Ramesh Chawla (HUF) Vs ITO (Delhi High Court)
Delhi High Court held that department need to comply with the order of the Tribunal in passing a fresh assessment order within the time limit prescribed under section 153(3) of the Income Tax Act. Thus, notices initiating fresh assessment set aside.
Facts- Petitioner was served with notice issued u/s. 148 of the Act on the basis of information received that the petitioner has received gifts of Rs. 1 crore from Sh. Harish Kumar. Respondent No. 1 concluded the reassessment proceedings assessing the petitioner at Rs. 1,00,45,000/- by making addition of Rs. 1 crore holding that the gifts received by the petitioner were not genuine.
CIT(A) dismissed the appeal. ITAT restored the matter to the file of the AO with certain findings and directions. Despite orders passed by the Tribunal, no action was taken by respondent No. 1 to give effect to the findings and directions of the Tribunal. Later, Petitioner deposited INR 37,73,012/- under protest against the raised demand. Upon failure of respondent No. 1 to grant the refund, petitioner filed the instant writ petition.
Conclusion- Admittedly, respondents did not file any appeal challenging the order dated 11.10.2019 passed by the Tribunal. The directions given by the Tribunal were to be carried out by the AO within a period of six months, but AO woefully failed to adhere to the stipulated timelines. No action was taken to give effect to the order of the Tribunal within the stipulated period. The statutory limitation period prescribed in sub section (3) of Section 153 of the Act also expired on 30.09.2021 i.e. 12 months from the end of the financial year in which the order was passed under Section 254 by the Tribunal. The underlying rationale of the Legislature behind the enactment of Section 153(3) and setting the limitation therein, cannot be envisaged to expand the time limit for passing of a fresh assessment. In fact, the said provision entails a strict adherence to the time period within which the remand order in the present case should have been passed by the respondents. The notices dated 21.07.2023, 09.08.2023 and 16.08.2023 for initiating fresh assessment were issued much beyond the statutorily prescribed period of limitation.
