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Facts
The assessee's assessment for AY 2011-12 was completed under Section 143(3). After a partial allowance by the CIT(A), the AO later issued a notice under Section 154 to rectify the consequential order, disallowing MAT credit, claiming a mistake. The CIT(A) dismissed the assessee's appeal against this rectification, including the limitation challenge, leading to the current appeal before the Tribunal.
Held
The Tribunal held that the rectification proceedings initiated by the AO under Section 154 to disallow MAT credit were barred by limitation. Since the MAT credit was not a subject matter of the CIT(A)'s earlier order, the limitation period for rectification should be calculated from the original assessment order dated 17.03.2014. As the Section 154 notice was issued on 17.01.2019, it was beyond the prescribed time limit, rendering the rectification proceedings invalid.
Key Issues
Whether the rectification order passed under Section 154 of the Income Tax Act, 1961 is barred by limitation.
Sections Cited
143(3), 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 17.03.2025 for Assessment Year (AY) 2011-12.
Brief facts of the case are that the appellant is a company incorporated under the provisions of Companies Act, 1956. The assessment was completed by the DCIT, Ward-1, Alappuzha (hereinafter called "the AO") vide order dated 17.03.2014 passed
Being aggrieved, aggrieved by the addition made in the assessment order an appeal was filed before the CIT(A), who vide order dated 06.04.2016 partly allowed the appeal. The AO passed the consequential order giving effect to the CIT(A)’s order on 26.04.2016 reducing the taxable income to Rs. 18,78,0,302/-. Subsequently, the AO issued a notice u/s. 154 of the Act dated 17.01.2019 proposing to amend the consequential order passed to give effect to the CIT(A)’s order passed on 06.04.2016 on the ground that MAT credit available for set off was Rs. 3.5 lakhs only as against Rs. 17.38 lakhs allowed as per assessment record for AY 2010-11. In response to the notice u/s. 154 of the Act the appellant had pleaded ignorance of any mistake in the set off of MAT credit. In the circumstance, the AO, vide order dated 12.02.2019 passed u/s. 154 of the Act disallowed MAT credit of Rs. 13.81 lakhs.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal including the grounds challenging the limitation.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
The learned counsel for the assessee submitted that the AO sought to revise the order giving effect to CIT(A)’s order which is a N.C. John & Sons Private Ltd. blatant mistake as the issue of MAT credit was not subject matter of the CIT(A)’s order. The MAT credit was allowed in the assessment order framed u/s. 143(3) which was passed on 17.03.2014 and, therefore, the limitation period for issue of notice u/s. 154 should be reckoned from 17.03.2014. If so computed the notice u/s. 154 is barred by limitation. Thus, he submits that the proceedings u/s. 154 initiated by the AO are barred by limitation.
On the other hand, the learned Sr. DR submits that the order passed by the CIT(A) is well reasoned and, therefore, no interference is called for.
We have heard the rival contentions and perused the material available on record. The issue that arises for our determination is whether the order passed u/s. 154 of the Act is barred by limitation. The AO sought to rectify the order giving effect to CIT(A)’s order by reducing the amount of MAT credit available for set off against the current demand. However, we notice that the MAT credit was not a subject matter of appeal before the CIT(A). The MAT credit was allowed in the assessment order passed u/s. 143(3) on 17.03.2014. Therefore, the period of limitation would commence from the date of original assessment order. The AO can only seek to rectify the assessment order within a period of 31.03.2018 whereas the present notice u/s. 154 was issued on 17.01.2019, which is clearly barred by limitation. Hence, the rectification proceedings initiated by the AO is bad in law.
Order pronounced in the open court on 30th June, 2025.