TMI Blog2011 (4) TMI 1519X X X X Extracts X X X X X X X X Extracts X X X X ..... ned rectification order, having been passed well after the end of four years from the end of financial year, in which, intimation u/s 143(1)(a) passed, is time barred. In any event, by no stretch of logic, a rectification of mistake almost after eight years of processing an intimation u/s 143(1)(a) can be said to have been made within a reasonable time limit. We, accordingly, quash the impugned rectification order. - Shri D.Manmohan And Shri Pramod Kumar, JJ. For the appellant: Sukhinder Bagai, For the respondent: A.K. Nayak, ORDER Pramod Kumar, JJ. 1. By way of this appeal, the assessee-appellant has called into question correctness of CIT(A) s order dated 29th April, 2009, upholding validity and correctness of order dated 31st March, 2009 passed by the Assessing officer under section 154 r.w.s. 143(1)(a) of the Income tax Act, 1961, for the assessment year 2001-02. 2. Ground No.1 is general in nature and does not call for any adjudication. 3. In Ground No.2, the assessee has raised the following grievance:- The ld CIT (A) erred in upholding the order dated March 31, 2009 passed by DCIT under section 154 of the Income tax Act, 1961 when the same was clearly passed beyond the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.3.2009. He, accordingly, proceeded to pass the impugned rectification order withdrawing the deduction in respect of loss on sale of car amounting to ₹ .1,22,139. Aggrieved, the assessee carried the matter in appeal before the CIT(A), inter alia, on the ground that rectification order under section 154 passed by the Assessing Officer is time barred. The CIT(A) dismissed the plea of the assessee observing as follows: I have considered the appellant submission made through letter dated 31.12.2007. I have perused the assessment order under section 154 passed by the AO dated 31.3.2009. The AO has discussed the reasons for rectification in detail in his order, the mistake apparent from record to be rectified under section 154 of the IT Act, 1961. The AO has categorically stated that he is rectifying the order dated 21.2.2005 passed by the AO under section 154 of the I.T.Act, 1961. In the course of appellate proceedings the copy of the said rectification order was submitted before me by the appellant. Therefore, the appellant s this argument that the AO was barred by limitation is not correct as the order dated 21.2.2005 passed by the AO was well within time to be rectified u/s.15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal order or the date of the order of first rectification. After an elaborate survey of judicial precedents on the issue, Their Lordships concluded that if the subject matter of subsequent rectification is not the subject matter of first rectification , the period of limitation will have to be calculated from the date of original order In view of these discussions, it is clear that the legal position is that the time limit for rectification of mistake under section 154(7) is to be considered from the date of the original order or in subsequent rectification order only if the said rectification order dealing with the same which is sought to be rectified. In this view of the matter and having noted that the first rectification order dealt with entirely different issue i.e. excess allowance of TDS credit, it is clear that the time limit for passing the impugned order indeed expired on expiry of four years from the end of the financial year, in which, the original order sought to be rectified was passed i.e. on 31.3.2007. There is no dispute that in terms of provisions of section 154(7), no amendment under section 154 can be carried out after the expiry of four years from the end o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (54 TTJ 644 (CTK), wherein, somewhat identical issue came up for consideration before the Tribunal. Even in the absence of any time barring limitation set out in the Statue, the co-ordinate Bench held that in proceedings under the Income tax Act must have a reasonable time limit and it cannot be open any one to proceed on the basis of proceedings, which can be initiated at any stage. Speaking through one of us (i.e. learned Vice President), the co-ordinate Bench has observed as follows: 9. It is the case of the learned Departmental Representative that s. 275 deals with procedural law and in the case of procedural law, the provisions as it stood at the time of initiation of penalty proceedings are applicable as there is no vested right to the assessee in such matters. We have given careful consideration to the submissions of the learned Departmental Representative. The amended provisions of s. 275 which have come into effect from 1st April, 1989, are applicable only to those cases where the limitation as per the unamended provisions, is not expired. In fact, in the case cited by the learned Departmental Representative i.e., Bhikari Charan Panda vs. CIT (supra) their Lordships have h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to reduce the period of limitation which was hitherto two years from the end of the financial year. Thus, to our mind, the same interpretation which was placed on the unamended cl. (1) of s. 275 applies to the provisions of amended w.e.f. 1st April, 1989. We may further observe that even accepting for a moment that there is no time-limit prescribed under the Act for initiating penalty proceedings under s. 271B/275 of the Act, as rightly submitted by the learned counsel for the assessee, by taking the spirit of the provisions of s. 275 fixing the time- limit for initiation of penalty proceedings under s. 271(1)(a), 271(1)(b), etc. in the case of the assessee, penalty proceedings have to be initiated by the AO within a reasonable period of time and any proceeding initiated after an abnormal delay, is liable to be treated as invalid in law. Admittedly, the assessments were completed in 1989 and penalty proceedings were initiated after about 43 months after the date of completion of the assessment and about 50 months from the date of obtaining the audit report. The subsequent incumbent AO has initiated the penalty proceedings. To our mind, taking the limitation period prescribed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is wholly impermissible to argue that unlimited time limit be granted to the revenue for taking action under this section. The sword of taxing authorities cannot be allowed to hang, forever, over the head of the tax payers. If this proposition of the learned D.R. is accepted that will give license to the authorities to take action even after 30, 40 or 50 years. The canons of limitation are ordinarily provided expressly in the Act and in their absence, they are to be impliedly inferred by taking into consideration the scheme of the relevant provisions. 9. In view of the above discussions, the hyper technical plea of the learned Departmental Representative is only fit to be rejected. Learned Departmental Representative as indeed the authorities below have also relied on in the case of Hind Wire Industries Ltd v. CIT,(supra) but then it is a case in which the subject matter of first rectification was the same as the subject matter of second rectification was sought. In the present case, however, subject matter of two rectification proceedings is altogether different and, therefore, the ratio of Hon ble Supreme Court s judgment in the case of Hind Wire Industries Ltd v. CIT(supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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