Timelines for income tax assessments are strictly regulated; actions exceeding those timelines are impermissible, reinforcing that expired timelines hinder subsequent assessments.

ORDER :

M. NAGAPRASANNA, J.

The petitioner is before this Court seeking a direction to the respondents to refund an amount of Rs.60,45,57,292/- pursuant to the order dated 27.06.2024.

2. Heard Percy Pardiwalla, learned Senior Counsel for Ms.Tanmayee Rajkumar, learned counsel appearing for the petitioner, learned counsel Sri.Y.V.Raviraj, learned counsel appearing for respondent Nos.1 and 2 and have perused the material on record.

3. The history to the case need not be gone into as this very petitioner was before this Court in Writ Petition No.13953/2020 and connected cases, which comes to be disposed in terms of an order of the Co-ordinate Bench dated 17.08.2023. Therefore, I deem it appropriate to paraphrase what is observed by the Coordinate Bench while issuing certain directions. The Coordinate Bench has held as follows.

“16. In the light of the rival submissions, this Court is called upon to decide on the following questions:

[a] Whether the ITAT by its Orders dated 31.03.2015 has entirely set-aside or cancelled the assessment orders dated 31.12.2009, 29.12.2010 and 30.12.2011, or has the ITAT in these orders issued certain directions for consideration of a few aspects for conclusion of the assessment; and

[b] Whether the proceedings before the AO for the Assessment Years 2007-08, 2008-09 and 2009-2010 consequent to the ITAT’s common order dated 31.03.2015 stood time barred as of the date of the impugned notices irrespective of whether the earlier provisions of Section 153 of the IT Act or the substituted provisions thereof apply.

[c] If this Court’s opinion insofar as the previous question is in the affirmative, what order should follow on the petitioner’s request for refunds in terms of its applications dated 29.11.2020.

17. It must be observed that the first question is almost canvassed as an incidental question because if indeed the ITAT has set aside/cancelled the assessment orders [as against certain directions being issued for consideration of a few aspects] paving way for fresh assessment, the timeline within which the assessment has to be concluded is different be it under the provisions of Section 153 of the IT Act as it stood prior to the Finance Act, 2016 or the substituted provisions. There will have to be elaborate discussion on this aspect when the second question is considered, but to bring out the significance of the first question to the extent that is relevant, this Court must refer to a decision of the Division Bench of the High Court of Delhi in ‘Basu Distributors Private Limited v. Income Tax Officer Ward'.

18. The Division Bench, while referring to a decision of the Bombay High Court in ‘Rikhabdas Jhaverchand v. Commissioner of Income Tax' where it is held that the time line in Section 153 [2A] of the IT Act is applicable when an assessment order is entirely set aside or cancelled and a host of other decisions, has ultimately held as follows:

"It is trite that Parliament is continuously concerned with the evils or undesirability of the proverbial sword hanging over the head of an Assessee. Parliament has, therefore, set-down the parameters within which an assessment must be completed, and over the years has shortened the span of time in this regard. It has, however, carved out an exception to the rule where a specific, limited or restricted direction is passed by an Appellate Authority which is of the opinion that it would not be possible to decide the appeal before it without a clarification on this point. The Appellate Authority has also the power to set-aside the Assessment Order and direct a de novo enquiry, in which case every aspect, computation and dimension is open for consideration. This partake the nature of an assessment which is akin to the original assessment and, therefore, the period of limitation applicable to th