Assessment order under section 153A quashed as time-barred despite Swiss treaty reference for 2008-09

The ITAT Mumbai held that an assessment order passed under section 153A read with section 143(3) was barred by limitation and liable to be quashed. The revenue's claim for extension of limitation period under section 153B(1) based on a reference to Swiss authorities under Article 26 of the Indo-Swiss Treaty was rejected. The tribunal ruled that since Article 26 applies only to information relating to periods on or after April 1, 2011, the reference for assessment year 2008-09 was invalid, making the assessment order passed on December 29, 2016 time-barred as it should have been completed by December 31, 2015.

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Issues Involved:
1. Admission of Additional Ground.
2. Validity of Assessment Order based on Limitation Period.
3. Applicability of Indo-Swiss Treaty for Exchange of Information.

Summary of Judgment:

Issue 1: Admission of Additional Ground

The assessee raised an additional ground contending that the assessment order is barred by time and hence illegal. The Tribunal admitted this additional ground for adjudication, relying on the judgment of the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC), as it was a purely legal issue not requiring investigation of new facts.

Issue 2: Validity of Assessment Order based on Limitation Period

The assessee argued that the assessment order dated 29.12.2016 was barred by limitation as the search was conducted on 11/03/2014, and as per section 153B(i), the assessment should have been completed by 31/12/2015. The Assessing Officer claimed an extension by one year under Explanation (ix) to section 153B due to a reference to FT & TR. However, the Tribunal found that the reference made by the revenue on 08.08.2016 was invalid as per the Indo-Swiss Treaty, which applies only to information from fiscal years beginning on or after 1st April 2011. Consequently, the assessment order passed on 29/12/2016 was deemed barred by limitation and quashed.

Issue 3: Applicability of Indo-Swiss Treaty for Exchange of Information

The Tribunal examined the Indo-Swiss Treaty and confirmed that the exchange of information under Article 26 is applicable only for information relating to fiscal years beginning on or after 1st April 2011. Since the reference made by the revenue pertained to AY 2008-09, it was invalid. This invalidity negated the one-year extension claimed by the Assessing Officer under Explanation (ix) to section 153B. The Tribunal supported this conclusion by referring to similar cases, including Praveen Sawhney vs ACIT (2023) 224 TTJ 46 (Del).

Conclusion:

The Tribunal quashed the assessment order dated 29/12/2016 as it was barred by limitation. The additional grounds raised by the assessee were admitted and adjudicated in their favor, rendering other grounds on merits academic and not warranting separate adjudication. The appeal of the assessee was allowed.

Order Pronounced:

The order was pronounced in the open court on 31/10/2023.

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