Sections 153(2A), 153(3), 254 – If the Tribunal has set aside or cancelled the assessment, then the fresh order of assessment by the AO shall be passed within the period as prescribed u/s. 153(2A). The provisions of section 153(2A) are absolute and they impose a fetter on income-tax authorities to make a set-aside assessment after the expiry of periods mentioned in this sub-section. This is a statutory fetter which is not for the assessee to relax or waive or vice-versa. The power to make assessment lapses complete upon the expiry of the periods mentioned in the section.
Facts
The assessee company filed its return of income for assessment year 2004-05 on 29.10.2004. The original assessment u/s. 143(3) of the Act was completed by the AO on 15.12.2006 rejecting the claim of the assessee u/s 33AC of the Act on the ground that the assessee had not specified the amount transferred to reserve in the P & L Account for the relevant year.
Aggrieved, the assessee preferred an appeal to the CIT(A) who allowed the claim of the assessee vide his order dated 29.8.2007.
Aggrieved, the revenue preferred an appeal to the Tribunal. The Tribunal vide its order dated 25.7.2008 set aside the issue and restored the matter back to the file of the AO to decide the same afresh.
The AO while giving appeal effect, framed assessment u/s. 254/143(3) and also u/s. 263/143(3) vide order dated 8.12.2011 and disallowed the deduction u/s. 33AC of the Act.
Aggrieved, the assessee preferred an appeal to the CIT(A) where it contended that the order dated 8.12.2011, passed by the AO, was beyond the period of limitation. The CIT(A) dismissed the appeal filed by the assessee.
Aggrieved, the assessee preferred an appeal to the Tribunal.
Held
The Tribunal noted that it had vide its order dated 25.7.2008 set aside the appeal and restored the matter back to the file of the AO to decide the matter afresh. It also noted that the order dated 8.12.2011 passed to give effect to the order of the Tribunal read as under:
“In pursuance of the Hon’ble ITAT, `A’ bench, Kolkata’s order in ITA No. 98/Kol/2008 dated 28.7.2008, a notice u/s. 142(1) was issued to the assessee on 16.11.2010, requiring clarification on the details of Reserves & Surplus as on 31.3.2004 …..”
The Tribunal noted the decision of the co-ordinate bench of the Tribunal in the case of McNally Bharat Engineering Co. Ltd. vs. DCIT in CO No. 12/Kol/2011, arising out of ITA No. 98/Kol/2011 for AY 2002-03 dated 9.10.2015 on identical proposition of law.
Following the ratio of the decision of the Kolkata Bench of the Tribunal in the case of McNally Bharat Engineering Co. Ltd. vs. DCIT (supra), the Tribunal held that no assessment is possible after the expiry of period of limitation, the provisions of section 153(2A) are absolute and they impose a fetter on income-tax authorities to make a set-aside assessment after the expiry of the periods mentioned in this sub-section. This is a statutory fetter which is not for the assessee to relax or waive or vice-versa. The power to make assessment lapses completely upon the expiry of the periods mentioned in the section. It observed that in the present case, the Tribunal had completely set aside the assessment on the abovementioned issue and directed the AO to reframe the assessment afresh. It held that the assessee’s case fell in 2nd proviso to section 153(2A) of the Act.
The Tribunal set aside the assessment and held that the assessment made after expiry of limitation in terms of section 153(2A) of the Act is invalid.
This ground of appeal filed by the assessee was allowed.
