2023 (5) TMI 1405 - AT - Income Tax

Assessment Order under Section 144C void for exceeding limitation period despite digital signature affixation

The ITAT Bangalore held that the Final Assessment Order passed under Section 144C was barred by limitation. The DRP order was passed on 31.01.2021, with ... Limitation for passing assessment under Section 144C(13) - date of order is date of digital signature / signing of the order - completion of assessment requires signing of the assessment order - faceless assessment: system approval/dispatch distinct from signing of order - non-curability of jurisdictional time-bar under Section 292BLimitation for passing assessment under Section 144C(13) - date of order is date of digital signature / signing of the order - faceless assessment: system approval/dispatch distinct from signing of order - non-curability of jurisdictional time-bar under Section 292B - Final assessment order held barred by limitation where digital signature was affixed after the limitation date - HELD THAT: - The Tribunal found as an admitted fact that the DRP directions were received by the AO on 10.01.2022 and the time bar for giving effect to the DRP and completing the assessment was 28.02.2022. The impugned final assessment order bears a digital signature dated 01.03.2022. Applying precedents which treat the date of signing as the operative date for issuance of orders, the Tribunal held that limitation expired at 11:59:59 on 28.02.2022 and an order digitally signed after that time is time barred. The AO's contention that system-level approval on 28.02.2022 cures the delay was rejected: completion of assessment is evidenced by signing of the final order and system approval or later service cannot substitute for the act of signing within the limitation period in faceless proceedings. The Tribunal further held that passing an order beyond the limitation date is a jurisdictional defect and not a curable procedural irregularity under the provision relied upon by the department, and therefore the final order is void ab initio. Having decided the legal issue on limitation, the Tribunal declined to adjudicate the merits and left them open for consideration if necessary. [Paras 6, 7, 8, 11, 13]Ground No. 1 allowed; final assessment order quashed as barred by limitation and merits left openFinal Conclusion: The appeal is partly allowed: the Final Assessment Order for Assessment Year 2018-19 is quashed as being barred by limitation because the order was digitally signed after the limitation date; substantive grounds were not decided and are left open. Issues Involved:1. Whether the Final Assessment Order is barred by limitation under Section 144C(13) of the Income Tax Act.2. Applicability of procedural compliance under Section 292BB of the Income Tax Act.Detailed Analysis:1. Barred by Limitation under Section 144C(13):The primary legal issue raised by the assessee was that the Final Assessment Order was barred by limitation as per Section 144C(13) of the Income Tax Act. The assessee argued that the order was digitally signed on 01.03.2022, which is beyond the prescribed limitation date of 28.02.2022. The Department contended that the order was approved in the system on 28.02.2022, and the subsequent digital signing on 01.03.2022 was due to technical reasons, which should not affect the limitation period.The Tribunal examined the timeline of events and noted that the DRP's directions were received by the AO on 10.01.2022, making the deadline for passing the Final Assessment Order 28.02.2022. The Tribunal relied on the precedent set by the Hon'ble Madras High Court in Pfizer Healthcare India Pvt. Ltd. v. JCIT, which held that an order must be completed before 11:59:59 PM on the last day of the limitation period. Applying this principle, the Tribunal concluded that the order was barred by limitation as it was digitally signed on 01.03.2022, after the expiry of the limitation period.2. Applicability of Section 292BB:The Department argued that the procedural issue raised by the assessee is covered under Section 292BB, which precludes the assessee from objecting to any procedural irregularity if they have cooperated throughout the proceedings. However, the Tribunal found this argument untenable. It emphasized that passing an order beyond the limitation date is a fundamental error, not a mere procedural lapse that can be cured under Section 292BB or Section 292B. The Tribunal cited the Delhi High Court's judgment in PCIT v. Citi Financial Consumer Finance India, which held that Section 292B cannot save an order not passed in accordance with the Act.The Tribunal further referred to the Hon'ble Mumbai High Court's ruling in Ramani Suchit Malushte v. UoI, which stated that an order without a digital signature has no legal effect, and the time for filing an appeal begins only when the order is signed. This reinforced the Tribunal's view that the digital signing date is crucial for determining the validity of the order concerning limitation.Conclusion:The Tribunal allowed the assessee's appeal on the legal issue, holding that the Final Assessment Order was indeed barred by limitation. Consequently, the grounds on merits were not adjudicated, and the appeal was partly allowed. The judgment underscores the significance of adhering to statutory timelines and the necessity of digital signatures for the validity of orders under the faceless assessment scheme.