Authority should Refrain from Over Analysis which leads to Paralysis of Justice: Bombay HC directs AO to pass Fresh Assessment Order [Read Order]

The Bombay High Court directed the Assessing Officer (AO) to pass fresh assessment order and observed that the “Authority should refrain from over analysis which leads to paralysis of justice”.

Petitioner, which had entered into a joint venture agreement with one Sanghvi Premise Private Limited, for whatever reason had not filed its return of income (“ROI”) for Assessment Year 2011-12. Therefore, an assessment order came to be passed.

The Petitioner was not given a deduction under Section 80IB of the Income Tax Act, 1961 because of filing belated ROI. Petitioner’s appeal came to be dismissed by the Commissioner of Income Tax (Appeals) [CIT(A)] vide an order on the same ground that Petitioner did not file the ROI on time. Petitioner challenged that order of the CIT (A) by filing an appeal before the Income Tax Appellate Tribunal (“ITAT”).

The High Court in its order dated 23rd August 2022, condoned the delay by observing that the Income Tax Authority should consider the claim for deduction under Section 80IB(10) of the Income Tax Act for AY 2011-12 made by Petitioner in accordance with law, as if there was no delay in filing the return.

Armed with this order of the High Court, Petitioner filed a Miscellaneous Application under Section 254(2) of the Income Tax Act before the Tribunal seeking to recall Tribunal’s order. By an order, the Tribunal rejected the Miscellaneous Application by observing that the High Court states the Income Tax Authority and the ITAT is not an authority and there was no apparent mistake in its order as required within the four corners of Section 254(2) of the Income Tax Act.

A Division Bench of Justices Dr Neela Gokhale and KR Shriram observed that “The High Court had very categorically observed that the authority should refrain from over analysis which leads to paralysis of justice. Therefore, the delay having been condoned by the High Court, we hereby quash and set aside the assessment order dated 14th March 2014 and remand the matter to the stage of the Assessing Officer (“AO”), who shall pass fresh assessment order in accordance with law by considering the claim for deduction under Section 80IB(10) of the Act for AY 2011- 12 made by Petitioner as if there was no delay in filing the return.”

“The AO shall pass fresh assessment order on or before 31st August 2024 and before he passes any order, shall give a personal hearing to Petitioner, notice whereof shall be communicated atleast five working days in advance. The assessment order shall be a reasoned order dealing with all submissions of Petitioner” the Court noted.

To Read the full text of the Order CLICK HERE

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