While holding the assessment orders for AYs 2013-14 to 2018-19 to be passed well within the limitation period, the Madras High Court held that statutory limitation of 21 months shall be applicable for the instant case as per the main provision of Section 153B of Income Tax Act only, without considering exclusions provided in the Explanation thereto.

The High Court added that by applying the 21 months of limitation from the end of the financial year in which the last of the authorizations for search under section 132 was executed, the said date falls within the range of dates stipulated in the TOLA, and thus held that the benefit under TOLA is available to the Revenue.

A Single Judge Bench of Justice Dr. Justice Anita Sumanth observed that “it is the statutory time that must be taken into account for the purposes of TOLA, that is, the date as per the main provision of Section 153B only. The Explanation provides for exclusions in various situations. The application of the exclusions will result in expansion of the period taking note of various intervening events and the ultimate date would thus fluctuate depending on the exclusions taken into account and applied. This cannot be equated to statutory prescription and the date of limitation is determined only by the main provision which is inflexible”.

Senior Advocate R.V. Easwar appeared for the Assessee while Revenue was represented by Advocate A.P. Srinivas.

As per the brief facts, the Assesse was subject to search proceedings under Section 132 and was accordingly issued notices under Section 153A. The Assessee challenged the notices under Section 153A, for AYs 2013-14 to 2018-19 in the first round of litigation, by filing writ petitions, which were dismissed with the direction to the Revenue to complete the assessments, and accordingly, the Revenue passed the assessment orders for AYs 2011-12 to 2019-20. Therefore, the Assessee preferred the present writ petitions, challenging the assessment orders on the ground that the same are barred by limitation.

After considering the submission, the Bench observed that, the extension as per TOLA shall be considered before taking into account the benefit of the period of interim protection, i.e. total period for which the stay granted pending writ petitions and writ appeals being 16 months and 24 days, which extends the limitation till Apr 20, 2023

Thus, the Bench held the assessment order passed on Jan 29, 2022, to be well within the time and confirms the same along with the consequent penalty orders.

The High Court therefore concluded that the assessment orders passed for AYs 2011-12, 2012-13 and 2019-20 are barred by limitation and sets aside the same along with the consequent penalty orders.

Cause Title: Agni Estates and Foundations Private Limited v. Deputy CIT

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Madras High CourtJustice Anita Sumanth

Pankaj Bajpai