CHAMBAL FERTILISERS AND CHEMICALS LIMITED vs. PRINCIPAL COMMISSIOER OF INCOME TAX

PDF · subscribers
CW/5144/2022HC RajasthanRJHC02025863202226 February 2024Author: MANINDRA MOHAN SHRIVASTAVA,BHUWAN GOYAL3 pages
AI SummaryAllowed

What did the High Court hold?

The Tribunal held that the period of limitation for exercising powers under Section 263 of the Income Tax Act, 1961, must be reckoned from the date of the original assessment order, not from the date of the reassessment order. This decision was based on the authoritative pronouncement of the Supreme Court in Commissioner of Income Tax Vs. Industrial Development Bank of India Ltd. The Supreme Court, in turn, relied on its earlier decision in Commissioner of Income Tax, Chennai vs. Alagendran Finance Ltd. The reasoning is that if the issues before the Commissioner under Section 263 relate to the subject matter of reassessment, the limitation would start from the reassessment order. However, if the subject matter of reassessment is distinct and different from the issues before the Commissioner, the relevant date for limitation is the original assessment order. In this case, the notice impugned was found to be without jurisdiction and barred by limitation. The petition was allowed, and the notice was set aside.

What were the facts?

The petitioner, Chambal Fertilisers And Chemicals Limited, filed a writ petition challenging a notice issued under Section 263 of the Income Tax Act, 1961. The petitioner sought early listing of the case, arguing that the issue was covered by a Supreme Court decision. The core of the dispute concerned the starting point for calculating the limitation period for passing an order under Section 263. Specifically, the question was whether the limitation should be reckoned from the date of the original assessment order or the date of a reassessment order. The respondents are the Principal Commissioner of Income Tax and the Assistant Commissioner of Income Tax.

What were the issues?

1. Whether the period of limitation for passing an order under Section 263 of the Income Tax Act, 1961, is to be reckoned from the date of the original assessment order or from the date of the reassessment order? (Question of law) Assessee's Contention: The petitioner implicitly argued that the limitation period should be calculated in a manner that would render the notice under Section 263 invalid, as evidenced by their prayer for the notice to be set aside. They relied on the Supreme Court's decision in Commissioner of Income Tax Vs. Industrial Development Bank of India Ltd. to support their claim. Revenue's Contention: The learned counsel for the respondents did not dispute the legal position as laid down by the Supreme Court, indicating no argument was presented against the assessee's interpretation of the limitation period.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 5144/2022 Chambal Fertilisers And Chemicals Limited, Having Its Registered Office At Gadepan, Kota (Rajasthan) 3254208 Through Its Au- thorised Representative Shri Abhay Baijal S/o T N Baijal Aged 61 Years R/o G-30, Ground Floor, Saket, New Delhi 110017 ----Petitioner Versus 1. Principal Commissioer Of Income Tax, (Pcit) Aaykar Bhawan, Subcity Centre, Savina Udaipur 313001 2. Assistant Commissioner Of Income Tax, Room No. 207, Ii Floor, Dainik Navjyoti Building, Rawat Bhata Road, Circle 2 Kota 323307 ----Respondents For Petitioner(s) : Mr. Sanjay Jhanwar, Sr.Adv. Assisted by Mr. Aryan Singh For Respondent(s) : Mr. Shantanu Sharma with Ms. Bhawna Laddha HON'BLE THE CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA HON'BLE MR. JUSTICE BHUWAN GOYAL

Order 26/02/2024 1. [CW-5144/2022] of original assessment order or from the date of reassessment order.

3.

The Supreme Court in the aforesaid decision in the case of Commissioner of Income Tax(supra) has held as follows:- “3. At the outset, it is required to be noted and it is not in dispute that, as such, the Commissioner exercised powers under Section 263 of the Act with respect to the issues which were not covered in the re-assessment proceedings. Therefore, the issues before the Commissioner while exercising the powers under Section 263 of the Act relate back to the original Assessment Order and, there- fore, the limitation would start from the original Assessment Order and not from the Reassessment Order. We are fortified with our view by the de- Assessment is re-opened, the previous order of assessment will be held to be set aside and the whole proceedings would start afresh but the same would not mean that even when the subject mat- ter of re-assessment is distinct and different, the entire proceedings of assessment would be deemed to have been re-opened. Meaning thereby, only in a case where the issues before the Commissioner at the time of exercising powers under Section 263 of the Act relate to the subject matter of re-assessment, the limitation would start from the date of Re-assessment Order. However, if the subject matter of the re-assessment is distinct and different, in that case the relevant date for the purpose of determination of period of limitation for exercising powers under Section 263 of the Act would be the date of the original Assessment Order.”

4.

In view of the aforesaid authoritative pronouncement, it is clear that for the purposes of exercising powers under Section 263 of Income Tax Act, 1961, the period of limitation for passing the order has to be reckoned from the date of original assessment order and not from the date of reassessment order.

(3 of 3) [CW-5144/2022]

5.

The aforesaid legal position is not disputed by learned counsel for the respondents.

6.

In view of the above, the notice impugned cannot be sustained in law and, therefore, the same is set aside being with- out jurisdiction and barred by limitation.

7.

The petition is accordingly allowed. (BHUWAN GOYAL),J (MANINDRA MOHAN SHRIVASTAVA),CJ N.Gandhi-Anu/42/

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →