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Facts
The assessee's assessment for AY 2010-11 (and a similar case for AY 2011-12) was reopened under Section 147/148 of the Income Tax Act. The assessment order, although framed on 31.03.2016, was served on the assessee on 18.08.2016, which was 148 days beyond the statutory limitation period. The assessee challenged this, arguing the assessment was barred by limitation.
Held
The Income Tax Appellate Tribunal (ITAT) held that the assessment order was indeed barred by limitation as it was served beyond the prescribed statutory period. Relying on a co-ordinate bench decision in the assessee's own case for AY 2009-10 and various High Court pronouncements, the Tribunal quashed the assessment order, rendering other issues on merits infructuous.
Key Issues
Whether the assessment order framed under Section 147/143(3) was barred by limitation due to its service beyond the statutory period.
Sections Cited
143(1), 143(3), 147, 148, 139(1), 234B, 14A, 10(22A), 263, 256(2)
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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI DUVVURU RL REDDY, VP & SHRI RAJESH KUMAR, AM
O R D E R Per Rajesh Kumar, AM:
These are the appeals preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 24.03.2025 for the AY 2010-11.
As the facts and circumstances are exactly similar in both the appeals, hence, we first take for A.Y. 2010-11 and decide the issue accordingly.
A.Y. 2010-11 ITA No. 877/KOL/2025
The assessee has challenged the assessment order framed by the ld. AO as barred by limitation on the ground of having been served after more than four months from the end of the limitation period.
3.1. The facts in brief are that the assessee filed his return of income on 01.10.2010, showing the total income of ₹1,65,27,36/-, which was processed u/s 143(1) of the Act. The assessment u/s 143(3) of the Act was framed on 18.03.2013, assessing the income at ₹12,05,31,600/-. Subsequently, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 30.01.2015, which was not complied with by the assessee by filing any return of income. However, the assessee filed a letter dated 09.02.2015, stating that the return filed u/s 139(1) of the Act on 01.10.2010, may be treated as return filed in response to notice u/s 148 of the Act. The assessment was finally framed vide order dated 31.03.2016, passed u/s 147/ 143(3) of the Act.
3.2. In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee.
3.3. The ld. AR vehemently submitted before us that the assessment order is barred by limitation as the same was served on the assessee on 18.08.2015, and therefore, the same is barred by limitation and may kindly be quashed. The ld. AR submitted that the issue is squarely covered by the decision of the co-ordinate bench in assessee’s own case in for A.Y. 2009-10, wherein the issue has been decided in favour of the assessee. The ld. Counsel for the assessee submitted that the assessment was also framed in that case for A.Y. 2009-10, vide order dated 31.03.2016, which were also served on 18.08.2016.
3.4. The ld. DR on the other hand submitted that the assessment order was passed on31.03.2016, which is well within the limitation period and therefore, the ground raised by the assessee may be dismissed.
3.5. After hearing the rival contentions and perusing the materials available on record, we find that though the assessment was framed on 31.03.2016, however, it was served on18.08.2016, after 148 days from the due time. Therefore, the same is barred by limitation. We note that for A.Y. 2009-10, the assessment order was framed on 31.03.2016, and served on the assessee on 18.08.2016, and the co- ordinate bench in vide order dated 05.02.2020, has decided the issue by holding that the assessment is barred by limitation in favor of the assessee. The operative part of the decision is as under:-
“1. This assessee’s appeal for assessment year 2009-10 arises against the CIT(A), 19, Kolkata’s order dated 12-11-2018 passed in case no. CIT(A), Kolkata-19/10413/2017- 18 involving proceedings u/s 147/143(3) of the Income-tax Act, 1961 ( in short ‘Act’). Heard both the learned parties. Case file perused.
2. The assessee’s sole substantive plea during the course of hearing is that the impugned regular re-assessment allegedly framed on 31- 03-2016 itself deserves to be quashed since it was served only on 18-08-2016 i.e. after 140 days. Learned Counsel invited our attention to the CIT(A)’s discussion regarding the instant legal issue as follows:- 4. Grounds No. 1 is in respect of the limitation u/s 147. The appellant has contended that the impugned order u/s 147/143(3) dt. 31.3.2016 was served only on 18:8.2016 i.e. by delay of 140 s 0 buttress its contention, the appellant has also submitted that the demand created by the impugned order was not uploaded on the website of the Department till 18.8.2016. Hence, the order having not been served within reasonable time, the order is bad in law. The appellant has merely taken the plea that the order has been served on 18.8.20.16 and the same has been supported by the uploading of the demand on such date or subsequent date. The uploading of the demand on the web site cannot be a criteria to prove that the demand has been created on such date and neither there was any legal requirement of such uploading during such period. Hence merely because the demand has been uploaded [as contended by the assessee, without any proof the same even) has no legal sanctity since such uploading is for the convenience of the assessee only and can happen even on subsequent dates. Hence, this ground of the appellant is rejected.
