Assessment proceedings under section 144C subject to 12-month limitation period under section 153(2) when no TPO reference made

ITAT Hyderabad held that assessment proceedings under section 144C are subject to limitation period under section 153(2) of 12 months from end of financial year when notice under section 148 was served. The extended 12-month period under section 153(4) applies only when reference to TPO is made under section 92CA(1), not in non-resident assessments without TPO reference. Since notice was issued on 30.03.2021 and assessment order was passed on 12.01.2023, it exceeded the limitation period ending 31.03.2022. Assessment order was quashed as time-barred. Assessee's appeal allowed.

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Issues Involved:
1. Reopening of assessment u/s 147 and issuance of notice u/s 148.
2. Validity of assessment order based on time limits prescribed u/s 153(2).
3. Addition of Rs. 22,00,000/- as unexplained investment u/s 69.
4. Procedural fairness and principles of natural justice.
5. Initiation of penalty proceedings u/s 274 r.w.s. 271AAC(1).

Summary:

Issue 1: Reopening of Assessment u/s 147 and Issuance of Notice u/s 148
The assessee challenged the reopening of the assessment on multiple grounds, including the lack of proper approval and the absence of reasons recorded u/s 148(2). The assessee also contended that the reopening was based on borrowed satisfaction and without independent inquiry by the Assessing Officer (AO).

Issue 2: Validity of Assessment Order Based on Time Limits Prescribed u/s 153(2)
The assessee argued that the final assessment order dated 12.01.2023 was barred by limitation as it was passed beyond the time limit prescribed u/s 153(2). The Tribunal found merit in this argument, noting that the notice u/s 148 was issued on 30.03.2021, and the assessment should have been completed by 31.03.2022. The Tribunal quashed the reassessment proceedings, holding that the final assessment order was indeed barred by limitation.

Issue 3: Addition of Rs. 22,00,000/- as Unexplained Investment u/s 69
The AO made an addition of Rs. 22,00,000/- as unexplained investment based on an excel sheet found during a search operation u/s 132. The assessee contended that the excel sheet was not reliable evidence and that the payment was made through proper banking channels. The Tribunal did not adjudicate on this issue, as the reassessment proceedings were quashed on the ground of being time-barred.

Issue 4: Procedural Fairness and Principles of Natural Justice
The assessee argued that the AO did not provide a proper opportunity to be heard, violating principles of natural justice. The Tribunal did not specifically address this issue, as the reassessment proceedings were quashed on the ground of being time-barred.

Issue 5: Initiation of Penalty Proceedings u/s 274 r.w.s. 271AAC(1)
The assessee challenged the initiation of penalty proceedings. However, the Tribunal did not address this issue, as the reassessment proceedings were quashed on the ground of being time-barred.

Conclusion:
The Tribunal quashed the reassessment proceedings on the ground that the final assessment order was barred by limitation as per the time limits prescribed u/s 153(2). Consequently, the appeal filed by the assessee was allowed.

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