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Facts
The assessee sold an immovable property and declared income, which was selected for scrutiny. The Assessing Officer adopted the stamp valuation of the property for computing capital gains, leading to an addition. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal held that the assessment order was barred by limitation as it was not passed within the prescribed period under Section 153 of the Income Tax Act.
Key Issues
Whether the assessment order was passed within the period of limitation as prescribed under Section 153 of the Income Tax Act.
Sections Cited
153, 143(2), 143(3), 50C
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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI NIKHIL CHOUDHARY
PER KUL BHARAT, VICE PRESIDENT.: This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 27.09.2024, pertaining to the assessment year 2017-18. The assessee has raised the following grounds of appeal: -
1. The Commissioner of Income Tax (Appeals) has erred in law and on facts in passing the order which is illegal improper and against the principles of natural justice.
1. 2. The Commissioner of Income Tax (Appeals) has erred in law and on facts in passing the order without giving adequate opportunity of being heard.
3. The Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the order which was barred by limitation u/s 153 of Income Tax Act.
Page 2 of 10 4. The Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the addition of Rs.84,68,000/- made by Ld. Assessing Officer by invoking the provisions of section 50C of Income Tax Act.
The Commissioner of Income Tax (Appeals) has erred in law and on facts in passing appellate order which is contrary to the facts and law.
The appellant craves leave to add, amend, alter or withdraw any grounds of appeal or raise any new ground appeal during the pendency of appeal.”
2. The facts giving rise to the present appeal are that in this case, the assessee filed his return of income through electronic mode on 26.03.2018, declaring total income of Rs.56,68,990/-. The case was selected for scrutiny through Computer Assisted Scrutiny System (CASS) for limited scrutiny on the issue of ‘Capital gains/loss on sale of property’. Accordingly, a notice was issued to the assessee u/s 143(2) of the Income Tax Act, 1961 (“Act”, for short) on 09.08.2018 which was duly served upon the assessee through ITBA portal. It was noted by the Assessing Officer that during the year under consideration, the assessee had sold an immovable property at Gata No.3454/0.057, 3455/0.061, 3456/0.025, 3469/0.057, 3452/0.076 and 3468/0.063, total land admeasuring 2565 Sq.mts, situated at Vill- Mau, Pargana- Mohanlalganj, Distt- Lucknow. It is recorded that the property was sold at a sale consideration of Rs.1,00,00,000/-. However, as per the Stamp Valuation, the value of the property was Rs.1,88,59,500/-. Therefore, the assessee was called upon to explain why the value as per stamp valuation should not be adopted for the purpose of the computation of capital gain. In response thereto, the assessee filed his reply which is reproduced by the Assessing Authority in the order citing multiples reasons for the value being declared at a lower value. The Assessing Officer, therefore, referred the matter to the District Valuation Officer who estimated the fair market value of capital asset at Rs.1,84,68,000/-. Under these facts, the Long Term Capital Gain (LTCG) of Rs.1,39,30,412/- Page 3 of 10 was computed by AO adopting sale consideration at Rs.1,84,68,000/-. Therefore, after giving set off of the capital gain as declared in the return of income, the Assessing Officer made further addition of Rs.84,68,000/- on account of Long Term Capital Gain and assessed total income at Rs.1,41,36,990/-. Aggrieved against this, the assessee carried the matter an appeal before the Ld. CIT(A), who after considering the submissions dismissed the appeal of the assessee. Now, the assessee is in appeal before this Tribunal.
The assessee has taken multiples grounds including the grounds that adequate opportunity of being heard to the assessee was not provided by the Ld. CIT(A). Apropos to the grounds of appeal, Ld. Counsel for the assessee contended that the authorities below did not appreciate the facts in right perspective. She further contended that the assessment so framed is barred by time. She drew our attention towards relevant provision of law. On the other hand, the Ld. CIT-DR supported the orders of authorities below.
