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Facts
Multiple assessees challenged the validity of their assessment orders on grounds of limitation, specifically that the orders were passed beyond the timeframes stipulated by Section 144C read with Section 153 of the Income Tax Act, 1961. The Revenue argued that Section 144C was a self-contained code with its own timelines, independent of Section 153.
Held
The Tribunal held that Section 144C and Section 153 are mutually inclusive and interdependent, meaning the limitation period for final assessment orders must consider both. Based on the provided dates, the Tribunal found that the final assessment orders in all five cases were indeed passed beyond the prescribed statutory limitation period.
Key Issues
Whether the time limits prescribed under Section 153 of the Income Tax Act are applicable to assessments completed under Section 144C, or if Section 144C operates as a special mechanism with its own distinct timelines.
Sections Cited
144C, 153, 153(2A), 153(3)
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Income Tax Appellate Tribunal, DELHI BENCH “I”NEW DELHI
Before: SHRIVIKAS AWASTHY & SHRISANJAY AWASTHI
per section 144C (13) and three months under section 153 (2A) is available, within which period no orders have been passed in the present cases. The reference made by the learned senior counsels on the judgments in Nokia India (P.) Ltd. (supra) and Vedanta Ltd. (Supra) is well founded. The timeline given under the Act is to be strictly followed.” [Emphasized by us] Thus, the Hon’ble High Court negatived the arguments made by the Department on ‘non obstante’ clause used in section 144C of the Act. The Hon’ble High Court thus, concluded:- “27. For the reasons set out herein before, we conclude as under: (a) The provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually inclusive. The period of limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders. (b) Even in case of remand, the TPO or the DRP have to follow the time limits as provided under the Act. The entire proceedings including the hearing and directions have to be issued by the DRP within 9 months as contemplated under section 144C(12) of the Income-tax Act, (c) Irrespective of whether the DRP concludes the proceedings and issues directions or not, within 9 months, the Assessing officer is to pass orders within the stipulated time, (d) In matter involving transfer pricing, upon remand to DRP, the Assessing officer is to pass a denovo draft order and the entire proceedings as in the original assessment, would have to be completed within 12 months, as the very purpose of extension is to ensure that orders are passed within the extended period, as otherwise the extension becomes meaningless. (e) The outer time limit of 33 months in case of reference to TPO under Section 153, would not refer to draft order, but only to final order and hence, the entire proceedings would have to be concluded within the time limits prescribed, (f) The non-obstante clause would not exclude the operation of Section 153 as a whole. It only implies that irrespective of availability of larger time to conclude the proceedings, final orders are to be passed within one month in line with the scheme of the Act, (g) When no period of limitation is prescribed, orders are to be passed within a reasonable time, which in any case cannot be beyond 3 years. However, when the statute prescribes a particular period within which orders are to be passed, then such period, irrespective of whether it is short or long, shall be applicable.”
, 5939/D/2024, 525/D/2022, 5602/D/2024 + SA 650/Del/2025 & 1503/Del/2021
Considering the extract of the relevant portion from the case of Li & Fung (supra), we now need to consider the relevant dates in all these years for deciding whether the ratio in the case of Roca Bathroom (supra) applies or not. The date-sheet is as under: - Due date for passing Actual date of Name/ITA Assessment year final assessment passing final order u/s 144C(13) assessment order r.w.s. 153 of the Act 1939 2018-19* 30.09.2021 28.07.2022 5939 2021-22 31.12.2023 28.10.2024 525 2017-18* 30.09.2021 24.02.2022 5602 2021-22 31.12.2023 29.10.2024 1503 2016-17 31.12.2019 30.03.2021 Note: - *In both these cases there was extension of time considering TOLA, due to which the limitation as per Section 153(1) of the Act expired on 30.09.2021.
6.1 The dates mentioned in the above table have not been disputed by the Ld. DR. A perusal of the sequence of the dates for all the five assessment years involved clearly shows that the date on which the final assessment order was passed by the Ld. AO is beyond the period of limitation for passing the order u/s 144C(13) r.w.s. 153 of the Act. Accordingly, it is held that the final assessment orders are barred by limitation in all the five cases under consideration, and are thus quashed.
Since the assessees have succeeded on the legal issue of validity of the final assessment order, we do not at this stage, intend to adjudicate the other grounds of appeal. Hence, all other grounds of appeal are left open.
, 5939/D/2024, 525/D/2022, 5602/D/2024 + SA 650/Del/2025 & 1503/Del/2021
Before parting with this issue, it deserves to be observed that the assessees and Revenue, are at liberty to revive the aforesaid appeals in case the Hon’ble Apex Court reverses the law expounded by the Hon’ble Madras High Court in the case of Roca Bathroom Products (supra).
1. 5939/D/2024, 525/D/2022, 5602/D/2024 & 1503/D/2021 are allowed. 10. In the case of SA No. 650/Del/2025, connected with (AY 2021-22), since the main appeal has been decided, the stay application has become infructuous and the same is thereby dismissed.
Order pronounced in the open court on 28.01.2026