TPO order set aside for exceeding statutory limitation period under Section 153(3) of Income Tax Act

Delhi HC set aside a TPO order dated 13 February 2023 for being passed beyond the statutory limitation period under Section 153(3) of the Income Tax Act. The Court held that the limitation period commenced from 31 January 2019 when the ITAT order was received by CIT(Judicial), making 30 September 2021 the last date for framing assessment orders even with TOLA benefits. The Court also quashed adjustments of refunds made on 20 May 2022 and 02 June 2022 against AY 2011-12 demand, ruling that no valid demand existed after the original assessment was set aside by ITAT on 20 December 2018.

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Issues Involved:
1. Refund of Rs. 4,87,48,460/- for AY 2011-12.
2. Quashing of the Impugned Order dated 13.02.2023 as barred by limitation.
3. Adjustment of refunds pertaining to AYs 2008-09, 2009-10, and 2010-11 against a perceived demand for AY 2011-12.

Summary:

Issue 1: Refund of Rs. 4,87,48,460/- for AY 2011-12
The petitioner sought a writ of mandamus directing the respondents to issue a refund of Rs. 4,87,48,460/- along with interest under section 244A for AY 2011-12. The court noted that the adjustments made by the respondents against a perceived demand for AY 2011-12 were invalid as the original order of assessment was set aside by the ITAT on 20 December 2018, and no valid demand existed as of 20 May 2022 and 02 June 2022.

Issue 2: Quashing of the Impugned Order dated 13.02.2023 as barred by limitation
The court examined the timeline and found that the final assessment order dated 13 February 2023 was passed beyond the time prescribed under Section 153 of the Act. The respondents failed to frame the order within the extended period granted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA], which extended the deadline to 30 September 2021. Consequently, the court set aside the impugned order dated 13 February 2023.

Issue 3: Adjustment of refunds pertaining to AYs 2008-09, 2009-10, and 2010-11 against a perceived demand for AY 2011-12
The court found that the respondents adjusted refunds payable against a perceived outstanding demand for AY 2011-12 without any valid demand existing as of the adjustment dates (20 May 2022 and 02 June 2022). The court noted that any demand for AY 2011-12 should have been created on or before 30 September 2021, which was not done. Therefore, the court annulled the adjustments made for AYs 2008-09, 2009-10, and 2010-11.

Conclusion:
The court allowed both writ petitions, quashed the impugned order dated 13 February 2023, and directed the respondents to re-compute the refund payable to the petitioner along with statutory interest. The order of refund must consider the annulled adjustments for AYs 2008-09, 2009-10, and 2010-11 against the perceived demand for AY 2011-12. The respondents were instructed to frame and pass the order of refund within three weeks.

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