2025 (8) TMI 1781 - HC - Income Tax

Limitation on Reassessment: failure to commence reassessment within the statutory period renders later proceedings void and entitles refund.

Failure by revenue to initiate fresh assessment proceedings within the statutory limitation after a Tribunal remand extinguishes jurisdiction to reopen ... Limitation for fresh assessment u/s 153 - lack of jurisdiction due to non-initiation of remanded proceedings - proceedings before the Transfer Pricing Officer under Section 92CA - Whether the Revenue's failure to initiate fresh assessment proceedings pursuant to the Tribunal's remand within the statutory limitation rendered further action without jurisdiction and entitled the petitioner to refund? HELD THAT: - The Tribunal disposed the appeal by remitting the matter to the Assessing Officer with liberty to initiate fresh proceedings. The Court treated the Tribunal's order as permitting fresh assessment under Section 153, so the period for initiating those proceedings commenced from 31.03.2017 and expired nine months thereafter. No draft assessment or communication initiating proceedings was served on the assessee within that limitation. In the absence of initiation within the statutory period, any attempt now to act on the remand would be without jurisdiction; accordingly the petitioner was entitled to relief reclaiming the tax paid pursuant to the lapsed opportunity to make a fresh assessment. [Paras 11, 12, 13, 15] Final Conclusion: The writ petition is allowed - Revenue was directed to refund the amount paid by the petitioner for assessment year 2005-06 with applicable interest, the refund to be made within twelve weeks, on the ground that remanded proceedings were not initiated within the limitation period and therefore further action would be without jurisdiction. Issues: Whether the respondent-Revenue's failure to initiate fresh assessment proceedings within the statutory limitation period pursuant to the Tribunal's remand (order dated 16.09.2016) renders any subsequent action without jurisdiction and entitles the petitioner to refund of Rs.12,62,160/- with applicable interest for assessment year 2005-06.Analysis: Section 153(5) read with Sections 153(3) and 153(4) of the Income-tax Act, 1961 prescribes the time-frame within which a fresh assessment must be completed after a remand by the Tribunal. The Tribunal's order dated 16.09.2016 reserved liberty to the Revenue to initiate proceedings afresh; the statutory limitation period relevant to that remand ran from 31.03.2017 and expired on 31.12.2017. No draft assessment order or communication initiating proceedings afresh was served on the assessee within the limitation period, and only proceedings before the Transfer Pricing Officer under Section 92CA of the Income-tax Act, 1961 were recorded without compliance with the requirement to commence and complete a reassessment under Section 153 within the prescribed period. Where the statutory time-bar has expired and no action to initiate reassessment within the limitation period was taken, any later attempt to proceed would be without jurisdiction, and the assessee is entitled to restitution in the form of refund of amounts paid pursuant to an assessment that cannot lawfully be reopened.Conclusion: The writ petition is allowed. The respondent-Revenue is directed to refund Rs.12,62,160/- together with applicable interest for the assessment year 2005-06. The refund is to be made within twelve weeks.