P. RAVIKUMAR,NAMAKKAL vs. ITO, WARD-1, NAMAKKAL

This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), DELHI [CIT(A)] dated 08.08.2024 for Assessment Year 2011-12.

In this appeal, the assessee has raised eight (8) grounds of appeal. However, the counsel for the assessee has pressed a ground of limitation which is as under: ‘’2. On the facts and circumstances of the case the lower authorities are not justified in not accepting the position that the assessment framed is barred by limitation in terms of section 153(2) of the Income tax act, in as much as for the notice issued u/s 148 of the Act dated 24.03.2018 the assessment should have been completed on or before 31.12.2018 but the assessment was completed by order dated 29.11.2019, which order is barred by limitation’.

Brief facts are that the appellant is a resident individual. As per AIR (Annual Information Return) Information available with the Ld. AO's office, the appellant had made cash deposits during the Financial Year 2010-11 relevant to the Assessment Year 2011-12 amounting to Rs.14,12,500/- into his savings bank account with M/s. ICICI Bank Limited, Namakkal. But, on verification with the AST module, it was ascertained that the appellant had not filed his return of income for the said assessment year. In the absence of return of Income for the assessment year 2011-12, it would be absolutely impossible for the Assessing Officer to ascertain the sources for such cash deposits made by the appellant during the year under consideration. The Assessment order u/s. 144 r.w.s. 147 of the I.T. Act was passed on 29.11.2019 by assessing total income at Rs. 15,31,000/-. The Ld. AO made addition of Rs. 14,12,500/- on account of unexplained cash deposited into his bank account. Aggrieved the appellant filed an appeal before the ld. CIT(A).

Before the ld. CIT(A), the appellant has pleaded on the ground that issue of notice u/s 148 of the Act on 24.03.2018 was barred by limitation. As per the submission of the appellant referring to Section 153(2) amended by Finance Act 2010 since the notice u/s. 148 was issued on 24.3.2018, hence the assessment order should have been passed within nine months ie on or before 31.12.2018. The submission of the appellant was considered by the ld. CIT(A) but observed that the appellant had not filed return of income in response to notice u/s. 148 dated 24.03.2018 and hence, Ld.AO had to issue notice u/s. 142(1)/ 129 on 24.8.2018. The appellant filed the return of income on 25.8.2018 admitting total income of Rs.1,18,500/-. As per the facts of the case, as the return was filed on 25.8.2018 for A.Y. 2011-12, the due date for filing the return was 31.3.2012. In case the return would have been filed on or before the due date, then the time limit for passing order u/s. 143(3) would be 2 years from the end of the assessment year in which the return was filed, But in the present case, as the return was not filed on or before the due date for filing of return, hence the time limit for passing order u/s. 143(3) would be 2 years from the end of the F.Y. in which the return was filed [i.e. 31.3.2019]. Thus the time limit would be for the appellant's case 31.03.2021. As per the ld. CIT(A) in the present case, the Ld.AO has passed the order u./s. 144 r.ws. 147 on 29.11.2019 was well within the time i.e. 31.03.2021, hence the ground raised

Per contra, the ld.DR, Ms. T. M.Suganthamala, Addl.CIT relied upon the paras 6 and 6.2 of the impugned order and vehemently bolstered the findings of the ld.CIT(A).

We have heard the rival submissions and perused the orders of the lower authorities. The sole grievance of the asssessee before us is that the assessment order dated 29.11.2019 passed u/s 144 r.w.s 147 of the Act is barred as per provisions of section 153(2) of the Income Tax Act, 1961 (‘Act’ in short).

The time limitation for framing assessment, reassessment or computation has been provided in section 153 of the Act. The relevant section 153 is as under: ‘’153. Time limit for completion of assessment, reassessment and recomputation. (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 recomputation 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’.

Having plain reading of the proviso to section 153(2) of the Act, we find clue and analyse that the time period for passing assessment, reassessment or recomputation prior to 01.04.2019 is “nine months” from the end of the financial year in which the notice u/s 148 was served. It is also clear that after 01.04.2019, the provisions of this sub-section shall have effect, as if for the words “nine months”, the words “twelve months” had been substituted.

Now coming to the facts of this case, we find from the chart of para 5 of the assessment order that the notice u/s 148 was issued on 24.03.2018 and served upon the assessee through e-proceedings on 24.03.2018 itself. The crucial line in the section 153(2) is: “after the expiry of nine months from the end of the financial year in which the notice u/s 148 was served”: Provided that ……… Hence, we find force in the argument of the ld. Counsel for the assessee for the simple reason that, as per section 153(2), the time limit for completion of assessment , reassessment or computation shall be nine months from the end of the financial year in which notice u/s 148 was served. In the present case, if we go by the date of notice u/s 148 of the Act i.e. 24.03.2018 which is served on the 24.03.2018, the time limit for completing the assessment u/s 147 was available upto 31.12.2018 and thus, the assessment order passed by the Assessing Officer (‘AO’ in short) u/s 144 r.w.s. 147 dated 29.11.2019 is clearly barred by limitation and thus we quash the re-assessment order dated 29.11.2019.

Since we have decided the G.No.2 in favour of assessee hence other grounds raised