Assessment set aside as time-barred under s.144C(13) where final order issued after statutory DRP compliance deadline

ITAT DELHI - AT allowed the assessee's appeal and set aside the assessment order as time-barred under s.144C(13). The DRP issued directions on 22/04/2022; the TPO gave effect on 20/05/2022, but the final assessment was passed on 28/06/2022, beyond the statutory timeline for completing assessment after DRP directions. Relying on higher-court rulings that the assessing authority must complete assessment within the s.144C(13) timeframe, the Tribunal held the assessment invalid for delay.

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1. ISSUES PRESENTED AND CONSIDERED

p1: Whether the final assessment order passed pursuant to directions of the Dispute Resolution Panel (DRP) is time-barred under Section 144C(13) of the Income Tax Act when the order is completed after the one-month period from the end of the month in which the DRP directions were received (uploaded) by the Assessing Officer.

p2: Whether the timeline prescribed by Section 144C(13) is applicable where the assessment is being completed pursuant to a remand by the Tribunal and consequent action by the Transfer Pricing Officer (TPO) under Section 92CA(3) read with Section 254.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Applicability and computation of limitation under Section 144C(13)

Legal framework: Section 144C(13) prescribes that "Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received." The faceless assessment regime and Electronic Assessment Scheme (E-AS), 2019 mandate uploading of communications on ITBA/National e-assessment Centre as the mode of communication.

Precedent treatment: The Court follows and applies recent decisions of the jurisdictional Tribunal and High Court which hold that (a) the date of uploading the DRP directions on the ITBA portal constitutes the date of receipt for computation of the time limit under Section 144C(13) and (b) failure to complete assessment within the prescribed period renders the assessment time-barred and liable to be set aside. Authorities relied upon include the jurisdictional Tribunal decision (Honda R & D (India) (P.) Ltd.) and Delhi High Court decisions (Louis Dreyfus; Fiberhome), which are applied rather than distinguished.

Interpretation and reasoning: The Court treats electronic uploading as constituting valid and sufficient service/receipt for purposes of Section 144C(13), following principles under Section 13 of the Information Technology Act and the E-AS, 2019, which require all communications to be through the National e-assessment Centre. The relevant and determinative fact for computing limitation is the date of uploading by the DRP on the portal. Once the date of receipt (upload date) is fixed, the statutory one-month period from the end of that month must be observed. The Court rejects reliance on ancillary facts (e.g., when order becomes visible to particular officers) that do not affect the date of receipt/uploading for computation of limitation.

Ratio vs. Obiter: Ratio - The date of uploading of DRP directions on the prescribed e-platform constitutes receipt for computing the one-month period under Section 144C(13); failure to complete assessment within that period renders the assessment order void as time-barred. Obiter - Observations concerning other administrative timelines or internal visibility to specific officers are ancillary and not necessary to the core holding.

Conclusion: The impugned final assessment order passed after the expiry of the one-month period (computed from the month in which DRP directions were uploaded/received) is time-barred and set aside. The return is to be treated in accordance with the consequences flowing from setting aside the assessment (consistent with applicable precedent where acceptance/deemed acceptance may follow in particular writ contexts, though the present order sets aside the assessment).

Issue 2 - Effect of prior Tribunal remand and subsequent TPO action on the applicability of Section 144C(13)

Legal framework: Section 254 empowers the Tribunal to remit matters and Section 92CA(3) empowers the TPO to pass consequential transfer pricing orders; Section 144C(13) however contains a non-obstante clause ("notwithstanding anything to the contrary contained in section 153") and prescribes a fixed timeline "upon receipt of the directions issued under sub-section (5)." The interplay is between remand/consequential proceedings and the statutory timeline for completion after DRP directions.

Precedent treatment: The Court rejects the contention that a remand or prior sequence of proceedings exempts the Assessing Officer from the mandatory timeline under Section 144C(13). It follows decisions of higher fora which held that timelines under Section 144C(13) are mandatory even where proceedings follow remand and TPO action; those precedents are followed rather than distinguished.

Interpretation and reasoning: The Court reasons that the statutory mandate in Section 144C(13) is triggered by receipt of DRP directions and is not displaced by the fact that the matter originated from or involved a remand by the Tribunal. The remand and consequential TPO proceedings do not enlarge or restart the statutory timeline which is expressly linked to receipt of DRP directions. Therefore, the existence of earlier remand does not validate completion of assessment beyond the prescribed period.

Ratio vs. Obiter: Ratio - A remand by the Tribunal and consequential action by the TPO do not oust the mandatory timeline under Section 144C(13); the Assessing Officer must complete the assessment within the statutory period after receipt (upload) of DRP directions. Obiter - Remarks on sequencing of TPO orders and rectification entries are incidental and do not alter the binding effect of the statutory timeline.

Conclusion: The argument that the limitation under Section 144C(13) is inapplicable because the assessment arose from a remand is rejected. The impugned assessment, being completed after the statutory period measured from the date of receipt/upload of DRP directions, is void as time-barred and is set aside.

Cross-references and consequential observations

p1: The Court applies principles from the faceless assessment architecture (E-AS, 2019 and Information Technology Act) to determine the date of receipt for limitation purposes.

p2: Where DRP directions are uploaded to the ITBA portal, the uploading date governs computation of the one-month period under Section 144C(13); internal circulation or subsequent transmissions do not defer that date.

p3: The Court's decision is outcome-determinative on the grounds considered; other contested issues deemed academic in view of the time-bar ruling are left open for adjudication in other proceedings if necessary.

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