Assessment orders for multiple years held invalid due to time-bar, appeal partly allowed

The Tribunal held the assessment order for AY 2008-09 as invalid and void-ab-initio due to being time-barred under section 153B of the Income Tax Act. As a result, the issues raised by the assessee were not adjudicated on merit. The appeal was partly allowed, with similar outcomes for AYs 2009-10 and 2010-11. The order was pronounced on 11/06/2021.

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Issues Involved:
1. Validity of the assessment order framed under section 153A r.w.s. 143(3) & 144C(13) of the Income Tax Act, 1961, being barred by time.

Detailed Analysis:

Issue 1: Validity of the Assessment Order - Time Barred
The primary issue raised by the assessee was the validity of the assessment order framed under section 153A r.w.s. 143(3) & 144C(13) of the Income Tax Act, 1961, claiming it was barred by time. The sequence of events is as follows:
- The Transfer Pricing Officer (TPO) passed the order under section 92CA(3) of the Act on 31/10/2016.
- The Assessing Officer (AO) delivered the draft assessment order on 23/12/2016.
- The assessee raised objections to the Dispute Resolution Panel (DRP) on 23/01/2017, which were disposed of by the DRP on 29/09/2017.
- The AO framed the final assessment order on 29/11/2017.

The assessee contended that the provisions of section 144C were not applicable for the assessment year under consideration (AY 2008-09). The necessity for framing the draft assessment order and providing the opportunity to the assessee for raising objections, as per section 144C, was argued to be inapplicable. The assessee relied on the judgment of the Hon’ble Madras High Court in the case of M/s. Vedanta Limited vs. ACIT, which held that the provisions of section 144C inserted by Finance (No.2) Act 2009 are applicable from the assessment year 2011-12 onwards and not to earlier assessment years.

The assessee further pointed out that the AO was required to pass the final assessment order within the limitation period provided under the 4th proviso to section 153B of the Act, i.e., by 31/12/2016. However, the AO framed the assessment order on 29/11/2017, which was beyond the limitation period.

The respondent (Revenue) argued that there was no specific ground raised by the assessee in the memo of appeal challenging the assessment order as being barred by time. However, the Tribunal noted that the provisions of section 144C were indeed applicable only from the assessment year 2011-12 onwards, as per the judgment of the Hon’ble Madras High Court.

The Tribunal also referred to the Mumbai Tribunal’s decision in the case of Truetzsshler India Ltd., which took a similar view, affirming that the provisions of section 144C are applicable prospectively from the assessment year 2011-12.

Based on these precedents, the Tribunal concluded that the assessment for the year under consideration (AY 2008-09) could not be subject to the provisions of section 144C. Consequently, the time limit for passing the order as provided under section 153B of the Act applied. The AO framed the assessment final order on 29/11/2017, which was time-barred as the order should have been passed on or before 31/12/2016.

Thus, the Tribunal held the impugned assessment order as unsustainable and void-ab-initio. Since the order was invalid, there was no need to adjudicate the issues raised by the assessee on merit.

Conclusion:
The Tribunal allowed the assessee's appeal partly, declaring the assessment order for AY 2008-09 as invalid due to being time-barred. The same reasoning applied to the appeals for AYs 2009-10 and 2010-11, which were also partly allowed.

Order Pronouncement:
This order was pronounced in Open Court on 11/06/2021.

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