Assessment : Limitation : S. 143, S. 144 and S. 154

Last updated: 05 March 2009

Court :
High Court

Brief :
Assessment : Limitation : S. 143, S. 144 and S. 154 of Income-tax Act, 1961 : A.Y. 1994-95 : Order giving effect to Appellate order is order inherent in S. 143 and S. 144 : Not an order u/s.154 : Limitation u/s.154(7) not applicable.

Citation :
Peninsula Land Ltd. v. CIT 307 ITR 183 (Bom); 175 Taxman 58 (Bom)

For the A.Y. 1994-95 the AO passed an order u/s.154 of the Income-tax Act, 1961, on 9-6-2006 giving effect to the order of the Commissioner (Appeals). In that order he allowed set-off of carried forward depreciation of the preceding years. Subsequently, he passed another order u/s.154 dated 22-2-2007 withdrawing the earlier order u/s.154, dated 9-6-2006 claiming it to be beyond the period of limitation as prescribed u/s.154(7). The Commissioner rejected the revision application made u/s.264 of the Act. The Bombay High Court allowed the writ petition filed by the assessee and held as under : "(i) It was clear from the order dated 9-6-2006, that the set-off was granted in order to pass on to the assessee the benefit that it had obtained under the order passed by the Appellate authority in the statutory appeal. This order was not an order passed u/s.154 of the Act. The power to pass such order was inherent in S. 143 or S. 144. (ii) The power of the Income-tax Officer to amend the assessment in consequence of decision in an appeal, revision, reference or by a High Court or Supreme Court was not traceable to S. 154, but was inherent and traceable to S. 143 and S. 144 of the Act. Therefore the limitation as contained in S. 154(7) would not apply to the passing of such an order. (iii) The finding that the order passed on 9-6-2006 was beyond the period of limitation as prescribed u/s.154(7) was erroneous."