In the concerned case, the High Court of Delhi allowed the petition, ruling that the failure to pass a fresh assessment order within the prescribed time rendered the assessment for assessment year (AY) 2004-05 time-barred. The court set aside the impugned notices issued by the assessing officer and directed a refund of INR 37,73,012/- along with applicable interest, to be made within eight weeks.
Ramesh Chawla (HUF), the petitioner-assessee, had filed a return of income (ROI) for the AY 2004-05, declaring a total income of INR 45,000, which was processed and accepted under Section 143(1) of the Income Tax Act, 1961.
In 2008, the petitioner received a notice under Section 148 of the Act, based on information that he had received gifts amounting to INR 1 crore from Sh. Harish Kumar. Respondent No. 1 reassessed the petitioner’s income on 29.12.2008, adding INR 1 crore to the total income on the grounds that the gifts were not genuine, resulting in a reassessed income of INR 1,00,45,000.
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The petitioner appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], but the appeal was dismissed on 17.02.2010, confirming the addition of INR 1 crore. The petitioner then appealed to the Income Tax Appellate Tribunal (ITAT), which on 28.09.2012 remanded the case back to the Assessing Officer (AO) for further examination.
Following the Tribunal’s directions, the AO reassessed the petitioner’s income again on 26.03.2014, maintaining the same addition of INR 1 crore on a protective basis and raising a tax demand of INR 72,29,982. The petitioner challenged this reassessment before the CIT(A), but the appeal was dismissed, with the CIT(A) confirming the protective addition of INR 1 crore.
The petitioner, aggrieved with the CIT(A) order, appealed to the Tribunal. On 11.10.2019, the Tribunal sent the matter back to the AO with specific directions to be followed within six months.
Despite the Tribunal’s orders, respondent No. 1 took no action. The petitioner sent a letter on 27.03.2023 requesting compliance and a refund. A follow-up letter was sent on 12.06.2023, repeating the request.
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After receiving the letters, respondent No. 1 issued notices on 21.07.2023 and 09.08.2023, asking the petitioner to provide documents related to Harish Kumar’s assessment. The petitioner replied, objecting that the proceedings from the 21.07.2023 notice were time-barred. Despite this, respondent No. 1 issued another notice on 16.08.2023. The petitioner responded again, maintaining that the proceedings were time-barred.
The petitioner deposited INR 37,73,012/- under protest against the demand. When respondent No. 1 failed to issue a refund, the petitioner filed this writ petition to address the inaction.
The court noted that the main issue was whether the limitation period for a tribunal remand should be strictly interpreted under Section 254 and Section 153(3) of the act and also observed that the AO did not issue an assessment order after the tribunal’s 11.10.2019 order, and the petitioner’s refund claim was based on the assessment for AY 2004-05 being time-barred.
The court held that the contention regarding the fresh assessment order being barred under Section 153(3) of the Act, following the Tribunal’s order dated 11.10.2019, was valid. Consequently, the impugned notices issued by respondent No. 1 on 21.07.2023, 09.08.2023, and 16.08.2023 could not be sustained and were set aside.
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The division bench comprising Justice Yashwant Varma and Justice Ravinder Dudeja ruled that the income declared by the petitioner was accepted due to the respondents’ failure to issue a timely assessment order. The court set aside the impugned notices and ordered a refund of Rs. 37,73,012/- with interest within eight weeks and the petition was allowed.
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