VALVOLINE CUMMINS PRIVATE LIMITED,DELHI vs. DCIT, CIRCLE-25(1), DELHI

ITA 4178/DEL/2024Status: DisposedITAT Delhi23 January 2026AY 2020-211 pages

AI SummaryAllowed

Facts

The assessee's appeal challenged the Final Assessment Order, arguing it was time-barred as it was passed beyond the period prescribed under Section 153(1) read with Section 153(4) of the Income Tax Act, 1961. The Revenue contended that the issue of limitation was unsettled and pending before the Supreme Court, requesting a deferral of the adjudication.

Held

The Tribunal, following the Madras High Court's decision in CIT vs. Roca Bathroom Products (P) Ltd. and other precedents, ruled that the Final Assessment Order was indeed barred by limitation. Despite the pendency before the Supreme Court, the Tribunal found no stay on the binding judgment of the Madras High Court.

Key Issues

Whether the Final Assessment Order is barred by limitation under Section 153 read with Section 144C of the Income Tax Act, 1961, given the pendency of similar issues before the Supreme Court.

Sections Cited

143(3), 144C(13), 144B, 153, 153(1), 153(4), 144C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: YOGESH KUMAR U.S. & SHRI MANISH AGARWAL

For Appellant: Ms. Mansha Bhalla

Hearing: 20/01/2026Pronounced: 23/01/2026

ORDER

PER YOGESH KUMAR, U.S. JM:

The captioned appeal is filed by the Assessee challenging the Final Assessment Order passed u/s 143(3) r.w.s. 144C(13) r.w. Section 144B of the Income Tax Act, 1961 (the Act in short) dated 23/07/2024 pertaining to the Assessment Year 2020-21.

The Assessee raised Ground No. 1.1 contending that the Final Assessment order dated 23/07/2024 passed by the A.O. is time barred by limitation and is bad in law, as it has been passed beyond the time frame prescribed under section 153(1) read with section 153(4) of the Income Tax Act, 1961 ('Act' for short). The Ld. Assessee's Representative relying on the ratio laid down by the Hon'ble High Court of Madras in the case of Commissioner of Income-tax Vs. Roca Bathroom Products (P.)

Ltd. [2022] 445 537 (Madras) and also plethora of orders passed by the Co-ordinate Bench of the Tribunal, Hyderabad Bench sought for allowing the Ground No. 1.1 of the Assessee.

Per contra, the Ld. Department's Representative submitted that the issue of limitation arising from the interplay between Section 144C and Section 153 of the Act is presently unsettled and pending adjudication before the Hon'ble Supreme Court in the case of ACIT Vs. Shelf Drilling Ron Tappmeyer Ltd. in Special Leave to Appeal (C) Nos.

20569-20572/2023 therefore, deciding the very same issue by this Tribunal at this stage would be premature, thus submitted that the Tribunal cannot decide the issue of limitation in terms of the ratio laid down by the Hon'ble High Court of Madras in the case of Roca Bathroom Products (P) Ltd. (supra). Accordingly, the Ld. Department's Representative sought for deferral of adjudication of the present Appeal and also the issue of limitation. The Ld. Department's Representative has also filed detail written submission.

