2025 (11) TMI 1174 - HC - Income Tax

Reassessment after 31 March 2015 barred by limitation under s.153(2); typographical date error immaterial, no s.154 remedy

Pr. Commissioner of Income Tax-I Versus Clarion Technologies Private Limited.

The HC upheld the ITAT's factual finding that the reassessment order was passed after 31 Mar 2015 and thus barred by limitation under s.153(2) of the IT ... Rectification of mistake - ITAT failed to consider that a typographical error crept into the date of the reassessment order, which was recorded as 30 March 2015 instead of 31 March 2015. HELD THAT:- ITAT, being the final fact-finding authority, has duly considered this aspect in detail. It has been observed that in the ordinary circumstances, it is not possible that the AO signed the reassessment order on 31 March 2015, pursuant to the direction of the Additional CIT u/s 144A of the IT Act, which was also signed on the same date, i.e. 31 March 2015. In the Impugned Order, there is a specific finding that the reassessment order was passed by the AO somewhere in April 2015. As the said order was passed after 31 March 2015, the reassessment was barred by limitation under Section 153(2) of the IT Act. We find no perversity in the factual findings of the ITAT, which have been rendered after considering all aspects, perusing the record and proceedings before it, reflecting due and proper application of mind. Moreover, in the absence of any rectification proceedings initiated u/s 154 of the IT Act by the Appellant, we do not see any reason, let alone justification, to interfere with the impugned order of the ITAT. No substantial questions of law. ISSUES PRESENTED AND CONSIDERED 1. Whether the reassessment initiated under Section 148 of the Income Tax Act was time-barred having regard to the date on which the reassessment order was signed and the limitation under Section 153(2) of the Income Tax Act. 2. Whether a typographical error in the date of the reassessment order (recorded as 30 March 2015 instead of 31 March 2015) could be rectified in the absence of rectification proceedings under Section 154 of the Income Tax Act. 3. Whether the appellate authorities (CIT(A) and ITAT) erred in holding that the deduction claimed under Section 10B was not allowable for want of approval by the Development Commissioner and whether the alternative claim under Section 10A required fresh consideration by the AO. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Time-bar under Section 153(2) arising from the actual date of signing of the reassessment order Legal framework: Reassessment proceedings under Section 148 are subject to the limitation prescribed by Section 153(2) of the Income Tax Act which fixes the period within which an assessment/reassessment order can be made; the date of signing of the order is material to determine whether the order falls within the statutory period. Precedent Treatment: No specific authorities were relied upon or overruled by the Court; the ITAT's factual determination on the date of passing of the reassessment order was treated as a final fact finding. Interpretation and reasoning: The material on record, including contemporaneous signatures and the sequence of internal directions (specifically the Additional CIT's direction under Section 144A signed on 31 March 2015), were examined. The ITAT found that the reassessment order was actually passed in April 2015 despite being recorded with an earlier date, which placed the order beyond the limitation period under Section 153(2). The Court accepted that the ITAT, as the final fact-finding authority, had considered the contemporaneous record and arrived at a non-perverse finding that the reassessment was effected after 31 March 2015 and therefore barred by limitation. Ratio vs. Obiter: Ratio - where the actual date of passing a reassessment order places it outside the period fixed by Section 153(2), the order is barred by limitation; a recording of an earlier date does not cure a time-bar unless supported by rectification or other valid material. Obiter - none additionally articulated. Conclusion: The Court upheld the ITAT's conclusion that the reassessment order, as passed after 31 March 2015, was time-barred under Section 153(2), and found no reason to interfere with that factual and legal conclusion. Issue 2 - Rectifiability of a typographical error in the date of the reassessment order absent Section 154 proceedings Legal framework: Section 154 prescribes the procedure for rectification of mistakes apparent from the record in orders passed under the Income Tax Act. Rectification of clerical or typographical errors is permissible in appropriate cases, but ordinarily requires initiation of proceedings under Section 154 if correction affects the legality/validity of the order. Precedent Treatment: No direct precedents were invoked; the Court treated the availability and propriety of Section 154 rectification as the prescribed mechanism and noted absence of any such proceeding initiated by the appellant. Interpretation and reasoning: The appellant contended that a typographical error in the date should be rectified to validate the reassessment. The Court noted the appellant's concession that no Section 154 proceedings had been initiated. The ITAT considered the matter and concluded, on available evidence, that the reassessment was in fact passed after the limitation date. Given the absence of any rectification application to correct the date, and the ITAT's specific factual finding that the order was passed post-limitation, the Court held rectification could not be presumed or effected by appellate interference absent compliance with the statutory remedy. Ratio vs. Obiter: Ratio - a purported typographical error in the date of an assessment/reassessment order cannot be rectified by an appellate court in the absence of rectification proceedings under Section 154 where the factual record indicates the order was in fact passed outside the limitation period. Obiter - emphasis on the need for procedural compliance with Section 154 where correction would affect limitation and jurisdictional consequences. Conclusion: The Court declined to permit correction of the date in the absence of Section 154 proceedings and, endorsing the ITAT's factual finding, held there was no basis to treat the recorded date as validating an otherwise time-barred reassessment. Issue 3 - Disallowance of deduction under Section 10B for lack of approval and remand of alternate Section 10A claim Legal framework: Sections 10A and 10B provide tax deductions subject to statutory conditions and approvals (including approvals by Development Commissioner and Board where applicable); disallowance results where statutory conditions/approvals are not met. Appellate authorities have jurisdiction to examine whether conditions precedent for deductions are fulfilled and to remit matters for fresh consideration where necessary. Precedent Treatment: The Court did not rely on or discuss prior judicial pronouncements specific to Sections 10A/10B; it reviewed the appellate record and accepted the ITAT/CIT(A) treatment of these claims. Interpretation and reasoning: The AO disallowed the Section 10B deduction for want of approval by the Development Commissioner and also rejected the alternate Section 10A claim. The CIT(A) upheld the reopening and disallowance under Section 10B but remanded the Section 10A claim to the AO for fresh consideration. The ITAT's Impugned Order was considered in the context of the time-bar and date issue; the Court found that the ITAT had duly considered the factual and legal aspects and rendered findings accordingly. Given the overarching conclusion that reassessment was time-barred, the Court found no perversity in the ITAT's findings and no ground to interfere with the treatment of the substantive deduction claims on the record before it. Ratio vs. Obiter: Ratio - where the reassessment is found to be barred by limitation, the consequential disallowance under Section 10B and the remand of a Section 10A claim as per findings of the appellate authorities will not be disturbed in the absence of perversity in the fact-finding; lower authorities' remand for fresh consideration of alternate claims is appropriate when necessary facts are not fully considered. Obiter - none further. Conclusion: The Court upheld the appellate treatment - disallowance of Section 10B deduction for want of requisite approval and remand of the alternative Section 10A claim to the AO - and found no basis to disturb those conclusions given the factual findings and absence of any properly initiated rectification remedy. Overall Conclusion The Court concluded that the Appeal raised no substantial question of law warranting interference: the ITAT's factual finding that the reassessment was passed after 31 March 2015 and therefore barred by Section 153(2) was not perverse; rectification of the recorded date could not be allowed in the absence of Section 154 proceedings; and there was no justification to disturb the ITAT's treatment of the Section 10B disallowance and remand of the Section 10A issue. The Appeal was dismissed.