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15 April 2016

Power to extend period for passing assessment order to be exercised within limitation period

Supreme Court of India has held that when the normal period of limitation for passing assessment order by the Assessing Officer was three years, as per the provisions, the power to extend the period could be exercised within the said period of three years and not after the expiry of this limitation period.

The dispute [State of Punjab v. Shreyans Industries Ltd.] involved provisions of Punjab General Sales Tax Act, 1948 and the Court was of the view that power under sub-section (10) of Section 11 of the said Act could not be exercised on the expiry of the period of three years.
Karnataka High Court’s judgment in the case of Bharat Heavy Electricals, as relied in the impugned order of the Punjab & Haryana High Court was approved by the Apex Court while it held that once the period of limitation expires, the immunity against being subject to assessment sets in and the right to make assessment gets extinguished.

It was held that therefore, there would be no question of extending the time for assessment when the assessment has already become time barred.