Rectification order under Section 154 cancelled for exceeding limitation period and violating natural justice principles

ITAT Ahmedabad quashed rectification order u/s 154 passed by AO on grounds of limitation and natural justice violation. The tribunal found no evidence of notice dated 01.12.2015 being served on assessee before passing rectification order, violating natural justice principles. Additionally, the order dated 19.03.2018 was found to be actually passed on 01.06.2018 per ITD database, making it time-barred beyond four-year limitation period. Revenue failed to explain three-month delay in service despite prompt service of original assessment order. Assessee's appeal was allowed and rectification order cancelled.

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Issues:
1. Rectification order under Section 154 of the Income Tax Act.
2. Violation of natural justice and limitation in passing the rectification order.
3. Opportunity of being heard before passing the order.
4. Date discrepancy in the order under Section 154.
5. Appeal against the order under Section 154.

Analysis:

1. The appeal was filed against the rectification order under Section 154 of the Income Tax Act for the Assessment Year 2011-12, where the AO revised the income of the assessee and disallowed unabsorbed brought forward depreciation claimed by the assessee for A.Y. 2009-10.

2. The main contentions raised by the assessee were that the rectification order was against the principles of natural justice and was barred by limitation. The assessee argued that no opportunity was given before passing the order, and there were discrepancies in the dates mentioned in the order and the actual date of passing the order.

3. The Tribunal directed the Revenue to produce case records to verify the contentions raised by the assessee. It was found that there was no evidence of serving the notice under Section 154 dated 01.12.2015 to the assessee, which was mentioned in the order. The Tribunal concluded that no opportunity was provided to the assessee before passing the order, contravening Section 154(3) of the Act and principles of natural justice.

4. The order under Section 154 allegedly passed on 19.03.2018 had a discrepancy in dates, as it was uploaded in the ITD database with a date of 01.06.2018. The Tribunal noted a significant delay in serving the order to the assessee, raising questions about the validity of the order and the explanation provided by the Revenue.

5. Considering the violations of natural justice, the limitation issue, and the discrepancies in dates, the Tribunal held that the order under Section 154 of the Act dated 19.03.2018 was cancelled, and the appeal by the assessee was allowed, emphasizing the importance of adhering to procedural fairness and statutory timelines in tax assessments.

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