Case Law Details

Case Name : U.P. Forest Corporation Lucknow Vs DCIT (ITAT Lucknow)
Appeal Number : ITA No. 824 & 825/LKW/2014
Date of Judgement/Order : 23/09/2015
Related Assessment Year : 2001-02 & 2005-06
Courts : All ITAT (1731) ITAT Lucknow (54)

Common appeal is raised by the assessee against the order of CIT relating to assessment year 2001-02 & 2005-06, therein CIT by virtue of Sec 263 of Income Tax Act, 1961(ACT) ordered assessing officer to make fresh assessment for said asstt year, as he found it erroneous i.e non complied with the order of ITAT.

Brief of the case

In the case U.P. Forest Corporation Lucknow vs. DCIT, ITAT held that if assessing officer ( taken as A.O.) is ordered to make fresh assessment of the assessee U/s 250 or 254 or 263 or 264 of Income Tax Act 1961 (“ taken as Act”), after nullifying or cancelled or set aside its prior assessment then section 153(2A) of the Act will be applicable and where A.O. is ordered to make reassessement or recomputation on the basis of new finding or direction U/s 250 or 254 or 263 or 264 of the Act, then Section 153(3)(ii) of Act will be applicable. If Sec 153(2A) of the Act is applicable, then A.O. is required to complete the assessement within the stipulated time and in other case {i.e. in Section 153(3)(ii) of Act}, there would be no time limit for completion of assessment.

Facts of the case

a. The assessing officer rejected the exemption claimed by the assessee U/s Section 11 of the Act due to non registration of assessee u/s 12A of the Act.

b. The Assessee has filed the appeal with ITAT against the order of Assessing Officer. During the pendency of appeal, the assessee got the registration u/s 12A of the Act. Considering the same, ITAT instructed A.O to make reassessment on the basis of finding come across.

c. Thereafter, A.O issued refund order in favour of assessee without initiating any reassessment or re-computation proceeding. Later on, Commissioner of Income tax finds out that order issued by A.O is erroneous and against the revenue as the assessing officer fails to comply with the instruction issued by the Appellate Authority. Therefore rejected the refund order issued by A.O.

d. After this Assessee, file appeal against the order issued by the CIT.

Contention of Assessee

The order issued by A.O. consequential to the order of ITAT is not erroneous. Non application of Mind cannot be considered as erroneous.

Assessing officer is required to issue consequential order according to the direction of ITAT within the stipulated time limit prescribed u/s 153(2A). As A.O fails to issue order within the time prescribed in the said section, it becomes invalid. Therefore, action taken by CIT pursuant to section 263 also becomes irrelevant. The assessee places reliance on the various judgement e.g. (only few mentioned here)

CIT vs. Shelly Products and Another, 261 ITR 367 (SC)

Harihar Nath Agarwal P. Family Trust vs ACIT, 264 ITR 612 (ALL) etc

Common Fact

In both the cases, It is concluded that if the earlier assessment made by A.O. is nullified or cancelled by the authorized authority and the A.O. fails to do or complete fresh assessment within the time stipulated in Act, then return filed by the assessee or claimed lodged by the assessee would be final i.e. (Deemed Acceptance). Hence assessee would be eligible for refund.

Contention of Revenue

According to the revenue, contention of the assessee is not acceptable. As the cases relied upon by the assessee are totally different. In the cases referred above, earlier assessment made by A.O. is got cancelled or set aside or nullified by the authorized authority. Here, order issued by ITAT is directive in nature and instruct A.O. to revise or re compute the income considering the new finding which took place during the pendency of appeal i.e. registration u/s 12A of the Act. Order issued by ITAT did not state anything about the cancellation or annulment of the earlier assessment made by the A.O. Hence, Judgments referred by the assessee are irrelevant.

However, in this case provision of Section 153(3)(ii) of act would attract. According to which there is no time limit to pass consequential order. So the order issued by CIT against the refund order consequent to the ITAT order is valid.

For Reference Section 153(2A) of the Act

(2A) 1 Notwithstanding anything contained in sub- sections (1) and (2), in relation to the assessment year commencing on the 1st day of April, 1971 , and any subsequent assessment year, an order of fresh assessment under section, 146 or in pursuance of an order, under section 250, section 254, section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of two years from the end of the financial year in which the order under section 146 cancelling the assessment is passed by the 2 Assessing] Officer or the order under section 250 or section 254 is received by the 4 Chief Commissioner or Commissioner] or, as the case may be, the order under section 263 or section 264 is passed by the 4 Chief Commissioner or Commissioner].]

Section 153(3)

(3) The provisions of sub- sections (1) and (2) shall not apply to the following classes of assessments, reassessments and recomputations which may, 5 subject to the provisions of sub- section (2A),] be completed at any time-

(i) where a fresh assessment is made under section 146;

(ii) 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, 254, 260, 262, 263 or 264 6 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act];

……. So on..

Held by the Tribunal

In the light of various case laws & on bare reading of the provision prescribed in Act: It is observed that there is clear demarcation in the applicability of the section 153(2A) and section 153(3)(ii) of the Act.

Section 153(2A) is applicable where an earlier assessment made by the assessing officer is got set aside and an order for fresh assessment was passed by the appellate authority u/s 250 or 254 or 263 or 264 of the Act. Here, assessing officer is required to complete assessment within the stipulated time in the said section.

On the other hand, Section 153(3)(ii) is applicable in case of reassessment or re computation of income of the assessee in order to comply with the finding or direction stated in an order issued U/s 250,254,260,262,263 or 264 of the act or by authorized authority. Here, there will be no time limit for the assessing officer to pass a consequential order.

It was held that in the particular case, Section 153(3)(ii) is applicable. Hence the order issued by Assessing officer is within the time limit and valid.

On the basis of scrutiny of order issued by A.O., it is further added that A.O. issued a refund order without calculating the eligibility of the claim under the provision of the Act. Therefore, the order issued by the A.O. is erroneous and against the interest of revenue.

The appeal of the assessee was dismissed on above grounds.

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