Final assessment orders held time-barred under s.144C(13); delayed beyond deadline, declared invalid, assessee appeals fully allowed

The ITAT Delhi held the final assessment orders for AYs 2017-18 and 2018-19 to be time-barred under s.144C(13) of the Income-tax Act. The statutory deadline for passing the final assessment orders, following the Dispute Resolution Panel directions, was 30.04.2022. Since the Revenue passed the final assessment orders on 15.05.2022 and 18.05.2022, respectively, they were beyond the prescribed limitation period. Consequently, the impugned assessment orders were set aside as invalid and unenforceable in law, and the assessee's appeals were allowed in full.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the final assessment orders passed under section 143(3) read with section 144C(13) were barred by limitation prescribed under section 144C(13) of the Income-tax Act, 1961.

2. ISSUE-WISE DETAILED ANALYSIS

2.1 Limitation for passing final assessment order under section 144C(13)

Legal framework (as discussed)

2.1.1 The Court examined section 144C(13), which mandates that upon receipt of directions issued under section 144C(5) by the Dispute Resolution Panel, the Assessing Officer shall, in conformity with such directions, complete the assessment within one month from the end of the month in which such direction is received. The provision operates notwithstanding anything to the contrary contained in sections 153 or 153B and does not contemplate any further opportunity of being heard to the assessee before such completion.

Interpretation and reasoning

2.1.2 It was the assessee's contention that the directions of the Dispute Resolution Panel in both assessment years were received in March 2022, and hence, by operation of section 144C(13), the final assessment orders had to be completed on or before 30.04.2022 (i.e., within one month from the end of the month in which such directions were received).

2.1.3 The Court noted that, in fact, the final assessment orders were passed on 15.05.2022 and 18.05.2022 for the two assessment years, respectively, which fell beyond the statutory time limit prescribed in section 144C(13).

2.1.4 The Court referred to and relied upon the judgment of the jurisdictional High Court holding that an assessment order made beyond the period of one month from the end of the month in which the Dispute Resolution Panel's directions are received constitutes failure to comply with the mandatory timelines in section 144C(13), and such an assessment order is liable to be set aside. The Court also noted that a similar view had been consistently taken by various High Courts and the Tribunal in other decisions cited.

2.1.5 The Department contended that the assessee should not escape its tax liability on technical grounds and that the orders were otherwise passed in accordance with law on merits. The Court, however, treated the time prescription in section 144C(13) as mandatory and determinative, and did not accept that tax liability can be enforced through an order passed beyond limitation.

Conclusions

2.1.6 The Court held that, as per section 144C(13), the Assessing Officer was required to pass the final assessment orders on or before 30.04.2022 for both years under consideration.

2.1.7 Since the final assessment orders were actually passed on 15.05.2022 and 18.05.2022, they were beyond the period of limitation prescribed under section 144C(13).

2.1.8 The Court concluded that both impugned final assessment orders were invalid being time-barred and accordingly set them aside, allowing the assessee's appeals.

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