2025 (2) TMI 1208 - AT - Income Tax

Validity of assessment order passed u/s 144C - period of limitation - HELD THAT - The time available to the ld AO to pass the final assessment order in terms of Section 144C(13) would be one month from the end of the month in which order is received which would expire on 31.10.2021. Whereas in the instant case the final assessment order has been passed by the ld AO u/s 143(3) read with Section 144C(13) of the Act on 26.05.2022 which is much beyond the prescribed time limit provided u/s 144C(13) of the Act. This issue is no longer res integra in view of the decision of the coordinate bench of this Tribunal in the case of Honda R D (India) Pvt. Ltd. 2024 (5) TMI 1116 - ITAT DELHI No hesitation to hold that the final assessment order in the instant case has been framed beyond the maximum time limit prescribed u/s 144C(13) of the Act and hence become time barred. Accordingly the final assessment order is hereby quashed as void ab initio and ground No. 1 is herby allowed.

Summary

The core legal issue considered by the Tribunal in this appeal pertains to the validity of the final assessment order passed under the Income Tax Act, specifically whether the assessment order was passed within the prescribed time limit under Section 144C(13) of the Act. The principal question was whether the final order passed beyond the statutory time frame is void and liable to be quashed. Ancillary issues related to the timing and receipt of the Dispute Resolution Panel (DRP) order and its effect on limitation were also examined.

The Tribunal's analysis focused on the following key issue:

• Whether the final assessment order passed under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961, was passed beyond the prescribed time limit, thereby rendering it void and liable to be quashed.

For this issue, the Tribunal undertook a detailed examination of the relevant statutory provisions, judicial precedents, and facts on record.

Section 144C(13) of the Income Tax Act prescribes that the Assessing Officer (AO) must pass the final assessment order within one month from the end of the month in which the DRP order is received. The date of receipt of the DRP order is thus critical in computing the limitation period for passing the final order.

The Tribunal relied heavily on the coordinate bench decision in the case of Honda R&D (India) Pvt. Ltd., which dealt with a similar issue of limitation under Section 144C(13). The Honda R&D case clarified that the limitation period begins from the date of receipt or uploading of the DRP order on the Income Tax Business Application (ITBA) portal, which is the official mode of communication in faceless assessment proceedings.

In the instant case, the DRP order was intimated to the AO on 22.09.2021, and the AO was required to pass the final assessment order by 31.10.2021. However, the final assessment order was passed on 26.05.2022, which was well beyond the prescribed time limit.

Further, the Tribunal referred to the Information Technology Act, 2000, and specifically Section 13 thereof, which governs the time and place of dispatch and receipt of electronic records. This provision is incorporated by reference in Section 144B(6)(v) of the Income Tax Act, governing faceless assessments, to determine the time of receipt of electronic documents such as the DRP order.

The Supreme Court's decision in GS Chatha Rice Mills was cited to emphasize that the relevant date for computing limitation in electronic communication is the date of uploading the document on the portal, not the date when the AO actually accesses or views the order. In the present appeal, the DRP order was uploaded on the ITBA portal on 27.04.2022. Therefore, the limitation period expired on 31.05.2022.

Since the final assessment order was passed on 30.06.2022, it was held to be beyond the statutory time limit and consequently void ab initio. The Tribunal rejected any arguments or submissions by the Revenue that might have sought to justify the delay or extend the limitation period, noting that no written submissions were filed by the Revenue despite liberty being granted.

The Tribunal's application of law to facts was straightforward: the statutory time limit under Section 144C(13) is mandatory and cannot be extended. The uploading date of the DRP order on the ITBA portal is the determinative date for limitation. The final assessment order passed after the expiry of this period is invalid.

Other grounds raised by the assessee were not adjudicated upon as the quashing of the assessment order on limitation grounds rendered them academic.

The significant holdings of the Tribunal are as follows:

• "The final assessment order is hereby quashed as void ab initio" for being passed beyond the prescribed time limit under Section 144C(13) of the Income Tax Act.
• The relevant date for computing limitation in faceless assessment proceedings is the date of uploading the DRP order on the ITBA portal, as per Section 13 of the Information Technology Act, 2000 and Section 144B(6)(v) of the Income Tax Act.
• The statutory time limit prescribed under Section 144C(13) is mandatory and non-extendable.
• Reliance on the Supreme Court's interpretation in GS Chatha Rice Mills and the coordinate bench decision in Honda R&D (India) Pvt. Ltd. is authoritative for determining the limitation period in such cases.

The Tribunal concluded:

"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."

In summary, the Tribunal emphasized the primacy of statutory timelines in tax assessment proceedings and underscored the importance of electronic communication protocols in faceless assessments. The final assessment order passed beyond the prescribed limitation period was held to be invalid, resulting in the quashing of the assessment order and allowing the appeal.