2025 (2) TMI 305 - AT - Income Tax

Assessment order under Section 144C(13) passed beyond statutory time limit quashed as barred by limitation

Ivy Competech Private Limited, Hyderabad. Versus The Deputy Commissioner of Income Tax, Circle 2 (1), Hyderabad.

The ITAT Hyderabad held that an assessment order passed under Section 144C(13) beyond the statutory time limit is barred by limitation and liable to be ... Validity of assessment passed within time limit provided u/s 144C(13) or not? - HELD THAT:- As decided in Rapsican Systems Pvt. Ltd. [2025 (1) TMI 599 - TELANGANA HIGH COURT] wherein emphasized that the time limit provided under Section 144C(13) is mandatory and that the final order is required to be passed within the prescribed time under the Act. In the present case, no contrary evidence was filed by the Revenue or brought to the notice that the order passed by the DRP was not received on the date when it was uploaded on the Portal i.e., on 22.05.2024. Therefore, we presume that the date of communication of the DRP’s directions is 22.05.2024. AO received the TPO’s order giving effect on 12.06.2024 and still had sufficient time to pass the consequential order u/s 144C(13) on or before 30.06.2024. AO passed the order only on 19.07.2024, which is beyond the statutory time limit. Therefore, in our considered opinion, the order passed by the AO is barred by limitation and is liable to be quashed. Appeal filed by the assessee is allowed. ISSUES PRESENTED and CONSIDEREDThe core legal issue considered in this judgment was whether the assessment order passed by the Assessing Officer (AO) on 19.07.2024 was within the statutory time limit prescribed under Section 144C(13) of the Income Tax Act, 1961. The specific question was whether the AO complied with the mandatory timeline of completing the assessment within one month from the end of the month in which the directions from the Dispute Resolution Panel (DRP) were received.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and Precedents:The legal framework revolves around Section 144C(13) of the Income Tax Act, which mandates that upon receipt of directions from the DRP, the AO must complete the assessment within one month from the end of the month in which such direction is received. The Tribunal also referred to Section 282(1)(c) of the Income Tax Act and Section 13 of the Information Technology Act, 2000, which deal with the service and receipt of electronic communications.Precedents from various High Courts, including the Delhi High Court in Louis Dreyfus Company India Private Limited and the Bombay High Court in Vodafone Idea Ltd., were considered. These cases emphasized the importance of adhering to the statutory timeline and clarified that the period of limitation begins when the DRP's directions are uploaded on the designated portal.Court's Interpretation and Reasoning:The Tribunal interpreted that the statutory timeline under Section 144C(13) is mandatory and must be strictly adhered to. The Tribunal emphasized that the receipt of the DRP's directions by the AO is deemed to occur when the directions are uploaded on the ITBA portal, as per the provisions of the E-Assessment Scheme, 2019, and the Information Technology Act.Key Evidence and Findings:The Tribunal noted that the DRP issued its directions on 22.05.2024, and these were communicated to the AO/TPO on the same day via email. The TPO subsequently passed the order giving effect to the DRP's directions on 12.06.2024. However, the AO passed the final assessment order on 19.07.2024, which was beyond the statutory time limit.Application of Law to Facts:Applying the legal framework to the facts, the Tribunal found that the AO failed to pass the final assessment order within the mandatory timeline prescribed by Section 144C(13). The Tribunal rejected the Revenue's argument that the timeline should be computed from the date the AO received the TPO's order on 12.06.2024, instead of the date the DRP's directions were uploaded on the portal.Treatment of Competing Arguments:The Tribunal considered the Revenue's argument that the timeline should be computed from the date the AO received the TPO's order. However, this argument was dismissed as contrary to the jurisdictional High Court's decision in Rapsican Systems Pvt. Ltd., which held that the timeline begins from the date the DRP's directions are uploaded on the portal.Conclusions:The Tribunal concluded that the AO's order was barred by limitation as it was passed beyond the statutory time limit. Consequently, the Tribunal allowed the appeal filed by the assessee, quashing the assessment order.SIGNIFICANT HOLDINGSThe Tribunal held that the timeline prescribed under Section 144C(13) is mandatory and must be adhered to strictly. The Tribunal emphasized that the receipt of the DRP's directions is deemed to occur when the directions are uploaded on the ITBA portal, aligning with the E-Assessment Scheme and the Information Technology Act.Core Principles Established:The judgment reinforced the principle that statutory timelines in tax assessments must be strictly followed to ensure procedural fairness and certainty. It highlighted the importance of electronic communication in determining the receipt of directions and orders in the context of faceless assessments.Final Determinations on Each Issue:The Tribunal determined that the AO's order was invalid due to being passed beyond the statutory time limit. The appeal by the assessee was allowed, and the assessment order was quashed.