Limitation for recall under section 254(2) runs after excluding service period; low-tax-effect dismissal was reopened.

For an application under section 254(2) of the Income-tax Act, the limitation period was computed by reading that provision with section 268, so the day of service of the impugned order and the period between passing and actual receipt of the order were excluded. Applying that approach, the Tribunal treated the recall application as within limitation. It further held that the earlier dismissal of the appeal for low tax effect could be reopened, and the matter was restored for hearing on merits.

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Issues: Whether, for an application under section 254(2) of the Income-tax Act, 1961, the limitation period is computed from the end of the month in which the order was passed or by excluding the period between passing of the order and its actual receipt by the applicant, and whether the earlier order dismissing the appeal for low tax effect was liable to be recalled.

Analysis: The Tribunal held that the limitation question had to be determined by reading section 254(2) with section 268 of the Income-tax Act, 1961. Section 268 expressly requires exclusion of the day on which the complained order was served, and the provision was treated as reflecting a legislative scheme different from the earlier section 67-A of the Indian Income-tax Act, 1922. Following the binding and directly applicable view that the period between passing of the order and actual receipt of the order is to be excluded, the application was held to be within limitation. The earlier dismissal on the basis of low tax effect was therefore liable to be reopened for hearing on merits.

Conclusion: The limitation objection was rejected, and the recall application was allowed.

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