2026 (4) TMI 274 - HC - Income Tax

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 ... Validity of order passed within the prescribed limitation u/s 153 - Limitation for fresh assessment on remand - Deemed acceptance of return on failure to complete remand assessment HELD THAT: - The Court held that, once the Tribunal's remand order was received in Financial Year 2021-22 and the case involved a reference to the Transfer Pricing Officer, the outer time-limit for completing the fresh assessment expired on 31.03.2024. It was undisputed that no assessment order was passed within that period. In such a situation, the Assessing Officer's inaction denuded him of authority to make any further demand, and the returned income could not be disturbed. The Court rejected the Revenue's contention that finality attached to some earlier findings of the Tribunal would prevent acceptance of the return as filed, and held that non-compliance with the remand directions within limitation resulted in the return having to be accepted as such. [Paras 13, 15, 16, 20] The returned income for AY 2013-14 was directed to be accepted as such, no assessment having been completed within the statutory period after remand. Final Conclusion: The writ petition was allowed. Since no fresh assessment order was passed within the limitation applicable after the Tribunal's remand, the income returned by the petitioner for AY 2013-14 was directed to be accepted. 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.