In a major relief to Indian Oil Corporation Ltd. (IOCL), Patna High Court composed of Chief Justice K. Vinod Chandran and Justice Partha Sarthy held that ITAT was justified in quashing the assessment order after 4 years.
BACKGROUND
The department challenged order of the Income Tax Appellate Tribunal by which the order passed by the Assessing Officer finding it to be beyond four years was quashed, deeming that to be beyond reasonable time.
The department argued that there was no limitation provided in the statute for an order to be passed under Section 201, deeming an assessee to be in default in respect of such tax, which is not deducted or paid or after deduction failed to pay such tax, as an employer, due from the employee.
RULING
The court held that when no period of limitation is prescribed by a statute, even then the Department cannot pass orders after the expiry of a reasonable period.
“True, the provision was amended bringing in a limitation of four years, in 2010 and then later extended to six years and seven years. Providing a specific period of limitation by the Union Parliament indicates, though it is not applicable to the subject assessment orders, the wisdom of the legislature. The presumable object behind that is not to leave the matter to the vagaries of the Department officials. It is also pertinent that at first the reasonable limitation period prescribed by the Union Parliament was four years; which was the reasonable time, as deemed by the various High Courts,” the ITAT observed.
Case Title: ITO V/S Indian Oil Corporation Ltd.
Citation: Miscellaneous Appeal No.832 of 2017