Limitation for passing Revisionary order to be reckoned from original assessment order

Period of limitation for passing Revisionary order u/s 263 to be reckoned from the date of the original assessment order not reassessment order

In a recent judgment, Hon’ble Rajasthan High Court has held that Period of limitation for passing Revisionary order u/s 263 to be reckoned from the date of the original assessment order not reassessment order. 

ABCAUS Case Law Citation:
ABCAUS 4035 (2024) (05) HC

Important Case Laws relied upon:
Chambal Fertilisers and Chemicals Limited Vs. Principal Commissioner of Income Tax & Anr.
Commissioner of Income Tax Vs. Industrial Development Bank of India Ltd.

In the instant case the assessee/Petitioner had filed a Writ Petition before the Hon’ble High Court praying an order that revisionary proceedings initiated under Section 263 of the Income Tax Act, 1961 (the Act) by The Income Tax Department had become time barred u/s 263(2) of the Act and therefore continuation of same was non-est and void ab initio.

Upon the scrutiny of the petitioner’s income tax return, a notice was issued by the respondents and the assessment under Section 143(3) of the Act was done by the concerned authority, while passing a detailed assessment order.

Later, a notice u/s 154 of the Act was issued to the petitioner proposing to rectify the said assessment order pertaining to the Dividend income and expenditure under Section 14A of the Act read with, Rule 8D of the Income Tax (Fifth Amendment) Rules, 2008. The petitioner duly submitted its reply, upon which the Income Tax Department did not rectify the assessment order, while retaining original position thereof.

Thereafter, the petitioner was issued a re-assessment notice under Section 147 of the Act on the ground that there was a short fall of an amount and accordingly, the reassessment order was passed.

The Department did not stop and yet again issued another notice for the hearing to the petitioner under Section 263 of the Act invoking the revisional jurisdiction relating to the rate of tax.

The petitioner drawn the attention of Hon’ble High Court towards the judgment rendered by the Hon’ble Apex Court in which it was held that only in cases where the issues before the Commissioner at the time of exercising powers under Section 263 of the Act relate to the subject matter of re-assessment, the limitation would start from the date of Re-assessment Order. However, if the subject matter of the re-assessment is distinct and different in that case the relevant date for the purpose of determination of period of limitation for exercising powers under Section 263 of the Act would be the date of the original Assessment Order.

It was argued that the impugned notice for revision was ex facie illegal because the issues before the Commissioner at the time of exercising powers under Section 263 of the Act were related to the subject of the original assessment order, and not the reassessment order. In the present case, since the subject matter of reassessment was distinct and different, the entire proceedings of assessment should not be deemed to have been reopened.

The Hon’ble High Court noted that the Hon’ble Supreme Court had been clearly laid down that if the subject matter of the reassessment is distinct and different, in that case the relevant date for the purpose of determination of the period of limitation for exercising powers under Section 263 of the Act would be the date of original assessment order, which makes the revision proceedings to be ex facie illegal on the face of it on count of limitation.

In the light of the judgment of the Hon’ble Supreme Court, the Hon’ble High Court quashed the impugned notice issued under Section 263 of the Act alongwith entire proceedings pursuant thereto on count of being barred by limitation. 

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