The Kerala High Court recently held that the assessing authority adjudicating issue afresh on remand from the Appellate Authority, cannot ignore time limit under the Income Tax Act, 1961.
The petitioner, an assessee under the provisions of the Income Tax Act, 1961 approached this Court impugning the order dated 17.02.2023 passed by the Assessing Authority purportedly giving effect to an order dated 24.05.2016 of the Income Tax Appellate Tribunal, Cochin Bench, under Section 254 of the Income Tax Act.
The limited ground on which the Writ Petition was filed was that the consequential order passed by the assessing authority was beyond the time limit specified under Section 153(2A) of the Income Tax Act as it stood prior to the amendments with effect from 01.06.2016.
It was found on the facts of that case that the Appellate Tribunal had directed the assessing authority to consider afresh one of the issues that had arisen for consideration in the appeal, and the said remand was sufficient for attracting the provisions of Section 153 (2A) of the Income Tax Act.
The statutory mandate under the Income Tax Act is that consequential orders pursuant to a remand by an Appellate or Revisional Authority should be passed within a period of one year from the end of the financial year in which the order of the Appellate/Revisional Authority was passed. This was apparently with a view to ensuring finality and certainty in matters of taxation so far as an assessee was concerned.
Section 153(3) qualifies the provisions of Section 153(2A) by clarifying that where the assessment, reassessment, or re-computation is made on the assessee or any person in consequence of, or to give effect to, any finding or direction contained in any order passed by an Appellate/Revisional authority or of any court in a proceeding otherwise than by way of appeal or reference under the Act, the provisions of Section 153(2A) would not apply.
A Division Bench of Justices Dr AK Jayasankaran Nambiar and Dr Kauser Edappagath observed that “The time limit specified in Section 153(2A) of the Income Tax Act is also intended to ensure that amounts due to the Government, if any, are received at the earliest point in time after the remand. If an assessee defaults in payment of the tax dues after the passing of the consequential order giving effect to the terms of the remand, he becomes liable to pay statutory interest from the date on which he ought to have paid the tax in the first instance i.e., along with his return.”
“Thus, an Assessing Authority, who is called upon to adjudicate an issue afresh pursuant to a remand from an Appellate Authority, cannot ignore the time limit specified in the statute for passing the consequential order because any delay would operate to the prejudice of the assessee who would be called upon to pay interest for a longer time period corresponding to the delay” the Court noted.
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