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Facts
The assessee filed returns for AY 1992-93 and 1993-94, with assessments completed under Section 143(3). Reassessment proceedings were initiated under Section 147/148 on 17.06.1997 due to alleged excess deductions under Section 80HHD and 80HHC. The assessee challenged these proceedings through a writ petition, securing an interim stay from the High Court. After the High Court's final order in January 2020, the AO passed the reassessment order on 28.09.2021, which was subsequently upheld by the CIT(A).
Held
The Tribunal held that the period of the High Court's stay (December 22, 1997 to January 22, 2020) must be excluded for limitation purposes. Applying Section 153 as it stood before the Finance Act, 2016, and considering the exclusion, the last date for completing the reassessment was May 1, 2021. The Tribunal found the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and related notifications inapplicable as the original limitation period did not fall within their extended dates. Therefore, the reassessment order passed on September 28, 2021, was time-barred and quashed.
Key Issues
Whether the reassessment order passed under Section 147 of the Income Tax Act, 1961, was barred by limitation, considering the period of judicial stay and the applicability of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and related notifications.
Sections Cited
147, 148, 143(3), 153, 153(2), 151, 80HHD, 80HHC, 263, 144B, 142(1), 143(2), 144C(13), Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
O R D E R Per Rajesh Kumar, AM:
Earlier case was heard on 27.01.2025 and thereafter the case was fixed for clarification on 16.05.2025 on certain issues & both the parties have been heard on 16.05.2025. These are the cross appeals preferred against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 12.10.2023 & 05.10.2023 for the AYs1992-93 & 1993-94 respectively.
“1. Section 153: Reassessment Proceedings barred by law as per the provisions of section 153 of the Act Tax Impact - Not Applicable] a) That on the facts and in the circumstances of the case, the learned CIT(A) erred in not accepting that the impugned reassessment order passed by National Faceless Assessment Centre ("NFAC") was beyond the time limit prescribed under the provisions of the Income-tax Act, 1961 ("the Act") for passing of the said order and thus the impugned reassessment order is bad in law and liable to be quashed. b) That on the facts and in the circumstances of the case, the learned CIT(A) erred in not appreciating the fact that the instant reassessment proceedings were already time barred on 01 May 2021 and that the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and the notifications issued thereunder are not applicable to the instant reassessment proceedings. c) That on the facts and in the circumstances of the case, the learned CIT(A) erred in stating that there is no merit in appellant's contention that reassessment proceedings are barred by law. Relief Prayed: The impugned reassessment order may kindly be held as time barred as per the provisions of section 153 of the Act and quashed.”
The facts in brief are that the assessee filed the return of income on 30.12.1992, which was revised on 30.03.1994, declaring total income at ₹162,97,59,233/-. The case of the assessee was selected for scrutiny and assessment was accordingly completed u/s 143(3) of the Act vide order dated 28.02.1995, assessing the income at ₹165,65,02,220/-. While framing the assessment the assessee was allowed deduction u/s 80HHD and 80HHC of the Income-tax Act, 1961 (the Act) at ₹11,69,99,014/- and ₹11,73,61,242/- respectively qua which the assessee had filed audited report in form no.10CCAD and 10CCAC respectively. The assessee is engaged in the business of manufacturing and trading of cigarettes and tobacco, agro-products, paper and hotel business etc. According to the ld. AO the assessee is entitled to deduction u/s 80HHD of ₹3,44,67,125/- as against the
In the appellate proceedings, the CIT (A) dismissed the appeal on this issue after taking into account contentions raised by the assessee and thus upheld the order of AO.
The ld. AR vehemently submitted before us that the assessment framed by the ld. AO is hopelessly barred by limitation and therefore, the same deserved to be quashed as being passed in violation of timeline prescribed u/s 153(2) of the Act. The ld. AR submitted that the assessment was framed u/s 143(3) vide order dated 28.02.1995.Thereafter notice u/s 148 of the Act was issued on 17.01.1997 and served on the assessee on 18.06.1997, a copy of which is available at page no. 62 of the Paper Book. The ld. AR further submitted that in terms of provisions of Section 153(2) of the Act as was applicable at the relevant point of time, no assessment shall be framed u/s 147 of the Act after expiry of two years from the end of financial year in which the notice u/s 148 was issued. The ld. AR submitted that the assessee has challenged the assessment proceedings by filing the writ petition before the Hon'ble Calcutta High Court and Hon'ble High Court has passed an interim order directing the revenue that no final assessment order shall be passed without the leave of the court. The ld AR submitted that during the pendency of the writ petitions, section 153 of the Act was substituted by the Finance Act, 2016 with effect from June 1, 2016 by inserting a proviso in sub-section (9) of the substituted section by the Finance Act, 2017 with retrospective effect from June 1, 2016. Sub-section (9)
The ld AR while referring to the assessment order submitted that , the Assessing Officer had accepted the Assessee's calculation of limitation as correct (paragraph 5.7 of the assessment order for the assessment
The ld. AR ,in rebuttal, submitted that the question whether two years' time granted by the proviso to sub-section (2) of section 153 of the Act in respect of notices served during the financial year 1999-2000 can be applied in a case where the notice under section 148 of the Act was served during any other period came up for consideration before
The ld DR strongly objected to the arguments of the ld AR by submitting that limitation of two years from the end of the financial year in which the notice under section 148 was issued as contained in section 153(2) of the Act as it stood on the date of issue of the notice under section 148 of the Act would apply and not the curtailed period of one year consequent to the amendment made by the Finance Act, 2001 and therefore same is without merit. The ld Dr also filed detailed submissions supporting the order of lower authorities on the issue of limitation which are considered and placed in the appellate folder.
