[Section 263, Income Tax Act] Date of receipt of order has no relevance for counting the period of limitation: Supreme Court

  • Aishwarya Iyer
  • 05:09 PM, 13 Oct 2021

Date of receipt of order passed under Section 263 by the assessee, has no relevance for the purpose of counting the period of limitation provided under Section 263 of the Income Tax Act, the Supreme Court has held recently.

Section 263 (2) of the Income Tax Act, reads as under:­

“(2) No order shall be made under sub­section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.”

Justices MR Shah and AS Bopanna said that a fair reading of sub­section (2) of Section 263 showed that as mandated by sub­section (2) of Section 263, no order under Section 263 of the Act shall be “made” after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. Therefore the word used was “made” and not the order “received” by the assessee.

The Assessing Officer (AO) had passed an assessment order under Section 143 (3) of the Income Tax for the assessment year 2008­09 against which the Commissioner of Income Tax initiated revision proceeding under Section 263 of the Act to revise the assessment order and issued a notice to the assessee ­ respondent on 01.02.2012.

In turn, the assessee–respondent filed written submissions post which the learned Commissioner passed an order under Section 263 of the Act on 26.03.2012, which was dispatched on 28.03.2012, holding that the AO had failed to make relevant and necessary enquiries and thus the assessment order was set aside with a direction to AO to make necessary enquiries.

The said order was challenged before the ITAT.

The assessee – respondent submitted before ITAT that it had come to know about the revision order only when he received notice dated 06.08.2012 after which he had requested the AO to furnish a copy of the order which was supplied to him on 29.11.2012.

He argued that the order was beyond the period of limitation prescribed under Section 263 (2) of the Act which was accepted by the ITAT while allowing the appeal.

Madras High Court confirmed the order of the ITAT while holding that the date on which the order was received by the assessee was the relevant date for the purpose of determining the period of limitation under Section 263 (2) of the IT Act.

The Bench noted that even the word “dispatch” was not mentioned in Section 263 (2).

Therefore, once it was established that the order under Section 263 was made/passed within the period of two years from the end of the financial year in which the order sought to be revised was passed, such an order cannot be said to be beyond the period of limitation prescribed under Section 263 (2) of the Act.

Since the words the word used in the provision was “made” and not the “receipt of  the order, the Court said,

“As per the cardinal principle of law the provision of the statue/act is to be read as it is and nothing is to be added or taken away from the provision of the statue. Therefore, the High Court has erred in holding that the order under   Section   263   of   the   Act   passed   by   the   learned Commissioner was barred by period of limitation, as provided under sub­section (2) of Section 263 of the Act.”

“The relevant last date for the purpose of passing the order under Section 263 considering the fact that the assessment   was   for   the   financial   year   2008­09   would   be 31.03.2012 and the order might have been received as per the case of the assessee – respondent herein on 29.11.2012”, added the Court.

Accordingly, the appeal was allowed.

Cause Title: The Commissioner of Income Tax, Chennai v. Mohammed Meeran Shahul Hameed

Click here to access a copy of the Judgment.