ACIT CIR 6(3)(2), MUMBAI vs. KRISHIRAJ TRADING LTD, MUMBAI

Shri Narendra Singh Jangapangi, representing the Department submitted that the CIT(A) has allowed the appeal of the assessee merely on the ground that the assessment order dated 17/03/2016 passed under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) is beyond time limit prescribed under section 153 of the Act. The ld.Departmental Representative submitted that the CIT(A) has failed to take into consideration the fact that the case of assessee was referred by the Competent Authority, i.e. Joint Secretary, Foreign Tax and Tax Research Division, Ministry of Finance, Government of India for seeking information from Commissioner of Taxation, Ministry of Finance, Tax Department, Republic of Cyprus under the ‘Exchange of Information’ Article of Indo-Cyprus DTAA. To support his content the ld.Departmental Representative referred to communications dated 25/03/2015 and 26/03/2016. The ld.Departmental Representative further pointed that whenever such information is sought, the provisions of Explanation-1 to clause(viii) to section 153(3) of the Act are attracted and the time period for completing the assessment is enlarged. The ld.Departmental Representative submitted that in the present case, the assessment under section 143(3) of the Act was completed within the extended time period as provided in Explanation -1, clause(viii). The ld.Departmental Representative prayed that the impugned order may be set aside and the appeal may be restored to the file of CIT(A) for adjudication on merits.

Shri Ajay Nagpal, appearing on behalf of the assessee stated that, reference was made for seeking information under ‘Exchange of Information’ article of Indo-Cyprus DTAA was neither in the knowledge of assessee nor the CIT(A). The ld. Authorized Representative of the assessee fairly submitted that the CIT(A) has allowed the appeal of assessee on the legal ground alone without visiting merits of the addition.

We have heard the submissions made by representatives of both sides and have perused the orders of authorities below. The Assessing Officer passed assessment order under section 143(3) of the Act for assessment year 2012-13 on 17/03/2016. As per the provisions of section 153(1) of the Act, the time limit for passing scrutiny assessment order in the normal course would have expired on 31/03/2015. However, in the present case the time limit for passing assessment order got extended by virtue of operation of Explanation-I Clause (viii) to section 153 of the Act. As per section 153 Explanation-1, clause(viii), if reference is made by a Competent Authority under DTAA, the time limit for passing assessment order gets extended by a period of one year or till the date on which the information requested is last received by PCIT or CIT, whichever is less. For the ready reference the relevant provisions i.e. clause (viii) as it was applicable during the impugned assessment year is reproduced herein below:-