The period of limitation for invoking jurisdiction under Section 263 of the Income Tax Act begins to run from the date of the original order of assessment and not from the order of reassessment.

JUDGMENT

(Prayer: Appeals filed under Section 260 (A) of the the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal “A” Bench, Chennai, dated 18.12.2009 in I.T.A.Nos.551/Mds/2009, 552/Mds/2009 and 553/Mds/2009 respectively.)

Common Judgment

Mohammed Shaffiq, J.

1. The short question that arises for consideration is, whether the limitation for the purpose of invoking jurisdiction under Section 263 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") in respect of items/ income assessed originally and remaining untouched by reassessment, ought to be reckoned from the date of the original order of assessment or from the date of revised assessment.

2. The assessee company is a banking company, which filed its Return of Income for the assessment years 1999-2000, 2001-2002 and 2002-2003 on 28.03.2002, 29.10.2001 and 28.01.2002 respectively. The case was selected for scrutiny and notice under Section 143(2) of the Act came to be issued for the assessment years in question. Thereafter, assessment was completed under Section 143(3) read with Section 147 for the assessment years in question on 28.03.2002, 30.03.2004 and 27.08.2004 respectively. Subsequently, the Assessing Officer reopened the assessment for the years 1999-2000, 2001-2002 and 2002-2003 and passed orders under Section 143 (3) read with 147 of the Act on 26.12.2006, 31.12.2007 and 31.12.2007 respectively.    3. Thereafter, the Commissioner of Income Tax issued show cause notices under Section 263 of the Act and passed orders by setting aside the 2nd assessment orders for the assessment years 1999-2000, 2001-2002 and 2002-2003 on 27.03.2009, 27.03.2009 and 27.03.2009 respectively.

4. Challenging the aforesaid orders passed under section 263 of the Act, the assessee carried the matter by way of appeals to the Income Tax Appellate Tribunal, wherein, the question of limitation was raised as a preliminary issue on the premise that the principle of merger of original assessment with the reassessment order, does not apply, when the issues settled in the original assessment order remain untouched in the reassessment order. Consequently, the limitation to invoke jurisdiction under Section 263 of the Act in respect of the issues that stood resolved in the original assessment, ought to be reckoned from the date of original assessment. Agreeing with the said submission, the Tribunal allowed the appeals, holding that the assessments are barred by limitation by placing reliance on the judgment of the Hon'ble Supreme Court in the case of CIT v. Alagendran Finance Ltd. [(2007) 293 ITR 1 (SC)] wherein it was held as under: "25....We therefore, are clearly of the opinion that keeping in view of 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 equalization fund which being not the subject of the 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"

Aggrieved against the order of the Tribunal dated 18.12.2009, the appellant / Revenue preferred these tax case appeals.

5. We find that the order of the Tribunal holding that the exercise of power under Section 263 of the Act by the Commissioner of Income Tax is barred by limitation in terms of the judgment of the Hon'ble Supreme Court in the case of Alagendran Finance Ltd. (supra), does not warrant any interference.

6. Therefore, the substantial questions of law are answered against the Revenue and accordingly, the appeals stand dismissed. No costs.