2021 (11) TMI 1223 - AT - Income Tax

Assessment orders dated 27.12.2016 and 30.10.2017 held time-barred; 'received' under s.153(2A) means 'had knowledge,' fixing limitation cutoff at 31.03.2016

M/s Qualcom Incorporated USA Versus The Dy. C.I.T, Circle 3 (1) (1) New Delhi

ITAT DELHI - AT held the assessment orders dated 27.12.2016 (draft) and 30.10.2017 (final) are time-barred and therefore quashed as null and void. The ... Time limitation prescribed u/s 153(2A) - when it can be said that the order has been received by the appellant/respondent ? - when would the period of limitation start? - HELD THAT:- When the AO framed order dated 12.03.2015 giving appeal effect to the order of the Tribunal, he was in full knowledge of the decision of the Tribunal. In our considered opinion, the word “received” mentioned in section 153(2A) has to be construed as “having knowledge”. Since the AO had full knowledge of the order of the Tribunal and pursuant to such knowledge, he framed the appeal effect order dated 12.03.2015, therefore, the remaining effect should also have been given on or before 31.03.2016. The draft orders dated 27.12.2016 and final assessment orders dated 30.10.2017 are, therefore, barred by limitation in light of the judicial decisions of Nokia India Private Limited [2017 (9) TMI 1298 - DELHI HIGH COURT] and Dr R.P Patel [2015 (3) TMI 1291 - KERALA HIGH COURT]. Allowing the additional grounds raised by the assessee, we hold that the draft assessment orders and final assessment orders are barred by limitation. Since we have quashed the assessment order as null and void being barred by limitation, we do not find it necessary to dwell into the merits of the case. ISSUES PRESENTED AND CONSIDERED 1. Whether the period of limitation under section 153(2A) of the Income-tax Act begins to run from the date a copy of the Appellate Tribunal's order is 'received' by any of the officers named in the provision (including the CIT (Judicial) or DR) or only when received by the 'concerned'/jurisdictional Commissioner. 2. Whether section 153(2A) is attracted where the appellate order sets aside or remands one or more issues for fresh determination (i.e., whether a partial setting aside/remand attracts the one-year limitation under section 153(2A)). 3. Whether assessment orders (draft and final) framed after expiry of the period prescribed by section 153(2A) are null and void for want of jurisdiction or merely irregular/curable procedural defects. 4. Ancillary question considered: whether internal administrative instructions or departmental arrangements can postpone commencement of limitation under provisions similarly worded (e.g., section 260A/275) or read the word 'concerned' into the statutory text. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Commencement of limitation under section 153(2A): meaning of 'received by' and which officer's receipt triggers limitation Legal framework: Section 153(2A) prescribes that a fresh assessment in pursuance of an appellate/revisional order may be made before expiry of one year from the end of the financial year in which the order under section 250 or 254 is 'received by' the Chief Commissioner or Commissioner or Principal Commissioner, etc. Parallel provisions (section 260A(2)(a), section 275) use substantially similar wording. Precedent treatment: The Court relied on the authoritative interpretation by the jurisdictional High Court which considered identical language in the context of section 260A and answered multiple questions referred to a Larger Bench. That High Court held that 'received' would mean receipt by any of the named officers of the Department, including the CIT (Judicial), and that limitation begins to run from the date the Department/its representative has knowledge of the order; earlier decisions confining receipt to the 'concerned' Commissioner (in different contexts) were distinguished and reconciled in light of the changed statutory and procedural matrix. Interpretation and reasoning: The Tribunal accepted the purposive construction advanced by the High Court: the trigger is the Department's knowledge of the Tribunal's order and not the date on which the particular 'concerned' Commissioner happens to receive the copy. The rationale includes (a) similarity of language across provisions, (b) the statutory purpose of prescribing a fixed, limited time for completing reassessment on remand, (c) procedural realities (pronouncement in open court, presence of DR/CIT (Judicial) gives immediate departmental notice), and (d) administrative arrangements within the Department cannot be used to lengthen statutory limitation periods. The Tribunal treated the word 'received' as equivalent to having knowledge and held that where the AO had knowledge and issued consequential orders, the one-year period under section 153(2A) ran from that point. Ratio vs. Obiter: Ratio - the limitation period under section 153(2A) commences from the date the Tribunal's order is received by any of the officers named in the statute (including CIT (Judicial) / DR), i.e., when the Department has knowledge; administrative internal transmission cannot extend limitation. This follows and applies precedent authority. Conclusion: The Tribunal concluded that the