2026 (4) TMI 273 - HC - Income Tax

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 ... Assessment proceedings as barred by limitation in view of Section 153(3) r/w Section 153(4) - Limitation for fresh assessment after remand - Deemed acceptance of return on failure to complete assessment within limitation HELD THAT: - The Court held that it was undisputed that no assessment order pursuant to the Tribunal's remand had been passed within the extended period available under Section 153. Once the statutory time for completing the fresh assessment expired, the Assessing Officer could not keep the matter pending and at the same time refuse to give effect to the consequence of such failure. The Court rejected the contention that only the remanded issues would be hit by limitation while earlier findings could survive independently in the absence of a consequential assessment order. It held that non-passing of the order within limitation barred any further demand and the income returned by the assessee had to be accepted as such. In reaching this conclusion, the Court relied upon the principle stated in CIT v. Shelly Products [2003 (5) TMI 4 - SUPREME COURT] and found support from Plasticotes Investments (P.) Ltd. [2014 (8) TMI 204 - BOMBAY HIGH COURT] and Aircom International India (P.) Ltd. [2023 (12) TMI 1380 - DELHI HIGH COURT] [Paras 18, 19, 20, 21, 22] The return of income for AY 2014-15 was directed to be accepted as filed, since no fresh assessment order was passed within the limitation period. Final Conclusion: The writ petition was allowed. Since no assessment order was passed within the statutory period after the Tribunal's remand, the assessee's return for AY 2014-15 was held liable to be accepted as filed. 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.