The Bombay High Court allowed a writ petition challenging the inaction on the part of the respondents, in complying with the direction and order dated 18th February 2010 passed by the Income Tax Appellate Tribunal.
The Court observed that the words “is received” in section 153(3) cannot be construed to mean “till it's received.”
Brief Facts:
On 13th August 2002, a survey was conducted at the residential premises of the Late Mr. Lakhpatrai Agarwal. During the search, jewelry was seized and the petitioner’s father gave a statement, admitting to undisclosed income to the tune of Rs. 28,04,308/-. Thereafter, a notice was served upon the assessee calling upon him to file his income tax return, which he did.
However, the undisclosed income by the Petitioner’s father was not adequate to meet the discrepancy in the FDRs. On 29th December, 2004, the block assessment order under Section 158BC(c) of the Act was passed assessing Rs. 52,82,278/- as against the declared return of income of Rs. 28,04,308/-
Being aggrieved by the block assessment order and the addition made thereto, the petitioner preferred an appeal before Ld. Commissioner of Income Tax (Appeals), who passed an order confirming the additions made by the AO. Aggrieved by the order, the petitioner preferred an appeal, which was partly allowed on the grounds of violations of principles of natural justice.
On 6th March 2018, the petitioner addressed a letter to the respondent, to bring on record the fact that since the AO had not acted upon the order dated 18th February 2010 passed by the ITAT, the time limit for completion of such assessment proceedings viz. nine months had elapsed and consequently the respondent was called upon to refund Rs.7,39,083/- the tax paid with applicable interest totaling to Rs.14,33,821/-.
The Petitioner, after various communications, got the response that his petition was disposed of without issuance of the refund. The petitioner then filed an appeal on the CPGRAM portal which is still pending.
Contentions of the Petitioner:
The Learned Counsel for the petitioner argued that Section 153(3) of the Income Tax Act provides that any order of fresh assessment in pursuance of an order under Section 254, 263, or 264 should be made within a period of 9 months from the end of the financial year in which the order is received consequently; hence, the AO now seeking to give effect to the said order of the ITAT dated 18th February 2010 is time-barred.
Contentions of the Respondent:
The Learned Counsel for the respondent argued that the ITO has not ‘received’ the order dated 18th February 2010 and therefore the time period prescribed by Section 153(3) of the IT Act will not commence and consequently their action was within the time prescribed and was required to be completed on or before 30th September 2023.
Further, he contended that receipt of the letter dated 6th March 2018 would not entitle the Petitioner to contend the commencement of the limitation period.
Observations of the Court
The Court observed that it is unable to agree with the respondent’s Counsel’s contention that they have not received the order dated 18th February 2010. Section 254 (3) provides for ITAT to send a copy of the order to both the assessee and the Commissioner; therefore, the onus would lie on the respondent to prove that they had not received the said order.
Further, the Court remarked that the words “is received” in section 153(3) cannot be construed to mean “till it's received.” The period has to be a reasonable period of time and cannot be extended in perpetuity.
The decision of the Court:
The Bombay High Court, allowing the petition, held that the respondents failed to take steps to comply with the order dated 18th February 2010 and are, therefore, directed to issue a refund of 7,39,083/- plus additional interest till the date of payment to the Petitioner and to release the jewelry seized within two weeks from the date of this order.
Case Title: Late Mr. Lakhpatrai Agarwal vs Assistant Commissioner of Income Tax & Ors.
Coram: Hon’ble Justice Dhiraj Singh Thakur and Hon’ble Justice Kamal Khata
Case no.: WRIT PETITION NO. 9937 OF 2022
Advocate for the Petitioner: Mr. Sham Walve
Advocate for the Respondents: Mr. Ajeet Manwani
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