Limitation after remand controls fresh assessment: if time expires, the returned income stands accepted and no demand survives.

Failure to complete a fresh assessment within the limitation period after a Tribunal remand means the returned income must be accepted as filed. The article explains that, where only one issue is remanded and no assessment order is passed within the extended time under Section 153(3) read with Section 153(4) of the Income-tax Act, the assessment cannot be kept alive and no demand can be raised contrary to the statutory deadline. The limitation lapse does not revive any power to disturb the return already furnished, so the return stands accepted and further tax demand is barred.

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Issues: Whether, on the Assessing Officer's failure to pass an assessment order within the limitation period prescribed under Section 153 after remand by the Tribunal, the return of income for the relevant assessment year was required to be accepted as filed.

Analysis: The Tribunal had remanded only one issue for fresh adjudication, and the undisputed position was that no assessment order pursuant to the remand was passed within the extended limitation under Section 153(3) read with Section 153(4) of the Income-tax Act, 1961. In such circumstances, the Court held that the inaction could not keep the assessment alive or permit a demand to be raised contrary to the statutory time limit. Reliance was placed on the principle that where a fresh assessment cannot be lawfully made after setting aside or remand, the return already furnished stands accepted and no further demand can be enforced. The Court also noted that the limitation failure did not revive any power to disturb the returned income.

Conclusion: The return of income had to be accepted as filed, and the writ petition was allowed.

Ratio Decidendi: Where an assessment is remanded or set aside and the Assessing Officer fails to complete the fresh assessment within the limitation period prescribed by law, the return of income is deemed accepted and no further demand can be raised on that basis.

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