Duration of Revising the Order Under Section 263 of the Income Tax Act is two financial years: SC

The Commissioner of income tax, Chennai Vs. Mohammed Meeran Shahul Hameed(Supreme Court of India); CIVIL APPEAL NO.6204 OF 2021; 07.10.2021

Issue:

The revenue has appealed before the Supreme Court after the dissatisfying order dated 03.07.2019 passed by the High Court of Madras in Tax case Appeal No. 429 of 2019.

1. Whether the High Court and the learned ITAT are right in holding that the order passed by the learned Commissioner passed under Section 263 was barred by period of limitation provided under Section 263 (2) of the Act?

2. Whether the High Court is right in holding that the relevant date for the purpose of considering the period of limitation under Section 263(2) of the IT Act would be the date on which the order passed under Section 263 by the learned Commissioner is received by the assessee?

Facts:

• The assessing officer passed an assessment order under section 143(3) of the Income Tax Act for the year 2008-2009. Later the commissioner of income tax proceeds with the revision of assessment order passed by learned assessing officer under section 263 of Income tax Act and issued notice to assessee on 01.02.2012.
• The assessee (respondent) filed written submissions on 07.03.2012 and 12.03.2012. Stating that Assessing Officer had failed in making relevant and necessary enquires to assess the income and therefore the assessment order made under section 143(3) of the Income Tax Act was held to erroneous and prejudicial to the interest of the revenue.
• The learned Commissioner passed an order under section 263 of the act on 28.03.2012 to make necessary enquires.
• The order passed by the learned Commissioner for exercise of power under Section 263 of the Act was challenged by the assessee before the learned ITAT by saying that revision order passed by the learned Commissioner was passed beyond the period of limitation.
• The revenue appeal before high court after feeling aggrieved and dissatisfied with the order passed by the learned ITAT quashing and setting aside the revisional order passes by learned Commissioner under section 263 of the Act.
• The High Court held that the date on which the order was received by the assessee on 29.11.2012 is relevant date for questioning the periods of limitation under section 263(2) of the Income Tax Act.

Observations :

Sub ­section (2) of Section 263 of the Act provides that no order shall be ‘made’ under subsection (1) of Section 263 after the expiry of two years from the end of the concerned financial year.

Herein the present case, to pass the order under section 263 would be 31.03.2012 and the learned commissioner passed the order on 26.03.2012 and dispatched on 28.03.2012. Therefore, the order passed by learned commissioner was within the period of limitation.

Judgement :

The Supreme court Held that the order passed by the learned Commissioner under Section 263 of the Income Tax Act was within the period of limitation prescribed under sub­ section (2) of Section 263 of the Act.

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