We have heard the rival contentions of both the parties and perused the records placed before us carefully including the interim and final orders passed by the Hon’ble Jurisdictional High Court. In our considered opinion it is settled position of law that the time taken during which the matter remained stayed by the Hon’ble High Court "(9) The provisions of this section as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment, reassessment or recomputation made before the 1st day of June, 2016: Provided that where a notice under sub-section (1) of section 142 or sub- section (2) of section 143 or section 148 has been issued prior to the 1st day of June,2016 and the assessment or reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of this section as it stood immediately before its substitution by the Finance Act, 2016 (28 of 2016)."
After perusal of the above it is clear that in terms of the aforesaid proviso, for the assessment year 1992-93 notice under section 148 was issued prior to June 1, 2016, but no order could be passed
We also note that the AO accepted the Assessee's calculation of limitation as correct (paragraph 5.7 of the assessment order however, wrongly relied upon the provisions of the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020 ("TOLA") and Notifications issued thereunder to hold that time was available till September 30, 2021 to pass the assessment order. The ld AO even made reference to the order dated September 23, 2021 passed by the Hon'ble Supreme Court in Miscellaneous Application No. 665 of 2021. Similarly, the appellate order passed by the ld CIT(A) upholding the assessment order is also incorrect as TOLA or Notifications issued thereunder are not application in the instant case. For the sale of ready reference the TOLA provisions are discussed as under:-
(a) Section 3(1) of TOLA sought to extend limitation up to March 31, 2021 where it was to expire between March 20, 2020 and December 31, 2020 (Page 170 at 171-172 of Paper Book for assessment year 1992-93). (b) Notification No. 93/2020 dated December 31, 2020 sought to extend limitation up to March 31, 2021 where it was to expire between March 20, 2020 and March 30, 2021 (Page 210 of Paper Book for assessment year 1992-93).
We do not find any merit in the contention of the Revenue that limitation of two years would apply from the end of the financial year in which the notice under section 148 was issued pursuant section 153(2) of the Act as it stood on the date of issue of the notices under section 148 of the Act and not the curtailed period of one year consequent to the amendment made by the Finance Act, 2001. The proviso to sub-section (9) of section 153 of the Act as it stood at the time when the writ petitions were disposed of by the Hon'ble High Court expressly stipulated completion of reassessment in accordance with the provisions of section 153 of the Act as it stood immediately before its substitution by the Finance Act, 2016 in cases where notice under section 148 of the Act had been issued prior to June 1, 2016 and the reassessment had not been completed by such date because
The case of the assessee find support from the decision of Hon'ble Punjab & Haryana High Court in CIT v Smt. Anchi Devi, (2008) 171 Taxman 228 (P&H) wherein the question whether two years' time granted by the proviso to sub-section (2) of section 153 of the Act in respect of notices served during the financial year 1999-2000 can be applied in a case where the notice under section 148 of the Act was served during any other period was considered.. In the said case, the notice under section 148 of the Act was served on January 11, 2001 i.e. after the period mentioned in the proviso and before June 1, 2001 when the amendment to section 153(2) by the Finance Act, 2001 took effect. The Hon'ble High Court was pleased to hold thus:
"10..... Thus, only in such cases where notices have been served between 1-4- 1999 and 31-3-2000, the Assessing Officer can avail the time-limit of two years from the end of financial year in which notices were served. If the contention of the Department is accepted that even after 1-6-2001, the limit available for completing the assessment would be governed by the law prevalent before 1-6-
17. Therefore we do not find any merit in the revenue contentions that in terms of TOLA the time available for framing the assessment was up to September 30, 2021.
Considering the above facts in the light of provisions of the Act and the ratio laid in the various decisions as discussed above , we hold that the assessment framed by the AO is barred by limitation and is hereby quashed.
Since we have allowed the appeal of the assessee on the legal issue of being barred by limitation , the other grounds raised by the assessee are not being adjudicated at this stage and are left open to be decided if need arises for the same in future.
Since we have quashed the assessment order on the ground of being barred by limitation , the cross appeal by the revenue in No. 1318/KOL/2023 (Assessee’s Appeal) & (Revenue’s Appeal) A.Y. 1993-94
The facts qua A.Y. 1992-93 Vis a Vis A.Y. 1993-94 are as under:
Particulars A.Y. 1992-93 A.Y. 1993-94 Date of notice u/s 148 17.06.1997 17.06.1997 Date of service of notice under section 148 18.06.1997 18.06.1997 Date of High Court’s interim order (100 days remained 22.12.1997 22.12.1997 till the end of the financial year 1997-98) Date of High Court’s final order of disposal 22.01.2020 15.01.2020 Days remaining for completing the reassessment (100 465 465 days plus one year) Last date for passing reassessment order 01.05.2021 24.04.2021 Date of reassessment order 28.09.2021 28.09.2021 Since the legal issue of limitation in assessee’s appeal in A.Y. 1993- 94 are substantially similar to one as in A.Y. 1992-93 wherein we have quashed the assessment as being barred by limitation. Therefore, our decision would , mutatis mutandis , apply to this year as well. Consequently the appeal of the assessee is allowed and appeal of the revenue is dismissed.
In the result, both the appeals of the assessee are allowed and both the appeals of the revenue are dismissed.
Order pronounced in the open court on 19.05.2025.