ITO Vs Vasani Infrastructure (ITAT Ahmedabad)
Ahmedabad ITAT: Reassessment Passed Beyond Limitation Under Section 153 Is Void; Entire Addition Fails Once Assessment Is Time-Barred
The Ahmedabad ITAT dismissed the Revenue’s appeal and upheld the CIT(A)’s order annulling the reassessment, holding that a reassessment order passed beyond the statutory limitation prescribed under Section 153 is void, and consequently the additions made therein automatically cease to survive.
The reassessment was initiated on the basis of documents seized during a search in the case of the Venus Group, alleging that the assessee had made on-money payments of ₹18.16 crore towards the purchase of land. The Assessing Officer reopened the assessment under Sections 147/148 and made an addition under Section 69A as unexplained investment.
The Tribunal noted that the notice under Section 148 was issued and served on 31.03.2017, and that the reassessment proceedings were stayed by an interim order of the Gujarat High Court from 21.12.2017 to 02.04.2018. As only 10 days remained for completing the reassessment when the stay was granted, the Assessing Officer was entitled, after the stay was vacated, only to the extended statutory period of 60 days, which expired on 02.06.2018. However, the reassessment order was passed only on 19.07.2018, well beyond the prescribed limitation.
Rejecting the Revenue’s contention that the limitation should be computed from the date on which the High Court’s order was received by the Assessing Officer, the Tribunal approved the CIT(A)’s reliance on Sun Pharmaceutical Industries Ltd. and other precedents, holding that the limitation recommences from the date the court vacates the stay and not from the date of its communication to the Assessing Officer.
Accordingly, the Tribunal held that the reassessment was barred by limitation under Section 153, upheld its annulment, and observed that once the reassessment itself is invalid, the addition of ₹18.16 crore cannot survive, rendering any examination of the merits unnecessary. The Revenue’s appeal was dismissed, and the assessee’s cross-objection was dismissed as infructuous
Cases Discussed
- ACIT v. M/s Sun Pharmaceutical Industries Ltd. (ITAT Ahmedabad), ITA No. 1688/AHD/2015, dated 05/05/2017
- ITO v. MGF Growth Research & Investment Limited (ITAT Ahmedabad), ITA No. 166/Ahd/2016, dated 08/06/2018
- CIT v. DRS X-ray and Pathology Institute Pvt. Ltd. (Allahabad High Court), [2013] 358 ITR 27
- Allahabad High Court in the case of CIT V/s Chandra Bhan Bansal, [2014] 46 taxmann.com 108 (Allahabad)
- Radhasoami Satsang v. CIT (Supreme Court), (1992) ITR 321 (SC)
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
