Court deems assessment order illegal due to missed deadline under Income Tax Act; petitioner's appeal allowed.

The court found that none of the notifications extended the time limit for completing the assessment beyond 30th April 2021 as required by Section 144C(13) of the Income Tax Act. Consequently, the assessment order dated 30th September 2021 was deemed illegal and beyond the permissible time limit. The court allowed the petition, quashing the assessment order, computation of income, demand notice, and penalty notice issued on 30th September 2021, and directed the petitioner to withdraw any appeal filed against the assessment order within two weeks.

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Issues Involved:
1. Legality of the assessment order dated 30th September 2021.
2. Applicability of the Relaxation Act and subsequent notifications to the time-limit for completing the assessment.

Issue-Wise Detailed Analysis:

1. Legality of the Assessment Order:
The petitioner challenged the assessment order dated 30th September 2021, asserting it was ex-facie illegal and contrary to the provisions of the Income Tax Act, 1961. The petitioner contended that the assessment should have been completed within one month from the end of the month in which the directions from the Dispute Resolution Panel (DRP) were received, i.e., by 30th April 2021. However, the assessment order was passed on 30th September 2021, which the petitioner argued was beyond the permissible time limit.

2. Applicability of the Relaxation Act and Subsequent Notifications:
The court examined whether the Relaxation Act and the notifications issued under it extended the time limit for completing the assessment in the petitioner’s case.

- Section 144C(13) of the Income Tax Act: This section mandates that the Assessing Officer must complete the assessment within one month from the end of the month in which the DRP’s directions are received. The DRP’s directions were received on 20th March 2021, making the deadline 30th April 2021.

- Section 3 of the Relaxation Act: This section extends the time limit for actions falling between 20th March 2020 and 31st December 2020. Since the DRP’s directions were received on 20th March 2021, the petitioner’s case did not fall within this period.

- Notification No. 20/2021: Issued on 31st March 2021, this notification extended the time limit for completing actions under Section 144C(13) to 30th April 2021. However, since the original deadline for the petitioner’s case was already 30th April 2021, this notification was deemed inapplicable.

- Notification No. 38/2021: Issued on 27th April 2021, this notification extended the deadline to 30th June 2021 for actions whose time limit expired on 30th April 2021 due to earlier notifications. The court found this inapplicable as the petitioner’s deadline was not extended by any earlier notification but was based on the statutory provision itself.

- Notification No. 74/2021: Issued on 25th June 2021, this notification extended the deadline to 30th September 2021 for actions under Sections 153 or 153B of the Act. The court noted that this notification did not specifically include Section 144C(13), making it inapplicable to the petitioner’s case.

Court’s Conclusion:
The court concluded that none of the notifications extended the time limit for completing the assessment under Section 144C(13) beyond 30th April 2021. The assessment order dated 30th September 2021 was therefore deemed illegal and beyond the permissible time limit. The court allowed the petition, quashing the assessment order, computation of income, demand notice, and penalty notice issued on 30th September 2021. The petitioner was also directed to withdraw any appeal filed against the assessment order within two weeks.

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