HC Quashes Rectification Order Passed Beyond Limitation; No Notice Issued

The petitioner challenged an order dated 25.03.2022 passed by the Income Tax Officer under Section 154 read with Section 143(3) of the Income Tax Act, 1961. It was contended that the rectification order was passed without issuing prior notice as required under law and was also barred by limitation. The petitioner further pointed out that the order did not bear a valid Document Identification Number (DIN).

The Revenue opposed the writ petition on the ground of delay, arguing that the challenge was made nearly four years after the impugned order. However, the petitioner explained the delay, citing the death of his earlier counsel.

Issue Raised: Whether a rectification order under Section 154 passed beyond the statutory limitation period and without prior notice is legally sustainable.

HC Held: The Hon’ble High Court held that the impugned rectification order was clearly barred by limitation. It noted that the original assessment order sought to be rectified was passed on 25.02.2015, and therefore, any rectification ought to have been completed within four years from the end of that financial year, i.e., by 31.03.2019. Since the impugned order was passed on 25.03.2022, it was beyond the permissible time limit.

The Court further observed that there was no material to show that notice was issued to the petitioner before passing the order, as mandated under Section 154(3). The absence of a Document Identification Number (DIN) also lent support to the petitioner’s case. Holding that the order suffered from jurisdictional error, the Court set aside the impugned order and all consequential recovery proceedings. The writ petition was allowed, and the delay in filing the petition was condoned, considering the explanation provided.

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