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Facts
The assessee's return for AY 2010-11, processed u/s 143(1), was reopened u/s 147, leading to an assessment order u/s 147/143(3). The Pr. CIT later found the assessment erroneous and prejudicial to the revenue, leading to a revised order and significant additions related to share capital and premium. The assessee subsequently raised an additional ground before the Tribunal, arguing that the assessment order dated 30.12.2015, served on 05.01.2016, was barred by limitation.
Held
The Tribunal held that the issue of limitation was a purely legal question, and as the assessment order dated 30.12.2015 was served on 05.01.2016, beyond the statutory deadline of 31.12.2015 as per Section 153, it was hopelessly barred by limitation. Citing various High Court and Supreme Court decisions, the Tribunal concluded that the assessment order was non-est and a nullity in law, and consequently quashed it along with the consequential penalty order under Section 271(1)(c).
Key Issues
Whether the assessment order, passed by the AO on 30.12.2015 but served on the assessee on 05.01.2016, was barred by limitation under Section 153 of the Income Tax Act, rendering it non-est and a nullity in the eyes of law.
Sections Cited
143(1), 147, 143(3), 133(6), 263, 153, 144, 153B(1), 132, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI SONJOY SARMA, JM
These appeals are preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 31.8.2022 for the AY 2010-11.
At the time of hearing, the assessee raised additional grounds before the Bench which reads as under:-
“The order passed by the ld. AO u/s 263/ 143(3)/ 147 of the Act dated 30.12.2015is hereby barred by limitation and may be quashed as ab-initio, void and nullity, ex-facie. The Ld. A.R vehemently argued before us that the issue raised in the additional ground is a purely legal issue and the assessee is well within its right to raise the issue at any appellate stage as no further
The Ld. D.R on the other hand strongly objected to the admission of additional ground for the reason that the same was not adjudicated before the AO or Ld. CIT(A) and is being raised for the first time before this forum. The Ld. D.R therefore prayed that the legal issue may be dismissed or alternatively may be restored to the file of AO/Ld. CIT(A) which the Bench deems fit.
After hearing the rival contentions and perusing the material on record, we find that the issue raised by the assessee is purely legal issue the facts qua which are available in the records itself and no further verification of facts is required from any quarter whatsoever. We note that the assessee has raised a legal issue that the assessment framed by the ld. AO vide order dated 30.12.2015, is barred by limitation as the order was served on the assessee on 05.01.2016, which is apparently beyond the period of limitation and therefore, we find merit in the contention of the assessee. Since the issue raised before us is purely a legal issue which does not require any further verification of facts and no additional facts are required to be brought on record. Besides, the assessee’s prayers are clearly covered by the decisions of the Hon’ble Apex Court in the case of Jute Corporation of India Ltd. Vs CIT in 187 ITR 688 and National Thermal
The facts in brief are that the assessee filed its return of income on 04.02.2011, declaring total income of ₹6,419/-, which was processed u/s 143(1) of the Act. Thereafter, the case of the assessee was reopened u/s 147 of the Act and order u/s 147/143(3) of the Act, was passed on 30.04.2012, assessing total income of ₹77,830/-. Thereafter, Pr. Commissioner of Income Tax (in short ‘PCIT’) on perusal of the record observed that assessee has e-filed its return on 04.02.2011, declaring total income of ₹6,519/- and the assessee has raised share capital to the tune of ₹44,50,000/- and share premium ₹ 10,44,00,000/- by issue of equity shares. The PCIT also noticed that during the reassessment proceedings, the ld. AO issued notice u/s 133(6) of the Act to the 9 out of 20 subscribers and completed the assessment vide order dated 30.04.2012. According to the PCIT, notices u/s 133(6) of the Act were not served through postal services. In reply to notices u/s 133(6) of the Act, all replies were received in the office, which appears to have been prepared by the same person. The PCIT also noted that the assessee company was a newly started company having no record of any worthwhile business nor any reputation and thus there was no justification for issue of equity shares at high share premium. According to the PCIT, the AO has not carried out any through enquiry calling for intervention u/s 263 of the Act as the order passed by the AO is erroneous and prejudicial to the interest to the Revenue. Finally, the order was revised by the ld. PCIT
The order was in appeal before the ld. CIT (A) and the CIT (A) dismissed the appeal on merit although the legal issue raised before us was taken up before the ld. CIT (A).
The ld. AR vehemently submitted before us that the order passed by the ld. AO u/s 263/143(3)/147 of the Act dated 30.12.2015, should have been passed and served upon the assessee on or before 31.12.2015, in terms of provision of Section 153 of the Act. However, they said was order served upon the assessee on 05.01.2016, meaning thereby that the assessment framed was hopelessly barred by limitation and is non-est and ex-facie nullity in the eyes of the law. The ld. AR submitted that the order was passed u/s 144 of the Act and the communication was made after 5.01.2016 by speed post. The ld. AR in defense of his argument relied on the decision of Hon'ble Orissa High Court in case of PCIT Vs. Nidan in of 2018, I.A. No. 7 of 2019. The assessee also relied on the decision of CIT Vs. BJN Hotels Ltd.[2017] 79 taxmann.com 336 (Karnataka). The ld. AR therefore prayed that the assessment framed by the ld. AO may kindly be quashed.
The ld. DR on the other hand, strongly opposed the arguments of the ld. AR by submitting that the facts qua, the service of order on the assessee are not available before him, and therefore, sometime
In rebuttal, the assessee submitted before the Bench that the case law relied upon by the Department in the case of Mohammed Meeran Shahul Hameed (Supra), was rendered under different facts altogether. The ld. AR submitted that the present case relates to Section 143(3)/144 of the Act and has no action that section 263 of the Act, as relied upon by the Department. In the instant case, the order was dispatched before the limitation period but in the present case in hand, the assessment order was dispatched after the end of limitation period which was admitted by the CIT DR in his communication dated 2.9.2024 is apparent and was served on from the on 5th Jan, 2016, which is clearly barred by limitation period. The
The ld. AR also negated the second contention of the Department that the case law relied upon by the Revenue was qua e- uploading of the order on the portal and has no application to the present case as does not fall within the ambit of the e-proceeding and so delivered by hand. Finally, the ld. AR submitted
We have heard the rival contentions and perused the records as placed before us carefully. We observe that the order passed by the ld. AO u/s 263/143(3)/147 of the Act dated 30.12.2015 should have been served upon the assessee on or before 31.12.2015, in terms of provision of Section 153 of the Act. However, the said was order served upon the assessee on 05.01.2016 by hand delivery and the assessee claimed the same to be hopelessly barred by limitation and “3. The facts in brief are that a search was as conducted under Section 132 of the Income Tax Act, 1961 ('Act') in the case of the Respondent Assessee on 20th May, 2014. Pursuant thereto an assessment was completed under Section 153- A read with Section 144 of the Act and an assessment order was passed for the aforementioned AY on 30th December, 2016.
4. Relevant to the first question sought to be urged, the facts are that the assessment order dated 30th December 2016, was according to the Assessee, dispatched by the Assessing Officer (AO) by post only on 7th January, 2017 and was received by the Assessee on 9th January 2017. Contending that in terms of Section 153-B of the Act the assessment order has to in fact be communicated to the Assessee on or before 31st December, 2016 and therefore, was time barred, the Assessee assailed the said order before the Commissioner Income Tax (Appeals) [CIT (A)] apart from other grounds. However, the CIT (A) observed that the assessment order was dated 30th December, 2016 and there was no material to show that the AO had revisited the order thereafter.
In the result, the appeals of the assessee are allowed.
Order pronounced in the open court on 31.01.2025.