Income Tax Reassessment Order Passed Beyond Limitation u/s 153 Invalid: Chhattisgarh HC Dismisses Revenue Appeal [Read Order]

In a recent ruling, the Chhattisgarh High Court held that an income tax reassessment order passed beyond the limitation period under Section 153 of the Income Tax Act, 1961 is invalid, and dismissed the Revenue’s appeal against the ITAT order in favour of assessee.

The Deputy Commissioner of Income Tax filed an appeal under Section 260-A of the Income Tax Act challenging the order dated 29 November 2024 passed by the Income Tax Appellate Tribunal, Raipur Bench.

The case related to assessment year 2010-11. Silverleaf Infrastructure Pvt. Ltd., (the assessee) engaged in construction work and real estate, had filed its return of income on 9 July 2010 declaring total income/loss of Rs.(-)27,135.

The revenue conducted a survey under Section 133-A at the premises of Goldbricks Infrastructure Pvt. Ltd. group on 28 February 2016. The assessee’s case was later reopened and notice under Section 148 was issued on 28 March 2017.

The reassessment order under Section 143(3) read with Section 147 was passed on 31 December 2018. The Assessing Officer computed total income at Rs.5,39,72,865 after making an addition of Rs.5,40,00,000.

Read More: Income Tax Return Filed in Response to S. 148 Notice StillRequires Section 143(2) Notice: ITAT Quashes Reassessment [Read Order]

The assessee challenged the reassessment order. The Commissioner of Income Tax (Appeals) allowed the assessee’s appeal. The ITAT later dismissed the Revenue’s appeal and held that the reassessment order was barred by limitation.

Before the High Court, the revenue counsel argued that the ITAT failed to properly consider the effect of the interim relief granted by the High Court in the writ petition filed by the assessee. They argued that the period during which proceedings were stayed had to be excluded while computing limitation.

The revenue counsel also argued that when the writ petition was disposed of, the High Court had given time to the Assessing Officer to furnish reasons and to the assessee to file objections. They argued that this period should also be considered while calculating the limitation period.

The Division Bench comprising Justice Parth Prateem Sahu and Justice Sachin Singh Rajput observed that the relevant dates were not in dispute. The Section 148 notice was issued on 28 March 2017 and the original limitation was to expire on 31 December 2017.

The court observed that even after excluding the stay period and considering the Revenue’s argument, the reassessment should have been completed by 18 November 2018 at the latest. The order was passed on 31 December 2018 but it remained time-barred.

The court found no error in the ITAT’s finding that the reassessment order was barred by limitation. It held that no substantial question of law arose and dismissed the Revenue’s appeal.

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