Time has run out on an assessment order passed under Section 143(3) after the deadline specified in Section 153

Fact and issue of the case

Both appeals by Revenue are filed against the separate orders of Learned Commissioner of Income Tax (Appeals)-12, Mumbai [“Ld. CIT(A)”, for short], dated 03/04/2017 and 07/03/2017 for Assessment Years 2012-13

The revenue has raised the following grounds in both the appeals

ITA No.4322/Mum/2017

On the facts and circumstances of case and in law, the Ld. CIT(A) erred in rejecting application u/s 154 without giving opportunity to the A.O

On the facts and circumstances of case and in the law, the Ld. CIT(A) erred in rejecting the application u/s 154 of the act, filed by the A.O. holding that there is no mistake apparent from the record

The Appellant prays that the order of the CIT(Appeals) on the above grounds be set aside and that of the AO be restore

The Appellant craves leave to amend or alter any ground or to submit additional new ground, which may be necessary

ITA No.3317/Mum/2017

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is not justified in holding that the assessment completed on 31.03.2016 is beyond the time limit prescribed in section 153(1)(a) of the Act, without considering the fact a reference u/s 90 of the Act was made by the Assessing Officer hence the time limit to pass the assessment order was extended by a year t0o 31.03.2016

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not providing opportunity to the Assessing Officer through A.O. had specifically asked for the same vide letter dated 25.01.2017 to Ld. CIT(A)

The Appellant prays that the order of Ld. CIT(A) on the above grounds be set aside and that of the AO be restored

The Appellant craves leave to amend or alter any ground or to submit additional new ground, may be necessary

We have heard the rival submissions and perused the materials available on record. The assessee filed its return of income on 29.09.2012 declaring a loss of Rs.1,99,11,429/-. The assessment was completed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the „Act‟)on 30.03.2016 determining total income of the assessee at Rs 4164,62,52,690/- after making the following additions / disallowances: Addition of Rs. 2319,54,67,195/- on account of transfer of shares of listed company to wholly owned subsidiaries as gift without consideration; Disallowance of expenses u/s 37 of the Act amounting to Rs. 15,18,012/-; Addition of Rs. 1844,46,98,000/- u/s 68 of the Act in respect of unsecured loans from Prime Publishing Pvt. Ltd; Disallowance u/s 14A of the Act read with Rule 8D of the Income Tax Rules amounting to Rs. 60,87,493/-; and Disallowance u/s 36(1)(iii) of the Act amounting to Rs. 72,74,805/-

The assessee preferred an appeal against the assessment order before Learned Commissioner of Income-tax (Appeals)-12, Mumbai [hereinafter referred to as the “CIT(A)”]. The ld. CIT(A) disposed of the appeal vide order dated 07.03.2017 by setting aside the assessment order on the ground that the order ought to have been passed before 31.03.2015 and since the assessment order was passed beyond that date, the assessment is barred by limitation

The ld. AO filed a miscellaneous application before the ld. CIT(A) contending that the decision of the ld. CIT(A) suffers from mistake apparent from record leading to erroneous decision in view of the fact that a reference was made to Mauritius Revenue Authority (hereinafter referred to as “MRA”) u/s 90 of the Act and therefore the assessment order should be restored as the ld. AO would get extended time limit of one year to frame the assessment in view of Explanation 1(viii) of Section 153 of the Act. The ld. CIT(A), however, vide order dated 03.04.2017 dismissed the miscellaneous application of the ld. AO holding that there was no such mistake apparent from record

Observation of the court

From the annexures filed by the ld. AO along with the letter dated 18.01.23, it contains a letter dated 04.09.2015 which was called for by the Bench on earlier occasion. On perusal of the said letter dated 04.09.2015, it is very clear that further information was sought only in the case of Cyquator and not the assessee. Hence it is very clear that no information was sought by the Indian Tax Authorities from MRA after the receipt of information on 14.07.2015 qua the assessee herein. Hence as stated in the tabular form supra, the due date for completing the assessment would be 60 days from 14.07.2015 as per the proviso to Explanation 1 to Section 153 of the Act, which would be 12.09.2015

In view of the above, we hold that the assessment order passed u/s 143(3) of the Act in the case of the assessee ought to be passed on or before 12.09.2015 in view of the provisions of section 153(1) read with Explanation 1 and proviso to the said explanation. The assessment order, having been passed on 30.03.2016 is clearly beyond the time limit of 12.09.2015 and hence we have no hesitation to conclude that the assessment order is time barred and bad in law. Accordingly, the grounds raised by the revenue in ITA No. 3317/Mum/2017 and ITA No. 4322/Mum/2017 are hereby dismissed

In the result, both the appeals of the revenue are dismissed

Orders pronounced in the open court on 17th April, 2023