TOLA provisions cannot rescue assessment orders barred by limitation: ITAT Chennai

Althi Venkata Narendra Raju Vs DCIT (ITAT Chennai)

Facts:

• The assessee, Shri Althi Venkata Narendra Raju, was originally assessed under Section 143(3) of the Income Tax Act, 1961 for Assessment Year 2014-15 by an order dated 12.2016, wherein additions were made under the head long-term capital gains. Aggrieved, the assessee preferred an appeal before the Income Tax Appellate Tribunal. The Tribunal, vide its order dated 17.05.2019, set aside the assessment and remanded the matter to the Assessing Officer (AO) for a fresh assessment after proper examination of the nature of land and transactions involved.
• Pursuant to the Tribunal’s directions, the AO passed a fresh assessment order under Section 143(3) read with Section 254 on 09.2021, determining the assessee’s total income at ₹3.48 crore, which included an addition of ₹3.37 crore towards long-term capital gains. The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals), who, by order dated 27.02.2025, upheld the action of the AO.
• Thereafter, the assessee filed the present appeal before the Tribunal, primarily contending that the assessment order dated 28.09.2021 was barred by limitation under Section 153(3), as the AO was required to complete the fresh assessment within 12 months from the end of the financial year in which the Tribunal’s 2019 order was passed, i.e., on or before 03.2021.

Issue:

• Whether the assessment order passed on 28.09.2021 was barred by limitation under Section 153(3) of the Income Tax Act.
• Whether a time-barred assessment order be saved by the COVID-19 extensions provided under TOLA or by the Supreme Court’s suo motu extension orders.

Observations:

• The Tribunal noted that it was an undisputed fact that its earlier order had been passed on 05.2019, whereby the original assessment for AY 2014-15 was set aside and the matter remitted to the Assessing Officer for a fresh assessment in terms of Section 153(3) read with its proviso, the Assessing Officer was required to complete the assessment within twelve months from the end of the financial year in which the order was received. In the present case, this meant that the limitation period expired on 31.03.2021.
• It was further observed that although the Assessing Officer had concluded the hearing on 03.2021, no order was passed within the prescribed period, and instead, the assessment order was issued only on 28.09.2021. The Tribunal emphasized that the law does not permit the authority to keep matters pending once the period of limitation has expired, and any order passed thereafter is invalid in law.
• On the applicability of TOLA (Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020), the Tribunal observed that the benefit of extended timelines was available only in cases where the due date fell between 03.2020 and 30.03.2021. Since the limitation in the present case ended on 31.03.2021, the provisions of TOLA did not extend the timeline for the Revenue.
• With respect to the reliance placed on the Supreme Court’s suo motu orders extending limitation during the COVID-19 pandemic, the Tribunal clarified that such directions were intended to safeguard the rights of litigants in filing appeals, petitions, or proceedings before judicial authorities. These extensions could not be interpreted as enlarging the statutory time limits available to the Assessing Officer for completing assessment proceedings.
• Accordingly, the Tribunal held that the assessment order dated 09.2021 was passed beyond the prescribed period of limitation and was therefore barred by time. Consequently, the impugned assessment order could not be sustained in law.

FULL TEXT OF THE ORDER OF ITAT CHENNAI