A two-judge Bench of Justice MR Shah and Justice AS Bopanna has held that the receipt of order passed under Section 263 by the Assessee has no relevance for the purpose of computing the limitation period provided under Section 263 of the Income Tax Act.
An appeal was preferred before the Supreme Court against the judgment of the Madras High Court which had dismissed the appeal of the Appellant-Revenue and upheld the order passed by the Income Tax Appellate Tribunal (ITAT) holding that the revision order passed by the Commissioner was beyond the period of limitation.
In this case, the Commissioner of Income Tax had initiated revision proceedings under Section 263 of the IT Act to revise the assessment order passed by the Assessing Officer and issued a notice to the Assessee- Respondent. Thereafter, the Commissioner passed an order under Section 263 holding that the AO had failed to make necessary inquiries and make correct income assessment. The order of CIT was challenged by the Assessee-Respondent before the ITAT.
The High Court dismissed the appeal of the Revenue and upheld the order of ITAT holding that the order passed by the Commissioner was barred by limitation. The Court also held that the date of receipt of order by the Assessee-Respondent would be the relevant date for the purpose of determining the period of limitation under Section 263(2) of the Act.
Additional Solicitor General Mr. Vikramjit Banerjee appeared on behalf of the Appellant-Revenue while Counsel R. Sivaraman appeared on behalf of the Respondent during the proceedings before the Court.
The issues which were dealt with by the Court were (i) Whether, in the facts and circumstances of the case, the High Court and the ITAT were right in holding that the order passed by the learned Commissioner passed under Section 263 was barred by period of limitation provided under Section 263 (2) of the Act; ii) Whether the High Court was right in holding that the relevant date for the purpose of considering the period of limitation under Section 263(2) of the IT Act would be the date on which the order passed under Section 263 by the Commissioner was received by the Assessee.
The Apex Court, while referring to Section 263(2) of the IT Act, held that one it has been established that the order under Section 263 was made/passed within two years from the end of the financial year in which the order sought to be revised was passed, such an order could not be said to be beyond the period of limitation.
Further, the Bench observed, "Receipt of the 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 High Court as such has misconstrued and has misinterpreted the provision of subsection (2) of Section 263 of the Act. If the interpretation made by the High Court and the learned ITAT is accepted in that case it will be violating the provision of Section 263 (2) of the Act and to add something which is not there in the section," the Court asserted.
Additionally, the Court noted, "The word used is "made" and not the "receipt of the order". 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."
In the light of these observations, the Court allowed the appeal and set aside and quashed the judgment of the High Court and order of ITAT by holding that the order passed by the Commissioner was within the period of limitation under Section 263 of the IT Act.