Income tax final assessment timeline u/s153 after DRP route-TOLA not extending past 30.09.2021; order quashed as late.

The dominant issue was whether the final assessment order under s.143(3) r/w s.144C(13) was time-barred under s.153(1) r/w s.153(4). Applying binding HC interpretations and maintaining consistency with a prior ITAT decision, the Tribunal held that limitation must be computed strictly under s.153(1) read with s.153(4), and that the TOLA notifications did not extend the statutory deadline beyond 30.09.2021 for the relevant year. Since the final order was passed on 29/30.07.2022, it was beyond limitation and was quashed; liberty was reserved to revive the appeal on other merits issues depending on the SC's final ruling on the limitation question.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the final assessment orders were barred by limitation under section 153 (including extension under section 153(4) for a reference under section 92CA and the statutory extensions under TOLA), notwithstanding completion of the DRP route under section 144C(13).

(ii) Whether the time-extension directions of the Supreme Court in suo motu "Extension of Limitation" applied so as to save the impugned assessment orders from being time-barred.

(iii) Whether the assessee's additional legal grounds challenging limitation (and admission thereof) could be entertained at the appellate stage as pure questions of law requiring no further fact-finding.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Bar of limitation-interaction of sections 153 and 144C(13)

Legal framework (as discussed by the Tribunal): The Tribunal examined the statutory time limit for completing assessment under section 153(1), the 12-month extension under section 153(4) upon a reference to the Transfer Pricing Officer under section 92CA, and the further time relaxation under TOLA notifications. It also examined section 144C(13), which requires passing the final order within the prescribed period after DRP directions, notwithstanding anything to the contrary in section 153.

Interpretation and reasoning: The Tribunal accepted the assessee's contention that section 144C(13) does not enlarge or override the outer limitation prescribed under section 153; rather, it imposes an additional requirement that once DRP directions are received, the final order must be passed within the time mandated in section 144C(13). The Tribunal followed and applied the reasoning (as relied upon in its own earlier decision) that the limitation framework under section 153 continues to govern the overall outer limit for completion of assessment even where the DRP mechanism is invoked, and that the "notwithstanding" language in section 144C(13) is for the limited purpose of ensuring prompt completion after DRP directions, not for extending the statutory bar date under section 153.

Conclusions: For both years, the Tribunal held that the impugned final assessment orders were passed beyond the outer time limit computed under section 153 (with the applicable statutory extensions, including section 153(4) and TOLA). Consequently, both assessment orders were held to be time-barred and were quashed. The Tribunal kept all other merits issues (including the DIN-related challenge) open, granting liberty to seek revival if the Supreme Court later decides the limitation controversy differently.

Issue (ii): Non-applicability of Supreme Court suo motu limitation extensions to original assessment completion by tax authorities

Legal framework (as discussed by the Tribunal): The Revenue argued that the Supreme Court's suo motu "Extension of Limitation" orders extended limitation for passing the impugned assessments. The Tribunal examined whether those directions could extend statutory deadlines for completion of assessment by tax authorities.

Interpretation and reasoning: The Tribunal held that the Supreme Court's limitation extensions, as relied upon by the Revenue, did not apply to extend the statutory time limit for passing assessment orders by tax authorities beyond the deadlines under the Income-tax Act and statutory relaxations such as TOLA. The Tribunal reasoned that the limitation extension was not intended to cover every action by tax authorities and was not applicable to original adjudication/action in the manner suggested by the Revenue.

Conclusions: The Tribunal rejected the Revenue's reliance on the Supreme Court suo motu limitation extension to save the assessments, and maintained that the relevant permissible extension was only that available under the Act and TOLA; on that basis, the assessments remained time-barred.

Issue (iii): Admission and adjudication of additional grounds on limitation as pure questions of law

Legal framework (as discussed by the Tribunal): The Tribunal considered whether additional grounds raising limitation and DIN validity could be admitted. It specifically recorded that the limitation ground went to the root of jurisdiction/validity, was purely legal, and required no further investigation of facts.

Interpretation and reasoning: The Tribunal held that the additional grounds on limitation (and related legal validity challenges) were admissible because they were purely legal grounds capable of being decided on the existing record. The Tribunal admitted the additional grounds (at least limitation and DIN-related) for adjudication, and then proceeded to decide limitation conclusively.

Conclusions: The Tribunal admitted the additional legal grounds and finally allowed the appeals by quashing the assessment orders on limitation. Having disposed of the matters on limitation, it expressly kept other issues on merits (and the DIN issue) open to be revived only if the Supreme Court's eventual decision on the limitation controversy requires modification.

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