2024 (3) TMI 153 - HC - Income Tax

Assessment under s.144C time-barred as DRP directions deemed received on NFAC upload, making order beyond limitation.

M/s. Taeyang Metal India Private Limited, Represented by its Managing Director, Mr. Jung Younwook Versus The Deputy Commissioner of Income-Tax, Corp Circle 3 (1) Chennai, The Income-Tax Officer, Dispute Resolution Panel-2, Bengaluru

HC held the assessment under s.144C barred by limitation. The court reckoned receipt of DRP directions as the date they were uploaded to the National ... Assessment proceedings u/s 144C as barred by limitation - reckoning date of receipt of directions - HELD THAT:- Directions of the DRP were forwarded to the AO, i.e. National Faceless Assessment Centre, Delhi by uploading the same on 17.06.2022. Although learned senior standing counsel contends that the jurisdictional assessing officer received the directions only on 17.03.2023, for purposes of sub-section (13) of Section 144C, the date of receipt should be reckoned as the date of receipt by the National Faceless Assessment Centre on 17.06.2022. The internal arrangement by which the assessment proceedings relating to the petitioner were purportedly transferred so as to ensure that the proceedings are not barred by limitation is not material for this purpose. Indeed, as contended by petitioner, the communication dated 12.04.2022 from the PCCIT of the National Faceless Assessment Centre seeking approval for transfer so as to complete assessment within the period of limitation underscores the fact that the income tax authorities were mindful of the fact that assessment would be barred by limitation unless such assessment is proceeded with and completed expeditiously. Whether the assessment proceedings would be barred by limitation if computed from the end of June 2022? - If so computed, the period of one month expired on 31.07.2022, whereas the assessment order came to be issued on 25.03.2023. Hence, the assessment order was issued beyond the time limit specified in sub-section (13) of Section 144C. By taking into account not only statutory prescription but also the interpretation thereof by the Division Bench of this Court in Roca [2022 (6) TMI 848 - MADRAS HIGH COURT] and that of the Division Bench of the Delhi High Court in Louis Dreyfus [2024 (3) TMI 62 - DELHI HIGH COURT] we conclude that the assessment order cannot be sustained. Decided in favour of assessee. Issues Involved:The issues involved in the judgment are the challenge to an assessment order dated 25.03.2023 under the Income Tax Act, 1961 for assessment year 2018-2019. The primary grounds of challenge were on limitation and the jurisdictional authority of the assessing officer.Limitation Grounds:The petitioner challenged the assessment order on the grounds of limitation, citing Section 144C(13) of the Income Tax Act which sets out the period for passing an assessment order upon receipt of directions from the DRP. The petitioner argued that the directions were received on 17.06.2022, and as per the provision, the limitation period of one month expired on 31.07.2022. Referring to a previous judgment, the petitioner contended that the assessing officer should pass orders within one month, irrespective of the DRP issuing directions within nine months.Jurisdictional Challenge:The second ground of challenge was that the jurisdictional assessing officer did not have the authority to issue the assessment order, as per clause (xx) of subsection (1) of Section 144B. The petitioner argued that all orders and directions are required to be communicated electronically as per the E-Assessment Scheme 2019, and the assessing officer did not have the authority to issue the order.Court's Analysis and Conclusion:The court examined Section 144C(13) which specifies the time limit for completing the assessment upon receipt of directions from the DRP. The court noted that the directions were uploaded on the ITBA portal on 17.06.2022, and the assessing officer should be considered as having received the directions on that date. The court found that the assessment order issued on 25.03.2023 was beyond the time limit specified in the Act, based on statutory provisions and previous court interpretations. As the assessment proceedings were deemed barred by limitation, the court allowed the petition by quashing the assessment order dated 25.03.2023. The court did not delve into the jurisdictional authority of the assessing officer due to the limitation issue being conclusive.Outcome:The court allowed the petition, quashing the assessment order dated 25.03.2023, with no order as to costs. The connected miscellaneous petition was closed accordingly.