Income tax final assessment deadline for AY 2018-19 u/s143(3)/s.144C(13) held time-barred; order quashed.

The dominant issue was whether the final assessment order passed under s. 143(3) read with s. 144C(13) was time-barred under s. 153(1) read with s. 153(4). Applying the rule of consistency and following prior ITAT precedent, the Tribunal held that for AY 2018-19 the statutory time limit to complete assessment expired on 30.09.2021, and the TOLA notification did not extend that limitation for this year. As the final order was made after the expiry of the prescribed period, it was held to be barred by limitation and was quashed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the Tribunal should admit a purely legal ground, raised for the first time before it, challenging the validity of the final assessment orders as barred by limitation under section 153, when adjudication requires no fresh facts.

(ii) Whether the final assessment orders, though passed under section 143(3) read with section 144C(13) (eligible assessee/DRP route), were time-barred because the outer time-limit under section 153 (including extension for reference under section 92CA and the TOLA notifications) had expired.

(iii) Whether the limitation extension granted by the Supreme Court in suo motu "Extension of Limitation" applied to extend the statutory time-limit for tax authorities to pass original/final assessment orders beyond the time prescribed in the Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Admission of additional/legal ground on limitation at Tribunal stage

Legal framework (as discussed by the Tribunal): The Tribunal considered that a legal ground going to the root of the matter may be admitted where it can be decided on material already on record, applying the principle recognised by the Supreme Court in National Thermal Power Co. Ltd. v. CIT (as relied upon by the Tribunal).

Interpretation and reasoning: The Tribunal found no dispute that the limitation challenge was purely legal. It also held that adjudication did not require investigation of new facts or fresh material, since the relevant dates and statutory scheme were already part of the record.

Conclusion: The Tribunal admitted the additional/legal ground challenging limitation for both years.

Issue (ii): Whether section 153 outer limitation controls DRP-based final order under section 144C(13); and whether the impugned orders were time-barred

Legal framework (as applied by the Tribunal): The Tribunal analysed section 153 as prescribing the overall time-limit for completion of assessment, with an extension where a reference is made under section 92CA, and considered the effect of time extensions under TOLA notifications. It also examined the interaction between section 153 and section 144C(13), rejecting the contention that section 144C(13) enlarges the outer limitation.

Interpretation and reasoning: The Tribunal held that section 144C(13) does not override and expand the overall limitation in section 153; rather, it operates as a further restriction requiring the Assessing Officer to pass the final order within the specified period after DRP directions, without enlarging the statutory outer time-limit. The Tribunal relied on the reasoning (as adopted by it) that provisions of sections 144C and 153 are not mutually exclusive and that the non-obstante clause in section 144C(13) serves a limited purpose. Applying the statutory timelines and the benefit of TOLA notification extensions, it computed the last permissible date and found that the final orders were passed after expiry of the permissible period.

Conclusions: (a) For the first assessment year, even after considering extension due to reference to the TPO and the TOLA extension, the last date available for completion was 30.09.2021; the final assessment order dated 26.02.2022 was therefore barred by limitation and quashed. (b) For the second assessment year, the Tribunal held the outer time-limit under section 153 was available only up to 30.09.2021 and the final order dated 22.07.2022 was also barred by limitation and quashed. The Tribunal accordingly allowed both appeals on the limitation ground and did not adjudicate merits, keeping them open in view of pending Supreme Court consideration on the broader controversy.

Issue (iii): Applicability of Supreme Court suo motu extension of limitation to tax authorities' time to pass assessment orders

Legal framework (as discussed by the Tribunal): The Tribunal considered arguments that the Supreme Court's suo motu extension orders extended limitation. It examined whether such extension applied to original adjudicatory actions by tax authorities, and took note of the Tribunal's view that statutory extensions relevant for assessments were those provided by the Act and TOLA notifications.

Interpretation and reasoning: The Tribunal concluded that the Supreme Court's extension of limitation did not apply to extend the time for tax authorities to pass assessment orders beyond the limitation prescribed under the Act. It treated the statutory time extensions relevant to assessments as those arising from the Act (including section 153 read with section 92CA reference extension) and the TOLA notifications, and rejected reliance on the suo motu limitation extension for sustaining belated assessments.

Conclusion: The Tribunal held that the suo motu "Extension of Limitation" did not save the impugned final assessment orders from being time-barred.

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