Facts of the Case

The petitioner filed a writ petition seeking directions to the Income Tax Department to give effect to the orders passed by the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2008-09, issue refund of ₹25,44,671 with interest, defreeze bank accounts, and release attached properties.

The petitioner had originally filed its return declaring income of ₹19,92,354, which was later assessed at ₹100,42,66,390 under Section 143(3). Two immovable properties were also attached by the Department. The petitioner succeeded partly before the Commissioner of Income Tax (Appeals), and thereafter the ITAT, by order dated 8 October 2018, remanded the matter for fresh assessment and deleted the demand reflected on the ITBA portal.

Meanwhile, a penalty order under Section 271(1)(c) was passed but was subsequently dropped by the ITAT on 2 March 2020 because the quantum assessment itself had been remanded. Despite multiple representations, the Department neither passed a fresh assessment order nor removed the demand or issued refund, leading to the writ petition.

Issues Involved

  1. Whether the Department could delay compliance with an ITAT remand order on the ground that the order was not received through proper channel.
  2. When the limitation period for passing a fresh assessment under Section 153(3) commences.
  3. Whether the petitioner was entitled to refund, deletion of demand, and release of attachments in the absence of a fresh assessment within limitation.

Petitioner’s Arguments

The petitioner contended that the Department’s failure to give appeal effect was arbitrary and unlawful. It was submitted that the ITAT order had been communicated to the Department and that the statutory time limit for passing a fresh assessment under Section 153(3) had already expired.

It was further argued that demands amounting to ₹34.70 crore (quantum) and ₹33.98 crore (penalty) continued to be reflected on the ITBA portal despite deletion by the ITAT. Since the Department was already holding amounts exceeding the total tax demand, retention of ₹25,44,671 was unjustified and refundable.

Respondent’s Arguments

The Revenue contended that the ITAT order had not been received by the concerned authority (CIT-Judicial) through proper channel and therefore the remand could not be acted upon. According to the Department, limitation for passing a fresh assessment begins only upon receipt of the order by the competent authority.

Reliance was placed on judicial precedents interpreting the term “received” in limitation provisions, including the Full Bench decision in CIT v. Odeon Builders Pvt. Ltd..

Court Order / Findings

  • The expression “received” in Section 153(3) cannot be interpreted to indefinitely extend limitation merely because the Department claims non-receipt.
  • Once the Department is aware of the order—through its representatives or communication—the limitation period begins to run.
  • Internal administrative lapses cannot be used to defeat statutory timelines.
  • The ITAT had forwarded the order to the Department on 24 October 2018, and the petitioner had repeatedly communicated the same thereafter.
  • The Department failed to pass a fresh assessment within the prescribed period of twelve months.
  • Consequently, the demand could not continue to subsist.

The Court directed:

  1. Deletion of quantum and penalty demands reflected on the ITBA portal.
  2. Refund of ₹25,44,671 with applicable interest.
  3. Release of attached properties.
  4. Defreezing of the petitioner’s bank accounts.

Important Clarification

The judgment clarifies that the Department cannot indefinitely delay giving appeal effect by invoking technicalities regarding receipt of orders. Awareness of the order by responsible officials is sufficient to trigger limitation.

It reinforces that taxpayers are entitled to timely relief following appellate orders, including refund and release of attachments, and that statutory timelines for fresh assessments must be strictly enforced.

Link to download the order – https://www.mytaxexpert.co.in/uploads/1772256572_SUNSHINECAPITALLIMITEDVsDEPUTYCOMMISSIONEROFINCOMETAXCIRCLE91DELHIORS..pdf 

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