Non completion of Assessment Order as per ITAT Order within the time limit: Bombay HC directs a refund of taxes paid
Late Mr. Lakhpatrai Agarwal Through L/H Sunil L. Agarwal (WP No. 9937 OF 2022)
- During search, jewellery pertaining to the petitioner was seized and the petitioner’s father gave a statement under Section 132(4) of the Income Tax Act admitting to undisclosed income to the tune of Rs. 28,04,308/-.
- Thereafter, a notice under Section 158BC of the Act was issued and served upon the assessee calling upon him to file his income tax return. Upon receipt of the notice, the petitioner’s father filed his return of income for the block period 1st April, 1996 to 13th August, 2002 declaring undisclosed income amount of Rs.28,04,308/-.
- 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/-.
- The Commissioner of Income Tax (Appeals) (CIT(A)) confirmed the additions made by the AO in the block assessment order. The ITAT, partly allowed the appeal citing violations of principles of natural justice on the ground that the petitioner ought to have been allowed to cross-examine the statements of witnesses.
- 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 by which the matter was remanded back, as per Section 153(3), 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/-.
- On 13th July 2022, the petitioner received an intimation letter along with notice under Section 143(2) r/w. Section 158BC(c) r/w. Section 254 of the Act from the Assistant Commissioner of Income Tax Circle (7), Pune, stating that the ITAT has set aside the order and remanded the matter to the AO.
- The petitioner submitted that Section 153(3) provides that any order of fresh assessment should be made within a period of 9 months from the end of the financial year in which the order is received consequently, the AO now seeking to give effect to the said order of the ITAT dated 18th February 2010 is time barred.
Hon Bombay HC held as below:
- The respondent failed to take steps to comply with the order dated 18th February 2010 and even within 9 months after receipt of the letter addressed by the Petitioner on 6th March 2018.
- Section 254 (3) itself provides for ITAT to send a copy of the order to both the assessee and to the Commissioner; therefore, the onus would lie on the respondent to prove that they had not received the said order.
- The respondents are directed to issue a refund of Rs 7,39,083/- plus additional interest (under section 244A of the Act) till the date of payment to the Petitioner and to release the jewellery seized within two weeks from the date of this order.