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Facts
The assessee's final assessment order for AY 2011-12 was passed beyond the statutory time limit prescribed under Section 144C(13) of the Income Tax Act. The DRP issued directions on 22/04/2022, and the assessment order was passed on 28/06/2022, which is more than one month after the end of the month the directions were received.
Held
The Tribunal held that the assessment order was passed beyond the limitation period prescribed by Section 144C(13) of the Act. Consequently, the assessment order was deemed time-barred, null, and void.
Key Issues
Whether the final assessment order passed under Section 144C(13) of the Income Tax Act was barred by limitation, considering the timeline for completion after DRP directions.
Sections Cited
143(3), 144C, 254, 92CA, 153, 144C(13), 13, 144B, 144C(5), 144C(2)
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Income Tax Appellate Tribunal, DELHI
ORDER
PER YOGESH KUMAR, U.S. JM:
The present Appeal is filed by the challenging the Final Assessment Order passed by Assistant Commissioner of Income Tax, Circle -1(1)-Gurgaon, dated 28/06/2022 u/s254r.w. Section 143(3)/144C of the Income Tax Act, 1961 ('Act' for short).
The Assessee raised several grounds of Appeal
and also raised additional Ground No. 11 &
12. However, the Ld. Counsel restricted his argument only on Ground No. 11 & 12 which reads as under:- “"Ground 11: On the facts and circumstances of the case and in law, the Ld. TPO and Ld. AO have erred in passing the transfer pricing order under section 92CA(3) and draft assessment order under Section 144C in pursuance of the Hon'ble Tribunal's order under Section 254 beyond the maximum time limit prescribed under Section 153 of the Act and hence the subject orders are liable to be quashed/annulled as time barred "Ground 12: Without prejudice to any of the ground, the Ld. AO has erred by completing the final assessment under Section 144C(13) of the Income Tax Act, 1961, pursuant to the DRP directions, beyond the statutory time limit prescribed under the Act.”
Brief facts of the case are that initially a Final assessment Order came to be passed on 19/02/2016u/s 143(3) r.w. Section 144C of the Income Tax Act, 1961 ('Act' for short), pertaining to Assessment Year 2011-12,wherein the A.O. made addition/adjustments on account of advertisement, marketing and promotion (AMP) expenditure,income of the Assessee has been enhanced by Rs. 1,71,32,019/- by holding thattransaction pertaining to receipt of information technology support services does not satisfy the Arm’s Length Price and further disallowed an amount of Rs. 83,70,085/- being payment made to M/s Bhumi Consultants. Aggrieved by the Final Assessment Order dated 19/02/2016, the Assessee preferred an Appeal before the Tribunal in , the Co-ordinate Bench of the Tribunal vide order dated 25/01/2019, set aside the Final Assessment Order by deleting the adjustment made with regard to AMP Expenditure and remanded the adjustment of Rs. 1,71,32,019/- qua receipt of information technology support services and disallowance of Rs. 83,70,085/- qua deduction claimed for expenditure incurred for legal and professional services. Pursuant to the order of the Tribunal dated the TPO passed an order on 31/01/2021 u/s 92CA (3) r.w. Section 254 of the Act. ARectification Order has also been passed by the TPO on 09/02/2021 by rectifying the said order dated 31/01/2021.
The Ld. A.O. passed a Draft Assessment Order on 15/07/2021 u/s 144C r.w. Section 143(3) r.w. Section 254 of the Act. The Assessee filed objection before the DRP in terms of Section 144C (2) of the Act on 31/08/2021. The Ld. DRP issued directions on 28/04/2022 u/s 144C(5) of the Act. Consequent to the DRP direction dated 28/04/2022, the TPO passed an order dated 20/05/2022 giving effect to the directions of the TPO and subsequently A.O. passed Final assessment Order u/s 254 r.w. Section 143(3)/144C of the Act on 28/0/2022. Aggrieved by the Final assessment Order dated 28/06/2022, the Assessee preferred the present Appeal.
The Ld. Counsel for the Assessee addressing on the additional Grounds of Appeal submitted that the impugned order dated 28/06/2022 is barred by limitation in terms of provisions of Section 144C(13) of the Act. Further submitted that the A.O. shall pass a Final Assessment Order within one month from the end of the month in which directions issued by DRP is received by the A.O. however, in the presentcase, DRP’s issued the direction on 22/04/2022, uploaded on the portal on 28/04/2022. Hence, the service of the order stood completed on the date of such upload. Therefore, it was incumbent uponthe A.O. to complete assessment with one month from the end of the month in which such directions were received by the A.O. As per Section 144C (13) of the Act. The limitation for passing the Final Assessment Order in the case in hand ends on the last day of May, 2022, however, Final Assessment Order has been passed on 28/06/2022. Therefore, Impugned Final Assessment Order dated 28/06/2022 is barred by limitation. The Ld. Counsel also relied on plethora of Judgments.
Per contra, the Ld. Departmental Representative submitted that the order impugned has been passed after partially remanding the matter by the Tribunal, therefore, the limitation provided u/s 144C(13) of the Act is not applicable. Thus, sought for dismissal of the Additional grounds of Appeal of the Assessee.