7. Per contra, the Ld. Department's Representative at the outset requested not to decide the captioned Appeal and prayed for keeping the Appeal pending till the Larger Bench of the Hon'ble Supreme Court finally decides the case of Shelf Drilling Ron Tappmeyer Ltd. (supra). Further the Ld. Department's Representative submitted that there is a specific Interim Order passed by the Hon'ble Supreme Court on 22/09/2023 in the case of Assistant Commissioner of Income Tax Vs. Shelf Drilling Ron Tappmeyer Ltd. in Petitions for Special Leave to Appeal (C) Nos. 20569-20572/2023, wherein the Hon'ble Supreme Court has observed that the impugned Judgment (of Hon'ble High Court of Judicature at Bombay in the case of Shelf Drilling Ron Tappmeyer Ltd.) shall not be cited as precedent in any other subsequent matters until further order. Further submitted that the issue involved in the Roca Bathroom Products (P) Ltd. (supra) and in the case of Shelf Drilling Ron Tappmeyer Ltd. (supra), being identical, it should be construed that the interim order passed by the Hon'ble Supreme Court dated 22/09/2023 in the case of Shelf Drilling Ron Tappmeyer Ltd. shall also applicable to the ratio laid down by the Madras High Court in the case of Roca Bathroom Products (P) Ltd. (supra). Further submitted that the issue of limitation arising from the interplay between Section 144C and Section 153 of the Act is presently unsettled and pending adjudication before the Hon'ble Supreme Court and therefore, deciding the very same issue by this Tribunal at this stage would be premature, thus submitted that the Tribunal cannot decide the issue of limitation in terms of the ratio laid down by the Hon'ble High Court of Madras in the case of Roca Bathroom Products (P) Ltd. (supra). Accordingly, the Ld. Department's Representative sought for deferral of adjudication of the present Appeal and also the issue of limitation. The Ld. Department's Representative has also filed written submission which is reproduced as under:- “1. At the outset, the Revenue submits that the present written submissions are confined only to the preliminary issue of limitation arising from the interplay between section 144C and section 153 of the Income-tax Act, 1961. The Revenue respectfully reserves the right to make comprehensive submissions on all other issues on merits, as and when the same are taken up for hearing. A. Introductory submission 2. The present appeals raise the issue whether, in cases governed by section 144C, the time consumed in the proceedings before the Dispute Resolution Panel ("DRP") is required to be subsumed within the limitation prescribed under section 153, or whether section 144C operates as a special statutory mechanism with its own distinct timelines for completing the assessment after passing the draft order.

“In the instant case, the proceedings before the Board under ss. 15 and 16 of the Act had been terminated by order of the Board dated April 26, 1990 whereby the Board, upon consideration of the facts and material before it, found that the appellant-company had become economically and commercially non-viable due to its huge accumulated losses and liabilities and should be wound up. The appeal filed by the appellant-company under s. 25 of the Act against said order dated January 7, 1991. As a result of these orders, no proceedings under the Act was pending either before the Board or before the Appellate Authority on February 21, 1991 when the Delhi High Court passed the interim order staying the operation of the Appellate Authority dated January 7, 1991. The said stay order of the High Court cannot have the effect of reviving the proceedings which had been disposed of by the Appellate Authority by its order dated January 7, 1991. While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence. This means that if an order passed by the Appellate Authority is quashed and the matter is remanded, the result would be that the appeal which had been disposed of by the said order of the Appellate Authority would be restored and it can be said to be pending before the Appellate Authority after the quashing of the order of the Appellate Authority. The same cannot be said with regard to an order staying the operation of the order of the Appellate Authority because in spite of the said order, the order of the Appellate Authority continues to exist in law so long as it exists, it cannot be said that the appeal which has been disposed of by the said order has not been disposed of and is still pending. We are, therefore, of the opinion that the passing of the interim order dated February 21, 1991 by the Delhi High Court staying the operation of the order of the Appellate Authority dated January 7, 1991 does not have the effect of reviving the appeal which had been dismissed by the Appellate Authority by its order dated January 7, 1991 and it cannot be said that after February 21, 1991, the said appeal stood revived and was pending before the Appellate Authority. In that view of the matter, it cannot be said that any proceedings under the Act were pending before the Board or the Appellate Authority on the date of the passing of the order dated August 14, 1991 by the learned Single Judge of the Karnataka High Court for winding up of the company or on November 6, 1991 when the Division Bench passed the order dismissing O.S.A. No. 16 of 1991 filed by the appellant-company against the order of the learned Single Judge dated August 14, 1991. Section 22(1) of the Act could not, therefore, be invoked and there was no impediment in the High Court dealing with the winding up petition filed by the respondents. This is the only question that has been canvassed in Civil Appeal No. 126 to 1992, directed against the order for winding up of the appellant-company. The said appeal, therefore, fails and is liable to be dismissed.”

