2025 (9) TMI 88 - AT - Income Tax

Assessment under section 143(3) r.w.s. 254 held time-barred as limitation expired before belated 28.09.2021 order

Althi Venkata Narendra Raju Versus Deputy Commissioner of Income Tax, Central Circle-1 (2), Chennai.

Althi Venkata Narendra Raju Versus Deputy Commissioner of Income Tax, Central Circle-1 (2), Chennai. - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether an assessment order made after the period specified in section 153(3) of the Income-tax Act, 1961 is void for being barred by limitation where an earlier Tribunal order had set aside the assessment and remitted the matter for fresh adjudication. 2. Whether the reliefs/extension of time under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and subsequent suo motu extensions by higher courts operate to extend the time for completing a 'fresh assessment' under section 153(3) where the period for completion fell due on 31.03.2021 and the fresh assessment was completed on 28.09.2021. 3. Whether established judicial decisions about the meaning of 'fresh assessment' under section 153(3) and limitations jurisprudence (including decisions referred to in the judgment) apply to and control the present facts. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Applicability of section 153(3) to a Tribunal order setting aside assessment and remitting for fresh adjudication Legal framework: Section 153(3) prescribes a time limit for making a 'fresh assessment' in pursuance of an order under section 254 (or under section 250, 263, 264) setting aside or cancelling an assessment; the time is computed from the end of the financial year in which the order under section 254 is received, and specific provisos alter the period for certain assessment years. Precedent treatment: The Tribunal referred to authorities (including a Karnataka High Court decision) holding that when an assessment is 'set aside' and remitted for a full fresh assessment the timing under section 153(3) applies; when only parts of an assessment are set aside and other parts are left intact, the phrase 'fresh assessment' may not be engaged in the same sense. Interpretation and reasoning: The Tribunal noted its earlier order (setting aside the assessment and remitting the entire issue for re-examination) amounted to an order which required a fresh assessment within the time prescribed by section 153(3). The certified copy of the Tribunal order was received on 23.05.2019 and, applying the relevant proviso, the limitation for completion of the fresh assessment expired on 31.03.2021. The Tribunal examined whether the later assessment (dated 28.09.2021) complied with that limitation and concluded it did not. Ratio vs. Obiter: Ratio - where a Tribunal order sets aside an assessment and remits for fresh adjudication, the assessing officer is required to complete the 'fresh assessment' within the time stipulated in section 153(3); failure to do so renders the assessment time-barred. Observations about nuances of partial vs whole setting aside (drawing on precedents) are explanatory. Conclusion: The Tribunal held that section 153(3) applied to the remitted proceedings and the assessing officer was required to complete the fresh assessment by 31.03.2021; the assessment completed on 28.09.2021 was therefore barred by limitation. Issue 2 - Effect of TOLA and suo motu extensions on the limitation for completion of a fresh assessment Legal framework: TOLA (Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020) provided statutory extensions for specified time limits falling between 20.03.2020 and 31.12.2020 by extending such limits to 31.03.2021; the impulse was to provide relief for pandemic-related disruption. Subsequent suo motu judicial extensions were also invoked by Revenue in arguments. Precedent treatment: The Tribunal considered the Apex Court's decision in S. Kasi (2021) and a Jharkhand High Court decision (Rungta Mines) applying S. Kasi, which limited the scope of suo motu extensions and emphasized that such extensions were for the benefit of litigants who could not physically file and do not replace statute-based limitation periods for original adjudicatory functions. Interpretation and reasoning: The Tribunal examined whether TOLA applied to extend the due date in the present case. It held that TOLA applies only where the original due date for completion of the proceeding fell between 20.03.2020 and 31.12.2020; in the present matter the applicable due date (as computed under section 153(3) proviso) was 31.03.2021 and thus did not fall within the TOLA trigger window. Consequently, the statutory TOLA extension could not be invoked to push the 31.03.2021 expiry to 30.09.2021 or later. With respect to suo motu extensions by the Supreme Court, the Tribunal accepted the reasoning in S. Kasi and Rungta Mines that such orders could not enlarge statutory limitation periods for original adjudicatory proceedings where the statute prescribes finite timelines - the suo motu order's purpose was protective for litigants unable to access courts, not to revive or extend original substantive statutory timelines beyond their clear scope. Ratio vs. Obiter: Ratio - TOLA does not operate to extend the time for completion of a fresh assessment under section 153(3) where the original due date itself did not fall in the TOLA-specified window; suo motu judicial extensions cannot be used by Revenue to resurrect proceedings that are otherwise time-barred under the statute. Observations about the policy underlying TOLA and judicial extensions are explanatory. Conclusion: The Tribunal concluded that neither TOLA nor the suo motu extensions cited by Revenue saved the assessment dated 28.09.2021; the statutory time for completing the fresh assessment had expired on 31.03.2021 and therefore the later assessment was barred by limitation. Issue 3 - Application of precedents on 'fresh assessment' and limitation (Wipro, Bhan Textile, S. Kasi, Rungta Mines) Legal framework: Principles established by higher courts on the construction of 'fresh assessment' under section 153(3) and on the limits of judicial suo motu extensions bear upon whether a post-remand assessment is valid when completed after certain dates. Precedent treatment: The Tribunal referred to the Karnataka High Court decision interpreting 'fresh assessment' to mean the entire exercise of assessment when the assessment is set aside, and to the Delhi High Court decision in Bhan Textile supporting the view that when an entire assessment is set aside the time limit in section 153(3) governs the fresh assessment. The Tribunal relied upon the Supreme Court's S. Kasi decision and the Jharkhand High Court's Rungta Mines decision to reject reliance on suo motu extensions. Interpretation and reasoning: The Tribunal considered these authorities as supportive of two propositions: (i) an order setting aside and remitting for de novo consideration triggers the section 153(3) clock for fresh assessment, and (ii) emergency or suo motu extensions cannot be used to expand statutory limitation timelines for original adjudicatory proceedings beyond their explicit applicability. The Tribunal found these authorities applicable and followed their ratios in resolving the limitation question against Revenue. Ratio vs. Obiter: Ratio - the Tribunal followed and applied the controlling principles from the cited authorities to the present facts. Any distinctions noted (for example, where assessments are partially set aside) were treated as factual differentiations and explanatory. Conclusion: The Tribunal treated the cited precedents as directly applicable and followed their ratio to conclude the impugned assessment was time-barred and void. Final Disposition and Consequences Conclusion: The Tribunal set aside the assessment order dated 28.09.2021 as barred by limitation under section 153(3). Because the appellant succeeded on the limitation point (ground No.8), the Tribunal did not adjudicate the other substantive grounds (grounds 1-7) which were held to be academic. The ancillary stay application became infructuous and was dismissed.