SAMTA MINES AND MINERALS LIMITED,MUMBAI vs. ITO 11(1)(1), MUMBAI

This appeal by the assessee is directed against the final assessment order dated 29.10.2025 passed by the National Faceless Assessment Centre under section 143(3) read with section 144C(13) and section 144B of the Income-tax Act, 1961 (“the Act”), in pursuance of the directions dated 13.08.2025 issued by the Dispute Resolution Panel-2, Mumbai (“the DRP”) under section 144C(5) of the Act, for the assessment year 2022-23.

The assessee has raised the following grounds of appeal:

The brief facts are that the assessee is a company engaged in investing and financing activities in India and overseas. It filed its revised return of income on 24.11.2022 declaring a loss of Rs.1,94,86,390. During scrutiny proceedings, the Assessing Officer noticed international 2

The Assessing Officer passed the draft assessment order on 24.03.2025. The assessee filed objections before the DRP. By directions dated 13.08.2025, the DRP rejected the objections and sustained the transfer pricing adjustment of Rs.27,04,896. The Assessing Officer thereafter passed the impugned final assessment order on 29.10.2025, determining the loss at Rs.1,67,81,494 after making the said adjustment.

At the outset, the learned Authorised Representative submitted that ground no.1 is a jurisdictional ground and goes to the root of the assessment. He submitted that the DRP issued its directions on 13.08.2025, whereas the final assessment order was passed only on 29.10.2025. Under section 144C(13), the Assessing Officer was required to complete the assessment within one month from the end of the month in which the directions were received. Accordingly, the outer limit expired on 30.09.2025 and the order dated 29.10.2025 is barred by limitation. In support, he relied upon the decision of the Mumbai Bench of the Tribunal in Lubrizol Advanced Materials India Pvt. Ltd. v. Assessment Unit, ITA No.2543/Mum/2022, order dated 09.01.2024, and the judgment of the Hon’ble Bombay High Court in Principal Commissioner of Income-tax v. Sterling Oil Resources Ltd., Income Tax Appeal No.1238 of 2018, judgment dated 11.02.2025, reported in (2025) 481 ITR 767 (Bom). He accordingly submitted that the assessment order be quashed. 3

The learned Departmental Representative supported the final assessment order and the directions of the DRP. He submitted that section 144C(13) reckons the period from the date on which the directions are received by the Assessing Officer and not merely from the date borne by the directions. However, no material was placed before us to establish that the directions dated 13.08.2025 were received by the Assessing Officer in any subsequent month.

We have heard the rival submissions and perused the material available on record. Since ground no.1 challenges the very validity of the assessment on limitation, we consider it appropriate to adjudicate this ground first. The dates material for this issue are not in dispute. The DRP directions under section 144C(5) bear the date 13.08.2025 and the final assessment order bears the date 29.10.2025. The final assessment order itself records that the DRP had passed directions rejecting the assessee’s objections and confirming the adjustment. There is no material brought by the Revenue to show that the said directions were received by the Assessing Officer after August 2025.

Section 144C(13) provides that, upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with such directions, complete the assessment, notwithstanding anything to the contrary contained in section 153, without providing any further opportunity of hearing to the assessee, within one month from the end of the month in which such directions are received.

The Hon’ble jurisdictional High Court in Principal Commissioner of Income-tax v. Sterling Oil Resources Ltd. (supra), after examining the scheme of section 144C, held the time limit under sub-section (13) to be mandatory. The relevant observations in paragraphs 30 and 32 are reproduced below: 4

The Hon’ble High Court further held that the limitation cannot be reckoned from a later consequential order of the TPO and affirmed the Tribunal’s view quashing the assessment completed after the expiry of the period prescribed under section 144C(13). The retrospective insertion of section 144C(13A) does not dilute this principle because the newly inserted provision itself declares that the period available for passing the final assessment order shall be governed by sub-sections (12) and (13). The ratio of the judgment, insofar as it holds the time limit under section 144C(13) to be mandatory, therefore continues to apply.

We also find that in Lubrizol Advanced Materials India Pvt. Ltd. (supra), the co-ordinate Bench, on similar facts, held that where the DRP directions were issued and communicated in June 2022, the final assessment was required to be completed by 31.07.2022, and the assessment order passed on 01.08.2022 was barred by limitation. The

In the present case, the DRP directions were issued on 13.08.2025. Nothing has been placed before us to indicate that their receipt by the Assessing Officer occurred in a month later than August 2025. Therefore, on the material presently available, the period prescribed under section 144C(13) expired on 30.09.2025. The final assessment order passed on 29.10.2025 is beyond the statutory period. Respectfully following the binding judgment of the Hon’ble Bombay High Court in Sterling Oil Resources Ltd. (supra), we hold that the impugned final assessment order is barred by limitation and is consequently invalid. Ground no.1 raised by the assessee is allowed.

However, since section 144C(13) reckons the limitation from the month in which the directions are received by the Assessing Officer, liberty is granted to the Revenue to move an appropriate application for recall of this order, if it is able to establish by producing contemporaneous and conclusive documentary evidence that the DRP directions dated 13.08.2025 were actually received by the Assessing Officer in the month of September 2025. If such an application is filed, it shall be considered in accordance with law. This liberty is confined solely to verification of the month of receipt of the DRP directions and shall not be construed as expressing any view on the remaining grounds of appeal.

As the final assessment order has been quashed on the ground of limitation, the remaining grounds challenging the reference to the TPO and the transfer pricing adjustment are rendered academic and do not require adjudication. 6

In the result, the appeal filed by the assessee is allowed, subject to the liberty granted to the Revenue in paragraph 13 above.