Limitation after remand bars further tax demand when fresh assessment is not completed within the statutory period.

Where a fresh assessment order is not passed within the limitation period prescribed under Section 153(3) read with Section 153(4) of the Income-tax Act after remand by the Tribunal, the return filed by the assessee is deemed accepted and cannot be disturbed. The Bombay High Court held that the Assessing Officer's failure to complete the reassessment within the statutory time limit prevented the revenue from raising any further demand on the basis of the time-barred proceedings. The Court also noted that the revenue could not escape the statutory consequence of its own inaction. Mandamus was therefore issued directing acceptance of the returned income.

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Issues: Whether, after the expiry of the limitation period prescribed under Section 153(3) read with Section 153(4) of the Income-tax Act, 1961 for passing a fresh assessment order pursuant to remand by the Tribunal, the returned income must be accepted as final.

Analysis: The assessment had been set aside in part by the Tribunal and the revenue did not pass a fresh assessment order within the extended limitation period. The Court held that where the Assessing Officer fails to complete the assessment within the statutory time limit after remand, the consequence is that the return filed by the assessee cannot be disturbed. Reliance was placed on the principle that failure to make a fresh assessment after the earlier assessment is set aside amounts to deemed acceptance of the return and no further demand can be raised. The Court also noted that the revenue could not avoid the statutory consequence of its own inaction.

Conclusion: The returned income for the assessment year in question was required to be accepted as such, and the writ petition was allowed.

Final Conclusion: The Court granted mandamus directing acceptance of the assessee's returned income because the statutory time limit for passing a fresh assessment order had expired without any such order being passed.

Ratio Decidendi: If a fresh assessment order is not passed within the limitation period prescribed after remand, the assessee's return is deemed accepted and the revenue cannot raise a further demand on the basis of the time-barred assessment proceedings.

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