Date of Dispatch of Assessment order Beyond the Limitation Period Prescribed u/s 153(1) of Income Tax Act: ITAT Quashes Assessment Order [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that the assessment order, though passed on 31.12.2016, was dispatched to the Speed Post Centre on 02.01.2017 would have to be construed as assessment framed beyond the time limit prescribed under Section 153(1) of the Income Tax Act for the Assessment Year 2014-15 and hence is hereby declared as barred by limitation.

The assessee OPG Securities Pvt. Ltd is a private limited company engaged in the business of trading in shares and securities and is a member of BSE(Bombay Stock Exchange) and NSE(National Stock Exchange ). The return of income for the Assessment Year 2014-15 was filed by the assessee company on 25.11.2014 declaring total income of Rs 10,88,01,290. The assessment was completed under Section 143(3) of the Income Tax Act on 31.12.2016 under Section 143(3) of the Act determining total income at Rs 12,23,40,010 after making various disallowances / additions.

Aggrieved by the order the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] on the ground that the assessment per se wass barred by limitation. The CIT(A) sustained the addition made by the AO. Further aggrieved the assessee filed an appeal before the Tribunal .

The Bench observed that the time limit for completion of assessment proceedings for the AY 2014-15 under Section 143(3) or 144 of the Income Tax Act would be 21 months from the end of the assessment year in which income was first assessable i.e. from 01.04.2015. Accordingly, the time limit for completion of assessment would be 31.12.2016.

In this case , the assessment order under Section 143(3) of the Income Tax Act has been signed by the AO on 31.12.2016 as mentioned in the assessment order. But the same is dispatched only on 02.01.2017 which is evident from the screenshot of the consignment tracking taken from the India Post website. The said screenshot shows that consignment sent by the Additional Commissioner of Income Tax, Special Range 7 , CR Building, has been booked at Indraprastha Head Office on 02.01.2017 at 11 hrs 6 minutes and 57 seconds with the caption ‘Item Booked’.

The Tribunal relied on the decision of High Court in the case of Qualimax Electronics Pvt ltd vs Union of India where it was held that the date of dispatch from the adjudicating officer is relevant for determining the limitation period.

And also on the decision of the Gujarat High Court in the case of Kanubhai M Patel (HUF) vs Hiren Bhatt where it was held that In the circumstances, impugned notices under Section 148 of the Income Tax Act in relation to AY 2003-04, having been issued beyond the period of six years from the end of the relevant AY, are clearly barred by limitation and as such, cannot be sustained.

The Two Member Bench comprising of C.M. Garg, Judicial Member and M. Balaganesh, Accountant Member held that the assessment order, though passed on 31.12.2016, was dispatched to the Speed Post Centre by the office of the Additional Commissioner of Income Tax , Special Range -7 , C R Building, New Delhi -110002 on 02.01.2017 would have to be construed as assessment framed beyond the time limit prescribed under Section 153(1) of the Income Tax Act for the AY 2014-15 and hence is hereby declared as barred by limitation. Accordingly, the assessment order is liable to be quashed.

Thus, the appeal of the assessee was allowed.

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