 2019. Since the order was received on 28.03.2019, the nine-month period would end on 31.12.2019.

The assessment orders impugned were passed on 23.04.2021, well beyond the prescribed limitation period. The Tribunal rejected the Revenue's contention that extensions due to the COVID-19 pandemic notifications extended the limitation period to 30.04.2021, since the relevant date for receipt was before 1st April 2019, and thus the nine-month rule applied.

Key evidence and findings:

• RTI response dated 27.11.2024 confirming service of ITAT appellate order on CIT-DR on 28.03.2019.
• Assessment orders dated 23.04.2021 passed under section 153A read with section 254/143(3), beyond the nine-month limitation period ending 31.12.2019.
• Judicial precedents establishing that limitation commences from receipt by departmental representative.

Application of law to facts:

The Tribunal applied the statutory provisions and judicial precedents to the facts, concluding that the limitation period commenced on 28.03.2019 when the CIT-DR received the appellate order. The assessments passed on 23.04.2021 were therefore barred by limitation.

Treatment of competing arguments:

The Tribunal considered the Revenue's argument that limitation should start from receipt by the Commissioner of Income Tax (Central-3) on 08.04.2019 and that statutory extensions due to the pandemic applied. However, the Tribunal rejected these contentions, holding that the relevant date is receipt by the departmental representative, not any other authority, and that extensions applicable to orders received after 1st April 2019 do not apply here.

Conclusions:

The Tribunal concluded that all impugned assessment orders were passed beyond the statutory time limit prescribed under section 153(3) and are therefore void and non est at the threshold. Consequently, all appeals filed by the assessee were allowed, and the cross-objections filed by the Revenue arising from time-barred assessment orders were dismissed.

3. SIGNIFICANT HOLDINGS

The Tribunal's crucial legal reasoning is encapsulated in the following verbatim extract from the judgment:

"It is quite evident from the decision in Odean Builders (supra) that limitation begins (for any purpose under the Act) from the point of time when the departmental representative receives the copy of a decision or an order of the ITAT. The evidence on record in this case clearly establishes that the concerned DR (a Commissioner ranking officer) nominated by the revenue received a copy of the ITAT order dated 30.03.2016. The starting point of limitation therefore was 31.03.2016."

This principle was applied to the present facts where the CIT-DR received the ITAT order on 28.03.2019, thereby triggering the limitation period ending 31.12.2019.

The Tribunal established the core principle that the limitation period under section 153(3) for passing fresh assessment orders pursuant to appellate orders under section 254(1) commences from the date of receipt of the appellate order by the departmental representative or designated authority, and that assessment orders passed beyond this period are void.

Final determinations on the issue are:

• The impugned assessment orders dated 23.04.2021 are barred by limitation under section 153(3) of the Income Tax Act.
• The statutory extensions applicable to orders received on or after 1st April 2019 do not apply here as the order was received prior to that date.
• All appeals filed by the assessee challenging these assessments are allowed.
• All cross-objections filed by the Revenue arising from time-barred assessment orders are dismissed.

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