TaxTMI 
TaxTMI 
2011 (12) TMI 426
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....ax Act, 1961, was concerned which incidentally provides that no order of assessment shall he made under section 143 or 144 at any time after the expiry of 21 months from the end of the financial year when income was first assessable. 3. The Commissioner of Income-tax (Appeals) was grossly in error to ignore the specific statutory provision of section of 153(1) in which the words specified are 'shall be made' and nowhere explicitly or implicitly the term 'shall be served' has been mentioned. 4. The learned Commissioner of Income-tax (Appeals) was grossly in error to import the condition that assessment order made in accordance with the provisions of section 153(1) shall be valid only when such assessment order and demand notice are also served on the assessee within the period prescribed under section 133(1) of the Income-tax Act, 1961. 5. The learned appellate authority was not justified to ignore the legislative intent specified in section 143(2)/148/156(1) and other sections in which it is stated that the Assessing Officer, 'shall serve on the assessee' as compared to the specification stated in section 153(1). The Legislature in its wisdom has not used the term 'shall ....
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....ted in [1985] 151 ITR 216 (Gauhati) in which their Lordships had held that as per sub-section (1) of section 153 of the Income-tax Act, 1961, the Assessing Officer is required to pass an order of assessment within the limitation period. It does not require that the demand notice and assessment order shall also be issued within that limitation period. The hon'ble High Court has clearly distinguished the legislative intent regarding making of the assessment order and service of demand notice. In other words, the statute requires the income-tax authority to serve any notice of demand under section 156 of the Income-tax Act on the assessee not necessarily within the period of limitation under section 153(1) of the Income-tax Act. 11. The learned Commissioner of Income-tax (Appeals) was not justified to ignore to adjudicate the substantive grounds of appeal on merits." The cross-objections filed by the assessee are raising the issues in the way of supporting the impugned orders of the learned Commissioner of Income-tax (Appeals) and they are also common, as noted hereunder : "1. That the impugned order dated July 26, 2011 passed by the learned Commissioner of Income-tax (Appea....
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....citations relied on by the assessee has passed the impugned orders holding that the assessments made by the Assessing Officer for these assessment years are barred by limitation and he consequently found that the said assessment orders are non est and ineffective in law. Aggrieved with the said orders of the learned Commissioner of Incometax (Appeals), the Department is in appeal, whereas the assessee has filed cross-objections supporting the impugned orders of the learned Commissioner of Income-tax (Appeals). During the course of hearing, the learned Departmental representative vehemently contended that the orders of the learned Commissioner of Income-tax (Appeals) are unsustainable for legal scrutiny as the Assessing Officer has passed the assessment orders within the prescribed time limit prescribed in the statute. The service of the said orders to the assessee is not all contemplated in the Act. Hence, the learned Commissioner of Income-tax (Appeals) went wrong in observing that communication of order is a condition precedent for an order of assessment becoming effective. Apart from that the learned Departmental representative has relied on the following decisions : (....
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....the Act for passing the assessment orders but the said orders were sent for communication to the assessee after the expiry of the time limit for passing the assessment orders. Now coming to the fact dates of passing of the assessment orders and service thereof to the assessee, it is found that the assessments were passed on December 29, 2009, but they were served to the assessee on March 26, 2010, i.e., after three months approximately. Basing on this delayed service, the learned authorised representative for the assessee contended that the provisions as contemplated in section 153(2) of the Income-tax Act, 1961 clearly mandates that the assessment be made before the period of limitation. This provision was interpreted by various judicial forums including the hon'ble apex court and the hon'ble Kerala High Court and the Income-tax Appellate Tribunal, Jodhpur Bench holding that the provision requires that in order to be effective, the assessment order passed not only before the expiry of the limitation period but also be communicated to the assessee before expiration of the limitation period. He further contended that even before the Tribunal also the Department is not able to show o....
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....communicated. This is not only by reason of section 30 of the Kerala Agricultural Income-tax Act, 1950, but also for a more fundamental reason, namely, that a party against whom an order is made must be put on notice of that order. The date of making or signing the order is not determinative of its effect. At that stage, the order is only unilateral in a sense and not irrevocable ; it becomes bilateral or binding only on communication. 2. In the case of Commissioner of Agricultural Income-tax v. Kappumalai Estate [1998] 234 ITR 187 (Ker), the hon'ble Kerala High Court has taken a similar view. 3. In Shanti Lal Godawat v. Asst. CIT [2009] 126 TTJ (Jodh) 135, the Income-tax Appellate Tribunal, Jodhpur Bench, the assessment order though passed on December 28, 2007, it was despatched to the assessee on January 2, 2008 and accordingly served on the assessee. The Tribunal held that the last date of passing the order being December 31, 2007, the assessment orders served on January 2, 2008, were beyond the period of limitation and as such, the assessment orders are non est and ineffective under law. 4. The hon'ble apex court in the case of B. J. Shelat v. State of Gujarat reported in AI....
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....oy Industry P. Ltd. v. CIT [1993] 202 ITR 671 (Cal), the hon'ble Calcutta High Court has considered the issue of assessment order passed on October 15, 1980, served on October 22, 1980, with a delay of seven days. In the case of Prem Nath Motors P. Ltd. v. CST [1991] 82 STC 124 (Delhi), the hon'ble Delhi High Court has considered the issue whether the assessment order should be barred by limitation just because the demand notice was served on the assessee beyond the time barred period. In the case of Elkom Enterprises P. Ltd. v. ITO, Income-tax Appellate Tribunal, Kolkata Bench, the issue involved is whether the assessment order and the demand notice dated December 27, 2007, served on April 7, 2008, is barred by limitation or not. In this case the facts are that the assessment years are involved 2005-06 and 2006-07. For the assessment year 2006-07, the assessment order was generated on February 8, 2008, on the basis of return after adjustment against demand that has arisen from the assessment order relating to the assessment year 2005-06. This shows that the assessment order for the assessment year 2005-06 was passed on February 8, 2008 and the assessment records for the assessme....