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Facts
The assessee filed an appeal against the CIT(A)'s order for AY 2011-12, with a delay of 156 days which was condoned by the Tribunal. The core issue raised was that the reassessment order, passed by the AO on 04.12.2019 pursuant to a Section 148 notice issued on 24.03.2018, was barred by limitation.
Held
The Tribunal held that as per Section 153(2) of the Income Tax Act, the reassessment should have been completed within nine months from the end of the financial year in which the Section 148 notice was served, i.e., by 31.12.2018. Since the AO completed the assessment on 04.12.2019, it was beyond the statutory time limit, making the assessment order non-est in law and hence, quashed.
Key Issues
Whether the reassessment order passed by the Assessing Officer was barred by limitation under Section 153(2) of the Income Tax Act, 1961, as it was framed beyond the statutory time limit following a Section 148 notice.
Sections Cited
147, 148, 153(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 18.06.2024 for the Assessment Year (hereinafter referred to as "AY”) 2011-12.
At the outset, the Ld. Counsel for the assessee submitted that there is a delay of ‘156’ days in filing of this appeal and explained the reason for cause of delay. Having gone through the facts which led to the delay, we find that there was sufficient cause for the cause of delay and hence, we condone the delay of ‘156’ days and proceed to adjudicate the appeal on merits.
The Ld.AR of the assessee first of all drew our attention to Ground No.4 of grounds of appeal and submitted that the assessment framed by the AO was barred by limitation and therefore, assessment order itself is non-est in the eyes of law.
The Ld.DR supported the action of the AO and doesn’t want us to interfere with the action of the Ld.CIT(A)/NFAC.
Having heard both the parties only on the legal issue that has been raised supra, it would be gainful to reproduce Ground No.4 which reads as under:
4. On the facts and circumstances of the case, the First Appellate authority not justified in sustaining the order of the lower authorities when the legal position is that the order passed by the AO dated 04.12.2019 is barred by limitations in terms of section 153(2) of the Act. For the notice issued u/s.148 dated 24.03.2018, the re- assessment should have been completed on or before 31.12.2018. In as much as the assessment was completed by order dated 04.12.2019 the same is barred by limitation. 6. From a perusal of the aforesaid grounds of appeal, the assessee urges that since notice u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) was issued by the AO on 24.03.2018, consequently, the AO ought to have completed the assessment on or before 31.12.2018 as per the time-line prescribed by limitation stipulated u/s.153(2) of the Act. However, in this case, the assessment was undisputedly completed by order dated 04.12.2019 [i.e. more than a year later] so the assessment order was bad in law, because, it was barred by limitation. In order to adjudicate this issue, it would be gainful to refer to sec.153(2) of the Act, which reads as under:
Time limit for completion of assessment, reassessment and re-computation. …… ….. ….. …… ….. (2) No order of assessment, reassessment or re-computation shall be made under section 147 after the expiry of nine months from the end of the financial year in which the notice under section 148 was served:
From a plain reading of the aforesaid provision of law, it is clear that no order of assessment/re-assessment shall be made u/s.147 of the Act after the expiry of nine (9) months from the end of the Financial Year, in which notice u/s.148 was served. In the present case, notice u/s.148 of the Act was issued by the AO on 24.03.2018. Therefore, the AO had time of nine (9) months from the end of the Financial Year i.e. up to 31.12.2018 to frame the assessment/re-assessment u/s.147 of the Act.
Sec.153(2) prohibits the AO to frame an assessment after 31.12.2018, unless the Revenue was able to show that despite the notice u/s.148 was issued on 24.03.2018, the same hadn’t been served on or before 31.03.2018, and instead it was served upon the assessee only on or after 01.04.2018. But, in this case, the AO categorically recorded in the assessment order that “…………… notice u/s.148 of the Act was issued to the assessee on 24.03.2018 after recording reasons and after obtaining necessary approval from the Ld.PCIT, Salem, and the same was duly served on the assessee”. In the light of the factual assertion as made by AO of issue and serving of notice in March 2018, we are of the view that he was duty bound to frame the assessment on or before 31.12.2018 as
per the time-line prescribed by limitation stipulated u/s.153(2) of the Act.
In other words, the AO was barred from framing the assessment/reassessment after 31.12.2018 and therefore, the impugned assessment order dated 04.12.2019 [after a year] is certainly barred by limitation and therefore, the ibid legal issue raised by the assessee is allowed in its favour and the impugned assessment order dated 04.12.2019 is held to be non-est in the eyes of law and therefore, quashed.
In the result, appeal filed by the assessee is allowed.
Order pronounced on the 26th day of May, 2025, in Chennai.