Assessment Order Not Time-Barred Under Income Tax Act

The Tribunal held that the assessment order passed by the Assessing Officer under Section 143(3)/144C(13) of the Income Tax Act was not barred by limitation. It was determined that the provisions of Section 144C override the limitation period provided under Section 153 of the Act. The Tribunal emphasized that the final assessment order passed pursuant to the directions of the Dispute Resolution Panel within the timelines prescribed under Section 144C(13) is not time-barred. The additional ground raised by the assessee was dismissed, and the appeal was directed to proceed on other grounds before the regular bench.

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Issues Involved:
1. Whether the assessment order passed by the Assessing Officer (AO) is barred by limitation.
2. Whether the provisions of Section 144C override the limitation period provided under Section 153 of the Income Tax Act, 1961.

Detailed Analysis:

1. Whether the assessment order passed by the Assessing Officer (AO) is barred by limitation:
The appellant contended that the assessment order passed under Section 143(3)/144C(13) of the Income Tax Act, 1961, is barred by limitation. The appellant argued that the overall limitation for making an assessment, including in the case of an eligible assessee, is three years from the end of the relevant assessment year as provided under Section 153 of the Act. The appellant further submitted that the time limitation in Section 144C(4) or Section 144C(13) are only sub-limits, subsumed within the overall limitation of three years.

The appellant elucidated the scheme of the Act with respect to assessment and limitation, emphasizing that the time limit for completion of assessment in terms of Section 153(1) of the Act is ordinarily two years from the end of the relevant assessment year, extended to three years in cases where a reference is made to the Transfer Pricing Officer (TPO). The appellant argued that the provisions of Section 144C do not override the limitation enshrined in Section 153 of the Act.

2. Whether the provisions of Section 144C override the limitation period provided under Section 153 of the Income Tax Act, 1961:
The Revenue contended that the provisions of Section 144C override the limitation period provided under Section 153 of the Act. The Revenue argued that the proceedings before the Dispute Resolution Panel (DRP) are akin to appellate proceedings, and the final assessment order passed by the AO under Section 144C(13) is akin to the appeal effect order. The Revenue relied on the decision of the Delhi Bench of the Tribunal in the case of Honda Trading Corporation vs. CIT, which held that the provisions of Section 144C override the provisions of Section 153 of the Act.

The Tribunal, after considering the rival contentions, held that the issues argued by the appellant are squarely covered against the assessee by the decision of the coordinate bench in ITA No. 1132/Del/2015. The Tribunal observed that the provisions of the Income Tax Act set out a special scheme for the assessment of an entity engaged in international transactions under Chapter X of the Act. The Tribunal noted that the scheme under Section 144C is a self-contained code, which includes specific timelines for passing the draft assessment order, filing objections before the DRP, and passing the final assessment order.

The Tribunal further observed that the draft assessment order is different in ambit from the assessment order and does not have any independent existence in law. The Tribunal held that the final assessment order passed pursuant to the directions of the DRP is within the time prescribed under Section 144C(13) and is not barred by limitation. The Tribunal also drew support from the decisions of the coordinate bench in the cases of Volvo India Private Limited vs. ACIT and Acer India Pvt Ltd vs. DCIT, which held that if the assessment orders are passed within the timelines provided under Section 144C, they are not time-barred irrespective of the timelines prescribed under Section 153 of the Act.

Conclusion:
The Tribunal dismissed the additional ground raised by the assessee, holding that the assessment order passed by the AO under Section 143(3)/144C(13) is not barred by limitation. The Tribunal directed the registry to post the hearing of the appeal on other grounds before the regular bench in due course. The order was pronounced in the open court on 10/10/2019.

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