4. Heard the Ld. Representatives of the parties and perused the material available on records. At the outset, we would decide the issue of limitation as raised by the assessee being a preliminary issue. In this case, the assessment year involved is 2017-18. For the sake of clarity, the chronology of relevant events is stated below: - a) Date of filing of return - 26.03.2018 b) Date of issuance of notice - 09.08.2018 c) Date of receipt valuation report - 05.12.2019 d) Date of assessment order u/s 143(3) of the Act – 20.02.2021 Page 4 of 10 5. In the aforementioned background, now it is to be determined when would be the limitation expiring for framing the assessment. As per the Ld. Counsel, the assessment order should have been passed on as before 31st Dec, 2020. For the sake of clarity, the relevant provision of the Act is reproduced hereinbelow: - “153. Time limit for completion of assessment, reassessment and re-computation. (1)No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable: Provided that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April, 2018, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted: [Provided further that in respect of an order of assessment relating to the assessment year commencing on the— (i)1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "twelve months" had been substituted; (ii)1st day of April, 2020, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted:] [Provided also that in respect of an order of assessment relating to the assessment year commencing on or after the 1st day of April, 2021, the provisions of this sub-section shall have effect, as if for the words "twenty- one months", the words "nine months" had been substituted.] [(1A) Notwithstanding anything contained in sub-section (1), where a return under sub-section (8A) of section 139 is furnished, an order of assessment under section 143 or section 144 may be made at any time before the expiry of nine months from the end of the financial year in which such return was furnished.] (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: Provided that where the notice under section 148 is served on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted. (3)Notwithstanding anything contained in sub-sections (1) and (2), an order of fresh assessment [or fresh order under section 92CA, as the case may be,] in pursuance of an order under section 254 or section 263 or section 264, setting aside or cancelling an assessment, [or an order under section Page 5 of 10 92CA, as the case may be], may be made at any time before the expiry of nine months from the end of the financial year in which the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner: Provided that where the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted. (4)Notwithstanding anything contained in sub-sections (1), (2) and (3), where a reference under sub-section (1) of section 92CA is made during the course of the proceeding for the assessment or reassessment, the period available for completion of assessment or reassessment, as the case may be, under the said sub-sections (1), (2) and (3) shall be extended by twelve months. (5)Where effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 is to be given by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] wholly or partly, otherwise than by making a fresh assessment or reassessment [or fresh order under section 92CA, as the case may be], such effect shall be given within a period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner: Provided that where it is not possible for the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer [or the Transfer Pricing Officer, as the case may be], if satisfied, may allow an additional period of six months to give effect to the order: Provided further that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 shall be made within the time specified in sub-section (3). [(5A) Where the Transfer Pricing Officer gives effect to an order or direction under section 263 by an order under section 92CA and forwards such order to the Assessing Officer, the Assessing Officer shall proceed to modify the order of assessment or reassessment or re-computation, in conformity with such order of the Transfer Pricing Officer, within two months from the end of the month in which such order of the Transfer Pricing Officer is received by him.] (6)Nothing contained in sub-sections (1) and (2) shall apply to the following classes of assessments, reassessments and re-computation which may, subject to the provisions of [sub-sections (3), (5) and (5A)], be completed— Page 6 of 10 (i)where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, section 254, section 260, section 262, section 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, on or before the expiry of twelve months from the end of the month in which such order is received or passed by the Principal Commissioner or Commissioner, as the case may be; or (ii)where, in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147, on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed. (7)Where effect to any order, finding or direction referred to in sub-section (5) or sub-section (6) is to be given by the Assessing Officer, within the time specified in the said sub-sections, and such order has been received or passed, as the case may be, by the income-tax authority specified therein before the 1st day of June, 2016, the Assessing Officer shall give effect to such order, finding or direction, or assess, reassess or recompute the income of the assessee, on or before the 31st day of March, 2017. (8)Notwithstanding anything contained in the foregoing provisions of this section, sub-section (2) of section 153A or sub-section (1) of section 153B, the order of assessment or reassessment, relating to any assessment year, which stands revived under sub-section (2) of section 153A, shall be made within a period of one year from the end of the month of such revival or within the period specified in this section or sub-section (1) of section 153B, whichever is later. (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 re-computation 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). Explanation 1.