Income Tax Act: Date Of Receipt Of Order Irrelevant For Computing Limitation Under Section 263(2) : SC

KEY TAKEAWAYS

• The Supreme Court ruled that the date of receipt of the assessment order has no bearing on the calculation of the limitation period for the Revision by the Principal Commissioner under Section 263 of the Income Tax Act.
• The above observation was made by a two judge bench of Justices M R Shah and A S Bopanna Commissioner of Income Tax, Chennai vs Mohammed Meeran Shahul Hameed - a case involving the calculation of the limitation period under Section 263 of the Income Tax Act.

BACKGROUND

• In 2010, the respondent was served with an assessment order under Section 143 of the Income Tax Act. Soon after, the Commissioner of Income Tax initiated revision proceedings under Section 263 of the Act, and on March 26, 2012, an order was issued holding that the assessment order was incorrect.
• On November 29, 2012, the respondent received notice and filed an appeal with the ITAT.
• The respondent contended that the Commissioner's order was issued after the statute of limitations specified in S.263(2) had expired .
• The ITAT ruled that the revision order was issued after the statute of limitations had expired, and the Madras High Court upheld the ITAT's decision in its impugned judgement.
• According to the impugned judgement, the date on which the respondent received the order was the relevant date for determining the period of limitation under Section 263 (2) of the Act.
• The Supreme Court, in a judgement authored by Justice M.R.Shah, framed the primary legal question for consideration as follows: whether the relevant date for determining the period of limitation under S.263(2) of the IT Act is the date on which the order is actually received by the respondent?
• Answering the above question in the negative, the Bench held that Section 263 (2) of the Act requires no revision order to be made after two years from the end of the fiscal year in which the order sought to be revised was passed.
• The Bench holds that because S.263 uses the words made and not received, the receipt of the order has no bearing on determining limitations.

COURT’S DECISION

• The order of the Commissioner of Income Tax dated 31.03.2012 was found to be well within the limitation period prescribed by S.263.
• The receipt of the order on November 29, 2013 is irrelevant for calculating limitation.

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