Income Tax--Assessment

Time Limit for Passing Order Under Section 153(3) and Consequences of Failure

V.K. Subramani

Section 153 has the title 'Time Limit for Completion of assessment, reassessment and re-computation'. Sub-section (3) says that where an order is to be made in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, it must be made before the expiry of 12 months from the end of the financial year in which the said order under section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner, or Commissioner or, as the case may be, the under section 263 or section 264, is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be. The time limit was 9 months previously and only in respect of orders passed or received, as the case may be, on or after 1st day of April, 2019 the extended time limit of 12 months will apply.

Recently, the Delhi High Court decided this issue in the case of Ramesh Chawla (HUF) v Income Tax Officer (2025) 482 ITR 361 (Del) : 2024 TaxPub(DT) 4576 (Del-HC). The assessee has filed a writ for issuing a refund of tax paid along with applicable interest under section 244A of the Act for the assessment year 2004-05. Originally, the assessee had filed a return admitting a total income of 45,000 for the assessment year 2004-05. The return was processed under section 143(1) of the Act and the same was accepted. Subsequently, a notice under section 148 was issued on the basis of information that the assessee had received a gift of Rs.1 crore from another person. So, the re-assessment proceeding was completed by assessing the total income at 1,00,45,000 by making an addition of Rs. 1 crore holding that the gift received by the assessee was not genuine.