—For the purposes of this section, in computing the period of limitation— (i)the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proviso to section 129; or (ii)the period during which the assessment proceeding is stayed by an order or injunction of any court; or (iii)the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) [, under clause (i) of the first proviso] to sub-section (3) of section 143 and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, as the case may be, under those clauses is received by the Assessing Officer; or Page 7 of 10 (iv)the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and— (a)ending with the last date on which the assessee is required to furnish a report of such audit under that sub-section; or (b)where such direction is challenged before a court, ending with the date on which the order setting aside such direction is received by the Principal Commissioner or Commissioner; or (v)the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under sub-section (1) of section 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer; or (vi)the period (not exceeding sixty days) commencing from the date on which the Assessing Officer received the declaration under sub-section (1) of section 158A and ending with the date on which the order under sub- section (3) of that section is made by him; or (vii)in a case where an application made before the Income-tax Settlement Commission is rejected by it or is not allowed to be proceeded with by it, the period commencing from the date on which an application is made before the Settlement Commission under section 245C and ending with the date on which the order under sub-section (1) of section 245D is received by the Principal Commissioner or Commissioner under sub-section (2) of that section; or (viii)the period commencing from the date on which an application is made before the Authority for Advance Rulings [or before the Board for Advance Rulings] under sub-section (1) of section 245Q and ending with the date on which the order rejecting the application is received by the Principal Commissioner or Commissioner under sub-section (3) of section 245R; or (ix)the period commencing from the date on which an application is made before the Authority for Advance Rulings [or before the Board for Advance Rulings] under sub-section (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Principal Commissioner or Commissioner under sub-section (7) of section 245R; or (x)the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or (xi)the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub-section (1) of section 144BA and ending on the date on which a direction under sub-section (3) or sub-section (6) or an order under sub- section (5) of the said section is received by the [Assessing Officer; or (xii)the period (not exceeding one hundred and eighty days) commencing from the date on which a search is initiated under section 132 or a requisition is made under section 132A and ending on the date on which the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing seized under section 132 or requisitioned Page 8 of 10 under section 132A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee,— (a)in whose case such search is initiated under section 132 or such requisition is made under section 132A; or (b)to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to; or (c)to whom any books of account or documents seized or requisitioned pertains or pertain to, or any information contained therein, relates to; or][(xiii) the period commencing from the date on which the Assessing Officer makes a reference to the Principal Commissioner or Commissioner under the second proviso to sub-section (3) of section 143 and ending with the date on which the copy of the order under clause (ii) or clause (iii) of the fifteenth proviso to clause (23C) of section 10 or clause (ii) or clause (iii) of sub-section (4) of section 12AB, as the case may be, is received by the Assessing Officer,]shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in sub-sections (1), (2), (3) and sub-section (8) available to the Assessing Officer for making an order of assessment, reassessment or re-computation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly: Provided further that where the period available to the Transfer Pricing Officer is extended to sixty days in accordance with the proviso to sub- section (3A) of section 92CA and the period of limitation available to the Assessing Officer for making an order of assessment, reassessment or re- computation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly: Provided also that where a proceeding before the Settlement Commission abates under section 245HA, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or re-computation, as the case may be, shall, after the exclusion of the period under sub-section (4) of section 245HA, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year; and for the purposes of determining the period of limitation under sections 149, 154, 155 and 158BE and for the purposes of payment of interest under section 244A, this proviso shall also apply accordingly:[Provided also that where the assessee exercises the option to withdraw the application under sub- section (1) of section 245M, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or re-computation, as the case may be, shall, after the exclusion of the period under sub-section (5) of the said section, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year: Provided also that for the purposes of determining the period of limitation under sections 149, 154 and 155, and for the purposes of payment of interest under section 244A, the provisions of the fourth proviso shall apply accordingly.] Explanation 2.—For the purposes of this section, where, by an order referred to in clause (i) of sub-section (6),— Page 9 of 10 (a)any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order; or (b)any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, if such other person was given an opportunity of being heard before the said order was passed.”
6. Therefore, in the light of the aforesaid provision, the order was required to be passed, within 21 months from the end of the relevant assessment. In this case, the assessment year ended on 31st March, 2018. Hence, the AO ought to have completed assessment till 31st Dec, 2020. He has not mentioned any provision of law that extended the normal period of limitation.
7. In the absence of any such reason, we hold that the assessment order is hit by limitation. Hence, cannot be sustained. Accordingly, the impugned assessment order is hereby set aside being barred by time. The ground no. 3 of the assessee’s appeal is allowed. Since we have set aside the assessment order on the ground of limitation. The other grounds are not being adjudicated and kept opened. Appeal of the assessee is partly allowed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open Court on 12/09/2025.