Time-barred appellate effect order cannot sustain penalty when the original assessment basis has fallen away.

An order giving effect to an appellate order under the income-tax law is treated as part of the assessment process because it recomputes income, tax, demand and related tax credit, and is not a mere administrative step. The text states that such an order must be passed within the prescribed limitation; if no timely order is made, the original assessment basis cannot continue and the return is treated as accepted. It further notes that a penalty for concealment or evasion based on the superseded assessment basis cannot survive, and delay-interest provisions do not cure the time bar or validate a belated assessment.

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Issues: Whether the failure to pass an order giving effect to the appellate order within the limitation prescribed under Section 153 of the Income-tax Act, 1961 caused the assessment proceedings to abate and rendered the penalty proceedings unsustainable.

Analysis: The appellate order required re-characterisation of the receipts, application of the beneficial tax rate, and verification of tax credit, which made the subsequent order giving effect part of the assessment process and not a mere administrative act. Such an order determines rights and liabilities, involves recomputation of income, tax and demand, and must therefore be passed within the statutory time limit. Since no order giving effect was passed within time, the original assessment could not survive; the return of income was to be treated as accepted. The penalty under Section 271(1)(c) was founded on the original assessment basis, and once that basis disappeared, no tax could be said to have been sought to be evaded. Delay-interest provisions could not cure the time-bar nor validate a belated assessment.

Conclusion: The assessment proceedings stood abated, and the penalty order and consequential demand notice were unsustainable; the writ petition was allowed in favour of the assessee.

Ratio Decidendi: An order giving effect to an appellate order under Section 153 is an integral and quasi-judicial part of the assessment process, and if it is not passed within the prescribed limitation, the return is deemed accepted and any penalty founded on the superseded assessment basis cannot survive.

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