Non raising limitation issue and participation in proceeding not precludes assessee to raise it later

Non raising of limitation issue and participation in assessment proceeding not precludes assessee to raise such issue at a later stage nor law sanctions a void proceedings

ABCAUS Case Law Citation:
ABCAUS 3017 (2019) (06) HC

The petitioner was aggrieved by the assessment order passed together with appellate order passed by the Commissioner of Income Tax (Appeals).

Before the Hon’ble High Court, the assessee stated that the assessment order passed under Section 143 of the Income Tax Act, 1961 (the Act) was time barred and hit by the proviso attached to Section 143(2) of the Act which, inter alia, mandates that no notice in this regard can be served on the assessee on the expiry of six months from the end of the financial year in which the return was filed.

The Revenue, while accepting the legal position submitted that the petitioner having not raised the issue of limitation at any stage, he could not be permitted to raise it for the first time before the Hon’ble High Court.

The Hon’ble High Court without going into the merit of the case, opined that the petitioner succeeded on the issue of limitation.

According to the Hon’ble High Court even if the assessee had failed to raise this objection at any stage of the proceedings, where law itself prohibits initiation of a proceeding on happening of an event, a waiver by the assessee to raise such issue and his participation in the proceeding neither precludes him to raise such issue at any stage of the proceeding nor provides sanction to a void proceedings.   

The Hon’ble High Court observed that there was no dispute that the return was filed in the financial year 2004-05 which ended on 31.03.2005 and the notice under Section 143(2) of ‘the Act’ was being issued on 08.08.2006 as admitted by the Assessing Authority himself, which was far beyond the limitation prescribed under the proviso attached to Section 143(2) of ‘the Act’ which ended on 30.09.2005 and thus was clearly hit by limitation.

The Hon’ble High Court held that the entire exercise by the Assessing Authority under Section 143(3) of the Act was illegal and time barred and its affirmation by the appellate authority was an illegality perpetuated.

Accordingly, the Hon’ble High Court quashed the entire proceedings including the assessment order passed by the Assessing Authority and the writ petition was allowed.

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