3. The Revenue’s case on the other hand is that the assessee’s foregoing legal argument carries no merit since the impugned reassessment had indeed been framed on 31-03-2016. We note in this backdrop of pleadings that the tribunal’s coordinate bench decision in ACIT Vs. Sunil Agarwal dt. 28-02-2019 has decided the very issue of an assessment is validly beyond the stipulated limitation period as under:- 2. We come to Revenue's appeal ITA No.l194/Ko1/2017. Its sole substantive grounds pleads that the CIT(A) has erred in law and on facts in holding the assessment in issue to be framed beyond the stipulated limitation period vide detailed discussion: "2. Aggrieved by the assessment order passed by the Assessing Officer, the appellant had preferred this appeal with the following grounds of appeal. I, That the impugned assessment order dated 3// 03/2014 passed by the Ld. DCIT and served on the appellant on 28/04/2014 is lime barred, illegal and void ab initio.
2. That the impugned assessment order passed u/ s. 143(3) of the Income Tax Act, 1961 by the Ld. DCIT on 31/03/2014 is against law and facts of the case and against the established principles of natural justice.
3. That on facts and circumstances of the case, the Id. ACIT erred in law in making additions of an aggregate sum of Rs. 73,05,000/ - on account of alleged unexplained cash credits appearing in the hooks of accounts.
4. That the Ld. DCIT erred in disallowing the sum of Rs.8, 78,694/-- on account of interest paid by the assessee on unsecured" loans borrowed by the appellant and used for the purpose of his business.
5. That without prejudice, the Id. DCIT erred in adding the sum of Rs.73,05,000/- on account of unexplained cash credit without considering [he peak credit of unsecured loans.
6. That the Ld. DCIT erred in not allowing deduction of Rs.2,83, 789/- claimed by the appellant against net profit from the proprietary business m/s Agarwal Steel Industries on account of interest paid on loans borrowed for the purpose of business.
7. That the Ld. DClT erred in disallowing the slim oIRs.I,344 It/ s 14A of the income lax Act, 1961.
8. That the Id. DCIT erred in charging interest 01 Rs. 9,35,478 u/ s. 234B of the income Ta-x Act, 1961 which is not chargeable in this case.
That the appellant craves leave 10 add, alter or withdraw any ground or grounds of appeal
at or before the hearing of the appeal.
3. Before going into the merits of the case it is important to deal with ground of appeal no I, wherein it has been mentioned that assessment order was served on 28104/2014. According to assessee, order was passed after 3110312014 and the order has got time barred and it is illegal. In support of his proposition, appellant has cited the following judgments/decisions. I. Slate of Andhra Pradesh vs. M Ramakrishtaiah & Co.-
93. STC 40; (SC). 2. ('IT vs. Shri Narayani Chandrika Trust 212 ITR 456 (Ker) 3. Government of Wood Works vs. Stale of Kerala - 69 STC 62 (SC)
4. Mofatlal Industries Ltd. & Another vs. ('TO & Others - 101 STC 461 (ITAT; Kolkata).
5. Shanti Lal Ghodawat & ors. Vs, ACIT- (2009) 7261TJ (Jd) 135 (ITAT. Jodhpur)
6. CIT vs. MA. Rai Bahadur Kishore Chand& Sons - 2008 TMI- 3777 (P &HHC)
7. M/s. Dilip Mohan Seth vs. no - (ITAT, Kolkata) 8. CIT vs. Kappumalai Estate- (/998) 2341TR 167 (Ker) 9. K. Joseph Jacob vs. Agrl. no & Anr. (1991) 190 Il R 464 (Ker).
Malayil Mills vs. Stale of Kerala - (TRC Nos, 15 and 69 (d' (1991) As assessee had leveled serious allegation that assessment order u/s. 143(3) was not passed within the lime limit of 3//03/2014, it was important to look into this issue. Accordingly, AO was requested to intimate the date of service of the assessment order. In his report dated 20/02/20/7 ACIT,Cir-50(I) informed that tear off acknowledgement slip was not available in theassessment records. It was also intimated that assessment order in this case was passed by DCITCentral Cir- 4(3) (erstwhile DCIT; Central, Cir-XXVII, Kolkata). Accordingly, letter was sent to DCI1; Or-4(3) in this regard. DCIT Central Cir- 4(3), vide his feller 22/02/2017, informed that assessment order was not dispatched by post and proof of service, if any, would be in the-assessment records. After receipt of this report another feller was sent to ACIT, Cir-50(1) intimate the date of uploading of computation on ITD, in respect of assessment order. In response, ACI1; Cirr-50(l), vide his letter dt. 09/03/2017, informed that computation/assessment order was not uploaded on ITD. Assessee is very forcefully saying that the assessment order was served on 28/04/20J4 and n has been passed after 31/03/1214. On the other hand A. 0 is not able to submit any proof to counter the allegalion of the assessee, Under the circumstances, 1 do not have any option hullo accept assessee 's submissions in this regard. I have also perused the assessment records and I am separately communicating my observations to Pr. CIT17, in this matter. In view of the facts narrated above and the case laws cited by assessee, if is held that order passed by the A.O was barred by limitation as if appears to have been passed after 31/03/2014, Hence, assessment u/s 143(3) dated 31/03/2014 is quashed. As the assessment order is quashed, merits of the case have not been looked into.
