Accost Media LLP v. Deputy Commissioner of Income tax Circle 27(1) And Ors
Limitation for Rectification under Section 254(2) of Income Tax Act: Commences from Date of Communication, Not Date of Order.
Court: Bombay High Court
Citation: 2025:BHC-OS:23375-DB
Decision Date: 01-12-2025
List of Laws
Income Tax Act, 1961; Section 254(2) of the Income Tax Act, 1961; Section 254(3) of the Income Tax Act, 1961; Income Tax (Appellate Tribunal) Rules, 1963; Rule 34A of the Income Tax (Appellate Tribunal) Rules, 1963; Rule 9 of the Income Tax (Appellate Tribunal) Rules, 1963; Rule 35 of the Income Tax (Appellate Tribunal) Rules
- Facts: Accost Media LLP filed a writ petition challenging an order passed under Section 254(2) of the Income Tax Act, 1961, which rejected their rectification application as time-barred. The Income Tax Appellate Tribunal (ITAT) order, which rectification was sought for, was dated December 10, 2024, and received by the petitioner on March 24, 2025. The petitioner filed a miscellaneous application for rectification on July 16, 2025. The ITAT considered the application time-barred as it was filed more than six months after the order was passed.
- Procedural Posture: The case came before the Bombay High Court as a writ petition seeking to quash the ITAT's order rejecting the rectification application.
- Issue: Whether the limitation period for filing a rectification application under Section 254(2) of the Income Tax Act, 1961, commences from the date of the order or the date of communication/knowledge of the order to the assessee.
- Holding: The Bombay High Court held that the ITAT misdirected itself in concluding that the rectification application was time-barred. The limitation period commences from the date of communication or knowledge of the order to the assessee.
- Reasoning: The Court reasoned that Section 254(3) of the Income Tax Act and Rule 35 of the ITAT Rules mandate the communication of the order to the parties. The Court relied on decisions of the Delhi High Court in Golden Times Services (P) Ltd V/S Deputy Commissioner of Income Tax and Pacific Projects Ltd V/S Assistant Commissioner of Income Tax, which held that the limitation period should commence from the date of actual receipt or knowledge of the order. The Court emphasized that a literal interpretation of "six months from the end of the month in which the order was passed" would lead to absurd situations where an assessee might lose the remedy without even knowing an order was passed. The Court clarified that since the petitioner filed an appeal against the original order, the grounds raised in the writ petition could be agitated in the appeal itself, thus disposing of the writ petition without remanding the matter back to the ITAT.
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