Income Tax
preet
(Querist) 12 April 2011
This query is : Resolved
What is the time limit u/s 263 order revision by the commissioner?
Arun Bhatia
(Expert) 12 April 2011
Two years from the end of the financial year in which the order sought to be revised was passed.In computing the limitation period of two years, time taken in giving an oppertunity to the assessee to be reheard under proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court.There is no limitation in case of an order passed in consequence of, or to give effect to, any finding or direction contained in an order of the Applellate Tribunal, Nationanl Tax Tribunal, the High Court or the supreme court under the income tax or order of any court under any other law.Where an order prejudicial to the revenue has become subject matter of appeal on a different issue, the time limit of two years has to be reckoned with reference to the original order and not the later order.
MUKESH SHARMA
(Expert) 12 April 2011
Mumbai High Court has given verdict on 16 April 2010 in favour of assessee in Ashoka Buildcon ltd vs ACIT by stating that if the original order of assessment is reopened and subsequent an order of reassessment is passed , the if the Commissioner of Income tax invokes his revisional power u/s 263 of the I T Act the order u/s 147 , but reasons for invoking 263 are pertaining to original orders , in that case the time limit of two years for invoking revisional powers will be counted from original order and not form reassessment order.
The basis of such decision was Supreme Court in Commissioner of Income Tax V/s. Alagendran Finance Ltd. 293 ITR 1. The excerpts of that decision quoted by Mumbai High Court is as under
The issue which arose before the Supreme Court was whether, for the purpose of computing the period of limitation envisaged under sub-section (1) of Section 263, the date of the order of assessment or of the order of reassessment is to be taken into consideration.
In that case, the assessee filed its return for assessment years 1994-95, 1995-96 and 1996-97 and the assessments were completed on 27 February 1997, 12 May 1997 and 30 March 1998. In the orders of assessment, the return of the assessee under the head of “Lease Equalisation Fund” were accepted. Proceedings for reassessment were initiated by the Assessing Officer and orders of reassessment were passed in respect of the following items namely (i) expenses claimed for share issue; (ii) bad and doubtful debts; and (iii) excess depreciation on gas cylinders and goods containers. Though the return of income in respect of the “Lease Equalisation Fund” was not the subject matter of the reassessment proceedings, the Commissioner of Income Tax invoked his revisional jurisdiction under Section 263 and by his order came to the conclusion that the assessee had not furnished complete details and the order of the Assessing Officer was prejudicial to the interest of the Revenue. The Tribunal held that the order which was passed under Section 263 on 29 March 2004 was barred by limitation. The Supreme Court held that the Commissioner of Income Tax, while exercising his jurisdiction under Section 263 found that only that part of the order of assessment which related to the lease equalisation fund was prejudicial to the interests of the Revenue. But the proceedings for reassessment had nothing to do 9
with the said head of income. The Supreme Court clearly held that the doctrine of merger was not attracted to a case of that nature. The Supreme Court followed its earlier judgment in C.I.T. V/s. Sun Engineering Co. Pvt. Ltd.2 and held that the Tribunal had found that all the subsequent events were in respect of matters other than the lease equalisation fund. In other words, this was not a case where the subject matter of the assessment and the reassessment was the same. The Supreme Court then held as follows:- “We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this case and, in particular, having regard to the fact that the Commissioner of Income-tax exercising his revisional jurisdiction reopened the order of assessment only in relation to lease equalisation fund which being not the subject of reassessment proceedings, the period of limitation provided for under sub-section (2) of section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment. The revisional jurisdiction having, thus been invoked by the Commissioner of Income-tax beyond the period of limitation, it was wholly without jurisdiction rendering the entire proceeding a nullity.
Read more: http://taxworry.com/revisional-powers-us-263-limitation-date-sc/#ixzz1JK5D74bm
Anil Kumar-Advocate
(Expert) 13 April 2011
Adv.Preet Kaur.
A very exhaustive details have been furnished by Expert Mukesh Sharma.I extend my thank to him. However, inbrief, you may refer Period of Limitation of all section given in R-11 of the Direct taxes Ready Reckoner in 33rd edition.Anil Kumar-Adv.