We have heard both the parties and perused the material available on record. In the present case, pursuant to the order of the Tribunal dated 25/01/2019 in the TPO passed order on 31/01/2021 u/s 92CA (3) of the Act, thereafter Draft Assessment Order has beenpassed on 15/07/2021 u/s 144C r.w.
Section143(3) of the Act. Further, the DRP issued direction on 28/04/2022 and the TPO passed order dated 20/05/2022 giving effect to the direction of the DRP and subsequently assessment order has been passed on 28/06/2022.As per Section 144C(13) of the Act the assessment shall be passed without providing any further opportunity to the Assessee within one month from the end of the month in which the directions issued by the DRP u/s 144C(5) of the Act. For the sake of ready reference the provision of Section 144C(13) of the Act is reproduced as under:-
“Sec. 144C(13): Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.”
The Hon’ble Jurisdictional Tribunal in the case of Honda R & D (India) (P.) Ltd, Gurgaon Vs. ACIT, Circle-10(1), New Delhi (ITA No. 1733/Del/2022) held as under:-
“17. In the context of faceless assessment process time and place of dispatch and receipt of electronic document (in this case DRP order) is required to be ascertained by reference to section 13 of Information Technology Act, 2000 which is the basis prescribed under section 144B of Income Tax Act also (refer section 144 B (6)(v)). Hon'ble Supreme Court in case of GS Chatha Rice Mills [(2021)2SCC 209-J para 85), interpreted this very provision. Applying principles laid down by Hon'ble Supreme Court, only relevant fact necessary for deciding Ground No. 4 in present appeal relating to time barred assessment, is time of uploading by DRP of DRP order onto ITBA portal. Intimation letter to DRP order unambiguously shows 27th April 2022 as date of uploading of DRP order. This fact cannot be disputed. Except this critical and relevant information everything else (like when order is visible to AO, date of uploading some document by DCIT/ACIT circle 2 (1) (1) Delhi) has been submitted by Respondents. It is fair to conclude that date of uploading DRP order on ITBA portal is 27.04.2022. As per section 144C(13) of the Act, assessment had to be completed on or before 31.05.2022. In present case the assessment is completed only on 30.6.2022 i.e., it is time barred null and void. Therefore, impugned assessment order dated 30.06.2022 is set aside being barred by limitation. Other grounds having become academic in nature are left open.”
Further the Hon'ble High Court of Delhi in the case of Louis Dreyfus company India Private Limited Vs. DCIT 13(1), [2024] 159 taxmann.com 244 (Delhi) as well as PCIT-1, Vs. M/s Fiberhome India Private Limited, ITA 91/2024/[2024] 159 taxmann.com 772 (Delhi) it has been held that, it is mandatory upon the assessing authority to complete the assessment as per the timelines prescribed as per provisions of sub-Section (13) of Section 144C of the Act, failing which assessment proceedings are barred by limitation and liable to be set aside. The relevant extract of Judgment delivered in the case of Louis Dreyfus (supra) is reproduced below:-
“"20. Undisputedly, the directive of the DRP came to be uploaded on the ITBA portal on 24 June 2022. It is additionally stated to have been dispatched through Speed Post to (Additional/Joint/Deputy/Assistant Commissioner of Income Tax, National Faceless respondent the third respondent (TPO) and the fourth Assessment Centre, New Delhi) on 27 June 2022. It is thereafter that the TPO appears to have passed the order dated 25 July 2022.
We, however note that paragraph 4(2) of the E-as, 2019 makes the following salientprovisions:- "4(2). All communication among the assessment unit, review unit, verification unit or technical unit or with the assesse or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making an assessment under this Scheme shall be through the National e-assessment Centre."
It is thus manifest that as per the provisions of E-as, 2019, all orders, notices and decisions have to be necessarily uploaded on the ITBA portal and as part of the larger faceless assessment regime which now holds the field. The uploading of the directive of the DRP on the ITBA portal would thus constitute valid and sufficient service and the period of limitation as prescribed in Section 144C(13) of the Act would be liable to be computed bearing that crucial date in mind. Once the aforesaid position becomes clear, it is evident that the order of assessment, if at all could have been framed lastlyby 31 July 2022. There has thus been an abject failure on the part of the first respondent to comply with the mandatory timelines as incorporated in the aforenoted provisions. Accordingly, the writ petition is liable to be allowed and the impugned order of assessment and the consequential penalty proceedings are thus liable to be set aside on this short score alone.
The writ petition is allowed. The order of assessment dated 24 August 2022 as well as the penalty show cause notice dated 24 August 2022 are quashed and set aside. For reasons aforenoted and consequent to a failure on the part of the respondents to implement the directives of the DRP, the return as submitted by the petitioner would be deemed to have been accepted and the tax liability worked accordingly." [Emphasis Supplied]
In the present case, the DRP issued directions u/s 144C(5) of the Act on 22/04/2022, the TPO passed giving effect to DRP direction on 20/05/2022 and subsequently on 28/06/2022, the impugned assessment order came to be passed which is beyond the period of limitation prescribed u/s 144C(13) of the Act. Therefore, the impugned assessment order dated 28/06/2022 is hereby set aside.
In the result, Appeal of the Assessee is allowed.
Order pronounced in the open court on 12th September, 2025