17.

The Co-ordinate Bench of the Tribunal of Hyderabad Bench in the case of Interwrap Corp Private Ltd (Successor of Owens Corning Industries (India) Pvt. Ltd. (Successor of Owens Corning Industries (India) Private Limited Verses The Deputy Commissioner of Income Tax, Circle-5(1), Hyderabad in reported in 2025 (12) TMI 1278-ITAT Hyderabad dated 10/12/2025, considered overall circumstances including the Interim Order passed in the case of Shelf Drilling Ron Tappmeyer Ltd. by the Hon'ble Supreme Court and decided the issue of limitation in favour of the Assessee by following the Judgment of Bombay High Court in the case of Roca Bathroom Products Pvt. Ltd (supra). The Co-ordinate Bench of the Tribunal also safeguarded the interest of the parties by granting liberty. The relevant portions of the order in the case ofInterwrap Corp Private Ltd (supra) are as under:- “17. The sum and substance of the ratio laid down by the Hon'ble Madras High Court in the case of CIT Vs. Roca Bathroom Products Private Limited (supra) and the Hon'ble Bombay High Court in the case of Shelf Drilling Ron Tappmeyer Limited Vs. ACIT, International Taxation (supra), which was later followed by the Co- ordinate Bench of the Tribunal in the case of Aveva Solutions India LLP, Hyderabad Vs. ITO (supra), is) that the upper time limit provided under Section 153(1) and Section 153(4) of the Act is applicable for the final assessment order passed by the A.O. under Section 143(3) r.w.s. 144C(13) r.w.s. 144B of the Act. In case the final assessment order passed by the A.O. under Section 143(3) r.w.s. 144C(13) r.w.s. 144B is beyond the upper time limit provided under Section 153(1) and Section 153(4) of the Act, then the said order is beyond the limitation prescribed and liable to be quashed. In the present case, there is no dispute with regard to the fact that the normal time limit available for passing the assessment order, as per the provisions of Section 153(1) of the Act, is 18 months from the end of the relevant assessment year, which would expire on 30.09.2020 for A.Y. 2018- 19. Further, as per the provisions of Section 153(4) of the Act, where a reference under Section 92CA of the Act was made to the Transfer Pricing Officer (TPO), the time) limit available stands extended by another 12 months, and in the present case, the upper time limit for completion of assessment proceedings would expire on 30.09.2021.

19. The court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with other parts of the law and the setting in which the clause to be 23 interpreted occurs. (See R.S. Raghunath v. State of Karnataka [(1992) 1 SCC 335 : 1992 SCC (L&S) 286 : (1992) 19 ATC 507 : AIR 1992 SC 81] .) Such a construction has the merit of avoiding any inconsistency or repugnancy either within a section or between two different sections or provisions of the same statute. It is the duty of the court to avoid a head-on clash between two sections of the same Act. (See Sultana Begum v. Prem Chand Jain [(1997) 1 SCC 373 : AIR 1997 SC 1006]).” (iii) Franklin Templeton Trustee Services (P) Ltd. v. AmrutaGarg, (2021) 6 SCC 736 : 2021 SCC OnLine SC 88 at page 752: “ 17. The concept of “absurdity” in the context of interpretation of statutes is construed to include any result which is unworkable, impracticable, illogical, futile or pointless, artificial, or productive of a disproportionate counter-mischief [ SeeBennion on Statutory Interpretation, 5th Edn., p.969.] . Logic referred to herein is not formal or syllogistic logic, but acceptance that enacted law would not set a standard which is palpably unjust, unfair, unreasonable or does not make any sense. [Bennion on Statutory Interpretation, 5th Edn., p. 986.] When an interpretation is beset with practical difficulties, the courts have not shied from turning sides to accept an interpretation that offers a pragmatic solution that will serve the needs of society [Id, p. 971, quoting Griffiths, L.J.] .Therefore, when there is choice between two interpretations, we would avoid a “construction” which would reduce the legislation to futility, and should rather accept the “construction” based on the view that draftsmen would legislate only for the purpose of bringing about an effective result. We must strive as far as 24 possible to give meaningful life to enactment or rule and avoid cadaveric consequences [See Principles of Statutory Interpretation by Justice G.P. Singh, 14th Edn., p. 50.]”

