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Longer limitation means a substantive right which cannot be curtailed by amendment- amendment reducing limitation to file petitions or appeals should be considered prospective only

Income Tax - By: - CA DEV KUMAR KOTHARI - Dated:- 12-9-2017 - Provision- section 254 of Income -tax Act 1961 regarding order and rectification of order by Tribunal. Summary: As discussed in detail in this article, as per provisions there is no limitation provided for making an application by the AO and assessee before the Tribunal for rectification of order of Tribunal passed u/s 254(1). Therefore there cannot be a limitation for passing order u/s 254(2) when an application is made. The limitati .....

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is is because to point out a mistake and to get order rectified, is a substantive right of the AO and assessee and such right cannot be removed, curtailed or impaired retrospectively. General: Under various laws certain rights are conferred upon parties concerned with matters under law. For example: (a) right to appeal before various appellate authorities , Tribunal or Court, (b) right to prefer petition for revision before revisionary authority, (c) right to prefer petition for rectification of .....

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d cannot be imposed for disposal of an appeal , petition or application, unless an appeal, petition or application has been filed. This is because concerned authority or court has to pass an order on appeal, petition or application. Therefore, limitation to dispose of or decide upon any application, petition or appeal can start only after the same has been filed. We find limitations provided for filing appeal , petition etc. before CIT(A), CIT, ITAT, High Courts and the Supreme Court Scope of th .....

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month in which order was passed whereas earlier limitation was four years from the date of the order . In this article an attempt is made to find out whether the limitation is only in respect of rectification by ITAT at its own and limitation is not applicable in case an application is made by any party to the appeal that is Revenue (AO) and Assessee and in such a situation Tribunal is required to rectify the order to remove mistake apparent from records and make the order as per law. Relevant .....

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d by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the 2[Assessing] Officer: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard : - .....

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nd of the month in which the order was passed] The language indicate that the limitation is only for suo moto rectification by Tribunal. This is because many times the order may not come to knowledge of assessee or AO within such limitation and even if it is known more time is generally required to make petition because a rectification is possible based on binding judgments which may be expected by assessee or AO. Even otherwise, a period of 45-60 days is generally required in service of notice .....

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ay amend order passed by it under section 254(1) Therefore, there seems very limited scope and possibilities of passing of orders by Tribunal at its own. Nature of limitation in section 254(2), in first part is limitation for passing of an order by Tribunal. The amended limitation starts from the end of the month in which order is passed u/s 254(1), earlier limitation was four years from the date of the order. Such limitations can naturally be for suo moto orders by Tribunal. Because in case of .....

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aid down is only for order to be passed by tribunal at its own. Whether, limitation apply to orders passed on or after 1st June,2016?: If we consider that the provision, for suo moto rectification provision is a procedural provision, then we find that it is a provision to cast a duty upon Tribunal, and it cannot be said to be a vested substantive right, then possible view is that the limitation prescribed in first limb of S.254(1), for suo moto rectification by Tribunal can be applied to orders .....

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intended. Therefore for orders passed before 1st January 2016 , for which four years limitation has not lapsed and which were amenable to rectification , the limitation can be considered till 31st December,2016. Whether, limitation apply to orders for AY 2017-18 onwards?: Another possible view is that the limitation should apply to appeal orders in relation to any assessment year which will began on or after 1st June, 2016 that is from assessment year 2017-18 and not for any earlier assessment y .....

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s the AO or assessee have to bring the mistake to the notice of Tribunal. This is to be by way of a petition. Any other party has no specific right to make such petition. the assessee or the 2[Assessing] Officer: Equal opportunity has been given to the AO and assessee who are generally parties in appeal and are actually affected parties in tax matters. On above analysis, it is clear that there is no limitation for making an application by AO or assessee. Whenever an application is made, it is ma .....

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