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Facts
The assessee filed their return for AY 2020-21, which was selected for scrutiny, including verification of foreign financial interest. The assessment was completed under Section 143(3) read with Section 144B on 28-3-2023. The assessee successfully argued before the CITA that this assessment was time-barred, as the due date was 30-9-2022. The revenue appealed to the ITAT, contending that the time limit for assessment should be extended due to a reference made to the Foreign Tax and Tax Research (FT & TR) division of CBDT for information from Singapore tax authorities.
Held
The Tribunal determined that merely a proposal from the Technical Unit to seek information from Singapore tax authorities does not constitute a formal reference by the competent authority (Joint Secretary, FT & TR-II). Without actual evidence of such a formal reference being made, the period of limitation for completing the assessment is not extended as per Explanation 1 clause (x) to Section 153 of the Income-tax Act. Therefore, the assessment completed on 28-3-2023 was held to be barred by limitation, and the CITA's decision to quash it was upheld.
Key Issues
1. Whether the assessment framed by the Assessing Officer for AY 2020-21 on 28-3-2023 was barred by limitation. 2. Whether a mere internal proposal to seek foreign tax information, without a formal reference by the competent authority, extends the statutory time limit for assessment under Section 153 of the Income-tax Act.
Sections Cited
143(3), 144B, 139(1), 153, 153B, 90, 90A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
Before: SHRI C. N. PRASAD & SHRI M. BALAGANESH
O R D E R PER M. BALAGANESH, A. M.: The appeal in AY 2020-21, arises out of 1. the order of the ld. National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] in Appeal No. ITBA/NFAC/S/250/2024-25/1072522379(1) dated 24.01.2025 against the order of assessment passed u/s 143(3) r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 28.03.2023 by the Assessing Officer, Assessment Unit (hereinafter referred to as ‘ld. AO’).
The revenue vide Ground No. 2 had challenged the action of the 2. Learned CITA in holding that the assessment framed by the Learned AO was beyond the period of limitation. The main crux of the ground of the revenue is that there was a reference made to Foreign Tax and Tax Research (FT & TR) division of CBDT for seeking certain information from Singapore tax authorities regarding the Assessee herein and that the Learned AO would get extended time for framing of assessment which fact has not been appreciated by the Learned CITA while quashing the assessment as barred by limitation. This goes to the root of the matter and hence, we deem it fit to address the same first.
We have heard the rival submissions and perused the materials 3. available on record. The assessee is an individual and had furnished his return of income for the assessment year 2020-21 electronically on 8-1- 2021 under section 139(1) of the Act declaring total income of Rs 5,41,98,020 and claiming carry forward of losses of Rs 1,14,76,791. The return was selected for complete scrutiny on various issues and one such issue flagged by the system was verification of Foreign Financial Interest of the Assessee. The Assessee is also a partner in the following firms:- a) GROX (PAN - AAOFG6955C) and b) SS Medtech (PAN - ADXFS1381C).
During the year, the assessee has shown income from letting out his 4. properties, capital gains and other sources. The assessment was completed by the Learned AO on under section 143(3) read with section 144B of the Act on 28-3-2023 determining total income at Rs 8,45,27,103 and allowing the long term capital loss to be carried forward at Rs 3,90,15,991 to subsequent years. The plea of the assessee is that this assessment framed on 28-3-2023 is barred by limitation as according to the Assessee, the due date for framing of assessment expired on 30-9- 2022. The assessee raised a specific ground in this regard vide Ground No.1 before the Learned CITA. The Learned CITA noted that as per the provisions of section 153 of the Act which stipulates the time limit for completion of assessment, the time available to the Learned AO is 30-9- 2022 for framing of assessment vide Circular No. 23/2022 dated 3-11- 2022. The Learned CITA sought a report from the Learned AO to ascertain as to whether there was any typographical error in mentioning the date in the assessment order. No report was submitted by the Learned AO in this regard to the Learned CITA. The Learned CITA also noticed that the digital signature of the Learned AO in the assessment order is dated 28-3-2023 and accordingly concluded the completion of assessment order to be on 28-3-2023 which is barred by limitation and accordingly quashed the assessment.
The Learned DR before us placed on record the factual report 5. obtained from the Learned AO dated 8-10-2025 , which contained the following documents:- a) Request for technical assistance made by Assessment Unit to Technical Unit dated 24-9-2022 b) Letter written by Technical Unit to Joint Secretary, FT & TR –II dated 26-9-2022 seeking information from Singapore Tax Authorities in the case of Assessee herein. This letter is nothing but a proposal for seeking information and requesting Joint Secretary, FT & TR-II for necessary and urgent action in view of assessment getting time barred by 30-9-2022.
For the sake of convenience, the entire factual report of the Learned 6. AO dated 8-10-2025 together with its Annexure containing the letters dated 24-9-2022 and 26-9-2022 referred in (a) and (b) above are reproduced below:-
On perusal of the aforesaid documents, we find that even the letter 7. dated 26-9-2022 written to the Joint Secretary , FT&TR-II is only a proposal for seeking information about the Assessee herein.
There is no document placed on record by the revenue before us duly confirming the fact as to whether the proposal of the Technical Unit of Assessment had been accepted by the Joint Secretary, FT & TR-II and that any reference was indeed actually made by the Joint Secretary, FT & TR-II to Singapore Tax Authorities. Only if the actual reference is made by the Joint Secretary, FT & TR-II, the Learned AO would get extended time limit as per section 153 of the Act. For the sake of convenience, the relevant provisions of Explanation 1 to section 153 of the Act which provides for the period to be excluded are reproduced below:-
“For the purposes of this section, in computing the period of limitation – (x) the period commencing from the date of which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; Shall be excluded Hence on perusal of the aforesaid provisions of Explanation 1 8. clause (x) to Section 153 of the Act, it is very clear that unless the reference is actually made for exchange of information to Singapore tax authorities by the competent authority , there cannot be any extension of time limit for framing of assessment to the Learned AO. If at all any reference was actually made to Singapore Tax Authorities by the FT & TR- II, then the same could have been placed on record by the Learned AO in his factual report. We find that the factual report of the Learned AO is even completely silent on the information , if any, received through exchange of information, pursuant to reference, if any, made to Singapore Tax Authorities and the date of receipt of such information, if any. Even if the information is not received from the Singapore Tax Authorities, the Learned AO should have waited for a period of one year as per the aforesaid provisions of Section 153 of the Act, which was not done by him as he had proceeded to complete the assessment on 28-3-2023.
In view of the above, we have no hesitation to conclude that no 9. evidence has been placed on record by the revenue for having made any reference to Singapore Tax Authorities seeking information qua the Assessee herein and hence the assessment for the Assessment Year should have been framed latest by 30-9-2022 and since the assessment is framed on 28-3-2023, the same has been rightly treated by the Learned CITA as barred by limitation. Accordingly, the Ground No.2 raised by the revenue is dismissed.
Since the entire assessment is quashed, the adjudication of Ground 10. No.1 raised by the revenue on merits of addition become academic in nature.
In the result, the appeal of the revenue is dismissed. 11.
Order pronounced in the open court on 30/12/2025.