26.

We are not oblivious of the fact that any finding on the aspect of reasonableness in time in passing orders when no time is provided would be superfluous in view of our decision in earlier paragraphs. It is necessary to decide on the issue as in this case, the revenue has taken more than 5 years in one appeal and 4 years in other appeals, which is unacceptable as rightly held by the learned judge. We are not alone on this issue and are fortified by the following judgments of the Hon'ble Supreme Court in this regard. (i) Bharat Steel Tubes Ltd. v. State of Haryana, [(1988) 3 SCC 478: 1988 SCC (Tax) 409 at page 4871 15. Before we part with the case, we would like to indicate that assessment of tax should be completed with expedition. It involves the revenue to the State. In the case of a registered dealer who collects sales tax on behalf of the State, there is no justification for him to withhold the payment of the tax so collected. If a timely assessment is completed, the dues of the State can be conveniently ascertained and collected. Delay in completion of assessment often creates problems. The assessee would be required to keep up all the evidence in support of his transactions. Where evidence is necessary, with the lapse of time, there is scope for its being lost. Oral evidence as and when required to be produced by the assessing authority may not be available if a long period intervenes between the transactions and the consideration of the matter by the assessing authority Long delay thus is not in the interest of either the assessee or the State. In view of the fact that a period of limitation has been prescribed for bringing the escaped turnover into the net of taxation, such an eventuality cannot be grappled with appropriately unless timely assessment is completed. In several taxing statutes, even in a situation like this, where assessment under Section 11(3) or 28(3) of the respective Acts is contemplated, a period of limitation is provided. Until by statute, such a limitation is provided, it is proper for the State Governments to require, by statutory rules or appropriate instructions, to ensure completion of assessments with expedition and reasonable haste but subject to rules of natural justice" (ii) Govt. of India v. Citedal Fine Pharmaceuticals, [(1989) 3 SCC 483 1989 SCC (Tax) 464 at page 487] 6. Learned counsel appearing for the respondents urged that Rule 12 is unreasonable and violative of Article of for the recovery of duty. He urged that in the absence of any prescribed period for recovery of the duty as contemplated by Rule 12. the officer may act arbitrarily in recovering the amount after lapse of long period of time. We find no substance in the submission While it is true that Rule 12 does not but that by itself does not render the rule unreasonable or violative of Article 14 of the Constitution prescribed any period within which recovery of any duty as contemplated by the rule is to be made. in the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period What would be reasonable period, would depend upon the facts of each case Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the assessee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice of demand for recovery was made within reasonable period. No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case (iii) (State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd., [(2007) 11 SCC 363: 2007SCC OnLine SC 1254 at page 367] 17. A bare reading of Section 21 of the Act would reveal that although no period of limitation has been prescribed therefor the same would not mean that the suomotu power can be exercised at any time

23.

The question at would be the reasonable period did not fall for consideration there The binding precedent of this Court, some of which had been referred to us heretobefore had not The counsel appearing for the parties were remissin bringing the same to the notice of the Court Furthermore from a perusal of the impugned notice dated 4-9-2006 is Apparent that the resvisional authority did not assign any reason as to why such a notice was being issued considered after a period of 53% years" Generally no hard and fast rule can be laid down to indicate what a reasonable time is. It though depends upon the facts of the each case drawing a clue from Article 113 of the Limitation Act the residual entry, it would be reasonable to conclude that in such cases, action is to be concluded within 3 years Needless to say if the statute prescribes shorter period, the doctrine of reasonable time will not be applicable and the timeline under the statute is to be strictly followed 27. For the reasons set out 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 (24) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer of 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 ORP 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 de-nova 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 on 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.”