Relief to TNS India: Telangana HC quashes orders passed beyond Period of Limitation prescribed under sub-section (2A) of Section 153 of Income Tax Act [Read Order]

In a major relief to M/s. TNS India Private Limited, the Telangana High Court quashed orders passed beyond period of limitation prescribed under sub-section (2A) of Section 153 of the Income Tax Act, 1961.

The challenge in these two writ petitions are the consequential orders dated 20.04.2018 issued by the respondent No.3/The Deputy Commissioner of Income Tax-2 under Section 254 read with Section 143 of the Income Tax Act, 1961, for the assessment year 2006-2007 and the impugned rectification order dated 12.10.2018 issued by the respondent No.2/The Assistant Commissioner of Income Tax under Section 154 of the Income Tax Act for the same assessment year. For convenience, W.P.No.853 of 2019 is taken up, so far as the facts are concerned.

The contention is as to “whether the consequential order could have been passed by the Assessing Officer beyond the prescribed period of time as is envisaged under Section 153 (2A) of the Income Tax Act.” Secondly, “whether after a remand is made by the Tribunal while allowing an appeal in part, the consequential order that needs to be passed would be one under Section 153(2A) or would be under Section 153(3) of the Income Tax Act”.

A plain reading of the aforesaid statutory provisions of law, particularly sub-section 2A of Section 153, it would clearly indicate that there is a specific time limit envisaged in the said sub-section for completion of the assessment, reassessment or re-computation. What is also apparently evident is that subsection (2A) itself was enacted with a clear intention of fixing a time limit for the order of fresh assessment to be passed in respect of matters which arise on account of an order under Section 250, 254, 263 or Section 264 of the Income Tax Act.

The counsel who appeared for the petitioner categorically contended that the proceedings in the instant case having been passed after a considerable period of time and the time limit was also lapsed as is required under sub-section (2A) of Section 153. The counsel in support of his contentions, relied upon the decision of High Court of Gujarat in the case of Instruments Control Co. v. Chief Commissioner of Income-tax-1 & 2.

A Division Bench comprising Justice P Sam Koshy and Justice Laxmi Narayana Alishetty observed that “From plain reading of the judicial pronouncements and precedents in the preceding paragraphs and the findings given by this Court, we are of the considered opinion that the proceedings drawn, admittedly being beyond a period that is prescribed under sub-section (2A) of Section 153 and the consequential orders passed are all beyond the period of limitation prescribed under sub-section (2A) of Section 153. Hence, the same being not sustainable, deserves to be and is accordingly set aside/quashed.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates