An assessment order giving effect to an appellate decision beyond

An assessment order giving effect to an appellate decision beyond the statutory limitation period is a nullity and must be quashed.

Issue

Whether an assessment order passed by the Assessing Officer to give effect to a CIT(A) appellate order is legally sustainable when it is issued beyond the strict three-month statutory limitation period prescribed under Section 153, and whether the assessee is consequently entitled to a full tax refund with interest.

Facts

The Claim: The assessee filed its return of income for the Assessment Year 2017–18, claiming a tax refund.
The Initial Assessment: The Assessing Officer (AO) initially rejected the claim and passed an assessment order under Section 143(3) raising a tax demand.
The Appellate Order: The Commissioner (Appeals) allowed the assessee’s appeal in full via an order dated August 16, 2022.
The Receipt Date: The Principal Commissioner of Income Tax (PCIT) officially received the copy of this appellate order on August 31, 2022.
The Statutory Deadline: Under Section 153, the AO was legally bound to pass a giving-effect order within three months from the end of the month in which the order was received, establishing a firm deadline of November 30, 2022.
The Delay: The AO failed to act within the timeline and eventually passed the order giving effect to the CIT(A)’s directions on December 9, 2025, well after the expiry of the statutory timeframe.

Decision

Order Barred by Limitation: Because the order giving effect to the CIT(A) decision was passed long after the strict statutory deadline, it is barred by limitation under Section 153 and is a legal nullity that must be quashed.
Refund Directed: Consequent to the quashing of the invalid order, the revenue department is directed to refund the entire sum of ₹96.69 lakhs back to the assessee.
Statutory Interest Awarded: The revenue must pay interest under Section 244A on the refund amount, calculated from the day immediately following the statutory deadline (December 1, 2022) up to the actual date of payment. (In favour of assessee)

Key Takeaways

Strict Enforcement of Timelines: Statutory limitation periods prescribed for the revenue department to give effect to taxpayer-favourable appellate orders are mandatory, not directory. Delays turn subsequent orders into void actions.
Consequence of Departmental Inaction: When the tax department lets a giving-effect window lapse, it loses its jurisdictional power to modify or process the assessment further, reverting the state of affairs to the choice most favourable to the taxpayer.
Compensatory Interest for Delay: The revenue cannot hold onto an assessee’s legitimate refund past the statutory deadline without consequence; Section 244A interest automatically triggers to compensate the taxpayer for the duration of the department’s non-compliance.

HIGH COURT OF CALCUTTA

Nomura Research Institute Financial Technologies India (P.) Ltd.

Union of India

Smita Das De, J.

WPO/29/2026

JUNE 12, 2026

Pratyush Jhunjhunwala, Ms. Sruti Datta and Ms. Saksdhi Singhi, Advs. for the Petitioner. Prithu Dudheria and Amit Sharma, Advs. for the Respondent.

ORDER

1. The core issue in this writ petition is whether the order dated 9^th December, 2025 passed by the Assistant Commissioner of Income Tax, circle 4(1) Kolkata giving effect to the order of the Commissioner of Income Tax (Appeals) dated 16^th August, 2022 for the assessment year 2017-18 is barred by limitation under section 153(5) of the Income Tax Act and consequently liable to be quashed.

2. It is submitted by the petitioner that the Commissioner of Income Tax (Appeals) passed an order under section 250 of the said act on 16^th August, 2022 where by petitioner’s appeal for the assessment year in question was allowed in full.

3. It is mandated that as per section 153(5) of the said Act, the Assessing Officer shall give effect to the order passed under section 250 within 3 months from the end of the months in which such order is received by the Principle Commissioner or Commissioner

4. The order of the Commissioner of Income Tax (Appeals) has been received by the Principle Commissioner of Income Tax (Appeals) on 31^st August, 2022 the statutory period to pass giving effect order expired on 30^th November, 2022.The impugned order dated 9^th December, 2025 has passed after a delay of over 3 years and is, therefore, non est in law without jurisdiction. It is well settled that the period prescribed under section 153(5) is mandatory and an order passed beyond the said period is a nullity.

5. Due to illegal retention of tax of the Income Tax Department the petitioner is entitled to refund of Rs.96,69,710/- along with statutory interest under section 244A of the said Act.

6. Despite there being a specific direction upon the respondent authorities to obtain instruction from the concerned Assessing Officer with regard to the issue involved in the instant case, learned counsel for the respondent is unable to produce the same.

7. It is submitted by the respondents that delay occurred due to administrative restructuring of charges. However, no application seeking extension of time under the proviso to Section 153(5) has been filed before the expiry of the prescribed period.

8. After careful consideration of this case and upon perusal of the materials on record this Court finds that the facts are not in dispute. The order of the Commissioner of Income Tax (Appeals) 16^th August, 2022 has been given effect to beyond the statutory period as prescribed under the statue.

9. The judgment relied upon by the petitioner which has been recorded in the earlier order dated 14^th May, 2026 squarely applies to the facts of this case. The failure to pass the giving effect order within the prescribed period, results in the appellate order attaining finality and the department cannot subsequently seek to give effect to.

10. This Court is of the view of the impugned order dated is nullity and is liable to be quashed and set aside.

11. Once the order is held to be a nullity the natural consequence is that the petitioner is entitled to refund of taxes paid along with statutory interest The department cannot be permitted to unjustly enrich itself by retaining the tax of the petitioner.

12. In view of the above the order dated 9^th December, 2025 passed by the Assistant Commissioner of Income Tax Circle (1) for the assessment year 2017-18 is hereby quashed and set aside. All consequential proceedings arising there from shall also stand quashed.

13. The respondents are directed to refund to the petitioner the sum of Rs.96,69,710/- for the assessment year 2017-18 and to pay an interest on the said amount under section 244A from 1^st December, 2022 till the date of actual payment. The entire exercise of demand along with interest shall be completed within a period of 2 months.

14. With the above observations and direction the writ petition stands allowed and disposed of

15. Since no affidavits have been called for the allegation made in the writ petition are deemed to have been denied by the respondents.