3. Learned Senior Departmental Representative vehemently contends during the course of hearing that the CIT(A) has erred in law and on facts in quashing the impugned assessment to have framed beyond the limitation period prescribed. He quotes hon 'ble jurisdictional high court's decision in CIT' vs. Subrata Roy; [2014] 45 taxmann.com 5/3 (Calcutta) holding that assessment within limitation period cannot be doubted merely because the consequential demand and notice was served after 47 days of the statutory period of limitation. We find no merit in Revenue's instant arguments. The facts remains the CIT(A) made tremendous efforts by way of various correspondence(s) to get all the relevant material on record as to whether the impugned assessment had been framed within the statutory time limit up to 31.03.2014 or not. It has come on record that the assessing authority had also failed to indicate any material on record that the relevant computation had been uploaded even on the department's portal. We therefore hold that the CIT(A) has rightly quashed impugned assessment not framed within the time limitation prescribed. Hon'ble jurisdictional high court's decision CIT vs. Subrata Roy; /2014/ 45 taxmann.com 513 (Calcutta} involves a case where the Revenue had filed sufficient proof before their lordships that the Assessing Officer had framed the assessment in issue within the time period prescribed as against the facts of the instant case. Hon'ble Kerala high court's judgment in CIT vs. Sree Narayan Cltandrika Trust; (/995) 212 IT!? 456(Kerala) in similar facts holds as follows: “ We shall now deal with the other references and applications under Section 256(2) which have been heard along with these references. the questions referred for the year 1978-79 are similar, except that one further question has been referred at the instance of the assessee. namely, "whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the order of the Commissioner of Income-tax passed under Section 263 is not barred hy limitation". We shall deal with this question which arises in Income-tax References Nos. 81 and 82 of 1986 relating to this year.
The Income-tax Officer made an order of assessment on January 12, 1981, holding that income accruing, 10 the assessee-trust fr0111 the firms of which it was a partnerwas exempt under Section 10(22A), as income accruing 10 the hospital, deviating from the stand taken by him earlier. the Commissioner of Income-lax took up the matter in revision on January 11, 1983 and set aside the order of assessment. The revisional order was passed on January 11, 1983. and communicated within a period of six days thereafter. The question was whether the exercise of the revisional power was barred by lime. The Tribunal held otherwise and sustained the order. It is in these circumstances that the additional question has been referred. Sub-section (2)of Section 263 as it stood at the relevant time, prescribed that no order shall he made under Subsection (I) of the section after the expiry of two years from the date of the order sought to be revised. The Tribunal was of the view that the Commissioner had passed his order within the lime prescribed, though it was communicated later. The question as to when an order can be slated to have been made was the subject of consider 01 ion by this court in Government Wood Workshop v. State of Kerala [1988] 69 STC 62 ; [1987] 1 KLT 804 in which this court stated, after relying on various decisions of the Supreme Court culminating in B.J Shelat v. State of Gujarat, AIR 1978 SC 1109, as follows (at page 69) : The order of any authority cannot be said to be passed unless it is in some way pronounced or published or the party effected has the means of knowing it. It is not enough if the order is made, signed, and kept in the file, because such order may be liable to change at the hands of the authority who may modify it, or even destroy it, before it is made known, based on subsequent information, thinking or change of opinion. To make the order complete and effective, it should be issued, so as to be beyond the control of the authority concerned, for any possible change or modification therein. this should be done within the prescribed period, though the actual service of the order may he beyond that period"
The Tribunal has not referred 10 this decision though it is relevant. We feel that the matter has not been considered by the Tribunal in the manner in which it should have been, particularly after advertence to the aforesaid decision. We, therefore, decline to answer the additional question referred at the instance of the assessee in Income-tax References Nos. 81 and 82 of 1986.
5. We adopt foregoing reasoning mutatis mutandis and hold the impugned re- assessment is not sustainable since it was framed beyond the stipulated time limit period. The same is quashed, therefore, the other issues on merits are rendered infructuous.” 3.6. Consequently, we quash the assessment framed in this case to be barred by limitation. The appeal of the assessee is allowed.
4. The issue raised in this appeal is similar to one as decided by us in for A.Y. 2011-12. Accordingly, our decision would, mutatis mutandis, apply to this appeal of assessee in ITA No. 878/KOL/2025 for A.Y. 2011-12 as well. Hence, the appeal of assessee is allowed.
In the result, the both the appeals of the assessee are allowed.
Order pronounced in the open court on 03.11.2025.