2020 (10) TMI 246 - AT - Income Tax

Appeal allowed, assessment order quashed as time-barred under Section 153(1) Income Tax Act.

M/s. Truetzschler India Pvt. Ltd. Versus Dy. CIT, Range – 2 (3), Mumbai

The Tribunal allowed the appeal, quashing the assessment order dated 13/05/2013 as time-barred due to the order being passed beyond the prescribed time ... Assessment order after expiry of time limit prescribed under section 153 - completion of assessment in case a reference has been made u/s 92CA(1) - applicability of newly inserted provisions of Section 144C - HELD THAT:- The third proviso providing revised time limit for completion of assessment in certain cases has been inserted by the Finance Act, 2012 with effect from 01/07/2012. This proviso provides an outer limit of three years from the end of relevant assessment year for completion of assessment in case a reference has been made u/s 92CA(1). The assessee’s case is covered by this third proviso. Provisions of section 144C of the Act vide which the assessee was given an option to take the benefit of specialised Dispute Resolution Panel as an alternate mechanism for expeditious disposal of dispute was inserted by the Finance (No.2) Act, 2009 w.r.e.f. 01/4/2009. The Hon'ble Madras High Court in the case of M/s. Vedanta Ltd. [2020 (1) TMI 168 - MADRAS HIGH COURT] has considered the issue of applicability of newly inserted provisions of Section 144C and has held that the amendment being substantive in nature would apply prospectively from assessment year 2011-12 onwards. The facts of the case, provisions of Section 153(1) of the Act (as they were applicable in AY 2009-10) and the ratio of judgement rendered in the case of M/s. Vedanta Limited (supra) makes it explicitly lucid that the provisions of section 144C would not apply in the impugned assessment year and hence, the time period for passing the assessment order would not get enlarged. AO was under obligation to pass the assessment order within the time specified under 3rd proviso to Sec. 153(1) of the Act i.e. on or before 31/03/2013. Since the order has been passed beyond the period of limitation the same is null and void. The assessee succeeds on the legal ground raised as additional ground of appeal. The assessment order is quashed and the appeal of assessee is allowed. Issues Involved:1. Validity of the assessment order dated 13/05/2013 under section 143(3) read with section 144C(13) of the Income Tax Act, 1961.2. Applicability of Section 144C to the assessment year 2009-10.3. Time limitation for passing the assessment order under Section 153(1) of the Income Tax Act, 1961.Detailed Analysis:1. Validity of the Assessment Order Dated 13/05/2013:The appellant challenged the validity of the assessment order dated 13/05/2013, arguing it was passed beyond the prescribed time limit under Section 153(1) of the Income Tax Act, 1961. The appellant's representative submitted that the Transfer Pricing Officer (TPO) issued the order under Section 92CA(3) on 09/01/2013, and the draft assessment order was passed on 27/03/2013. According to the appellant, the final assessment order should have been passed by 31/03/2013, but it was issued on 13/05/2013, thus making it time-barred. The appellant relied on the Madras High Court's decision in M/s. Vedanta Limited vs. ACIT, which held that Section 144C provisions apply from the assessment year 2011-12 onwards and not to the assessment year 2009-10.2. Applicability of Section 144C to the Assessment Year 2009-10:The appellant argued that Section 144C, inserted by the Finance (No.2) Act 2009, applies only from the assessment year 2011-12 onwards. The Madras High Court in M/s. Vedanta Limited vs. ACIT supported this view, stating that Section 144C introduced a new scheme of assessment for a specific class of assessees and was substantive rather than procedural. The court emphasized that the law applicable on the first day of the assessment year governs the assessment for that year. Thus, Section 144C did not apply to the assessment year 2009-10.3. Time Limitation for Passing the Assessment Order under Section 153(1):The Tribunal examined the provisions of Section 153(1) as applicable to the assessment year 2009-10. The third proviso to Section 153(1) extends the time limit for completing the assessment to three years if a reference under Section 92CA(1) is made. However, since Section 144C did not apply to the assessment year 2009-10, the time limit remained two years from the end of the assessment year, i.e., by 31/03/2013. The Tribunal concluded that the assessment order passed on 13/05/2013 was beyond the prescribed time limit and thus null and void.Conclusion:The Tribunal allowed the appeal, quashing the assessment order dated 13/05/2013 as time-barred. Given the decision on the legal ground, the Tribunal did not address the merits of the additions challenged by the appellant. The appeal was decided in favor of the assessee, and the assessment order was declared invalid.Order Pronounced:The order was pronounced on Wednesday, the 30th day of September, 2020.