limitation period began when the Department/AO had knowledge (i.e., when a copy was received by any of the named officers), and not only when the 'concerned' Commissioner received it; consequently, orders framed after the prescribed period (in the facts, draft and final orders dated well after expiry) were time-barred. Issue 2 - Applicability of section 153(2A) where assessment is partly set aside/remanded Legal framework: Section 153(2A) applies to fresh assessments made pursuant to appellate or revisional orders setting aside or cancelling an assessment; subsection (3) was made subject to (2A) to demarcate situations governed by the one-year limit. Precedent treatment: The Tribunal relied on High Court decisions which held that section 153(2A) is attracted where an appellate order results in the assessment on an issue being set aside and remanded for fresh adjudication, even if other parts of the assessment remain intact. Those authorities rejected the narrow view that (2A) applies only where the entire assessment is set aside. Interpretation and reasoning: The Tribunal reasoned that the legislature intended to prescribe a time limit for fresh assessments resulting from remand; construing (2A) to apply only when the entire assessment is set aside would defeat the legislative purpose and resurrect the open-ended timelines that (2A) sought to cure. The nature of the remand - requiring fresh determination of issues - is decisive, not whether some parts of the original order were upheld. Ratio vs. Obiter: Ratio - section 153(2A) applies where appellate directions require fresh assessment on remanded issues even if the original assessment is not wholly set aside; (3) applies only where (2A) does not. Conclusion: The Tribunal held that (2A) was attracted because the appellate orders remanded specified issues for fresh determination; therefore the one-year limitation applied to the consequential fresh assessment activity and the AO was bound by that timeline. Issue 3 - Legal consequence of framing assessment after expiry of section 153(2A) limitation: nullity v. irregularity Legal framework: The distinction between orders without jurisdiction (null and void) and orders illegal/irregular but curable was canvassed; Supreme Court guidance on when an order is a nullity was discussed, but the Tribunal principally followed High Court authorities holding that limitation prescribed by section 153(2A) is jurisdictional for making the fresh assessment. Precedent treatment: The Tribunal considered decisions that draw a distinction between lack of inherent jurisdiction (nullity) and mere irregular exercise of jurisdiction (curable). It applied the line of High Court decisions treating actions taken beyond the statutory limitation under section 153(2A) as without jurisdiction and hence void insofar as they purport to act after the time limit. Interpretation and reasoning: Applying the High Court rulings, the Tribunal held that where the AO had knowledge of the Tribunal's decision and proceeded to take consequential action, the remainder of the consequential fresh assessment had to be completed within the statutory one-year window; framing draft/final orders well after that period amounted to actions barred by limitation. Given that section 153(2A) prescribes a substantive time limit for making the fresh assessment, the Tribunal treated orders made beyond that time as null and void for want of jurisdiction in the circumstances of these appeals. Ratio vs. Obiter: Ratio - assessment actions taken pursuant to remand after expiry of the time period under section 153(2A) are barred; in the present factual setting, the Tribunal treated such delayed orders as without jurisdiction and void for limitation. Conclusion: The Tribunal held the draft assessment orders and final assessment orders were barred by limitation and therefore quashed them as null and void; having reached this jurisdictional conclusion, the Tribunal declined to decide merits of the underlying tax issues. Issue 4 - Effect of departmental administrative instructions and whether the word 'concerned' can be read into statutory text Legal framework: Statutory language contains no qualifying prefix 'concerned' in respect of named officers; administrative instructions are internal policy. Precedent treatment: The High Court decisions considered rejected the contention that internal departmental instructions or requirement that the 'concerned' Commissioner receive the certified copy should postpone or alter the statutory commencement of limitation. Interpretation and reasoning: The Tribunal accepted the view that internal administrative arrangements cannot override statutory limitation; reading 'concerned' into the provision is impermissible as it would frustrate the Legislature's intent to fix limitation; the point of departmental knowledge (first receipt) is the practical and statutory trigger. Ratio vs. Obiter: Ratio - departmental administrative instructions cannot alter commencement of limitation; the Court will not read 'concerned' into the statutory text. Conclusion: The Tribunal held that administrative instructions do not affect the statutory starting point; limitation runs from first receipt/knowledge by any named departmental officer.