Income tax transfer-pricing assessment timeline u/ss 153 and 92CA-final order issued late, quashed as time-barred.

The dominant issue was whether the final assessment order passed u/s 143(3) r.w.s. 144C(13) r.w.s. 144B was barred by limitation. Relying on HC rulings holding that the "upper time limit" in s.153(1) and the extended period in s.153(4) (where a reference u/s 92CA is made) govern even draft/final order regimes under s.144C and faceless procedures under s.144B, the Tribunal held that any final order beyond that outer limit is void. As the outer limitation expired on 30.09.2021, the final order dated 28.07.2022 was time-barred and was quashed; the appeal was allowed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the final assessment order was barred by limitation under the time limits in Section 153(1) read with Section 153(4), notwithstanding that the assessment followed the Section 144C (DRP) route.

(ii) Whether an additional ground challenging the validity of DRP directions for alleged absence of a valid computer-generated DIN could be admitted as a pure legal ground (the Tribunal ultimately kept this issue open without adjudicating it because the appeal was disposed of on limitation).

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Limitation for passing the final assessment order where DRP procedure under Section 144C is invoked

Legal framework (as considered by the Tribunal): The Tribunal examined the interaction between Section 153(1) (time limit for completion of assessment), Section 153(4) (extension where a reference to the TPO under Section 92CA is made), and the Section 144C scheme culminating in a final order under Section 144C(13). The Tribunal addressed the contention that the non-obstante clause in Section 144C excludes Section 153 time limits.

Interpretation and reasoning: The Tribunal applied the ratio of the decisions it discussed and followed, namely that the Section 144C procedure operates within, and does not displace, the outer limitation prescribed under Section 153. It accepted the proposition that the non-obstante clause in Section 144C(13) does not eliminate the overall statutory time cap; rather, it ensures that once directions are received, the final order must be passed within the shorter prescribed period under Section 144C(13). The Tribunal treated it as settled (at the High Court level) that the "upper time limit" for passing the final assessment order continues to be governed by Section 153(1) and Section 153(4), even where the eligible assessee/DRP mechanism is triggered.

Application to facts and conclusion: On admitted dates, the normal limitation for the relevant year expired on 30.09.2020 under Section 153(1), and stood extended by 12 months to 30.09.2021 under Section 153(4) due to the TPO reference. The final assessment order was passed on 28.07.2022, i.e., beyond the outer limit of 30.09.2021. The Tribunal therefore held the final assessment order to be barred by limitation and quashed it. In view of this disposal on limitation, the Tribunal did not decide the transfer pricing issues on merits.

Issue (ii): Admission of an additional legal ground relating to absence of a valid DIN in DRP directions

Legal framework (as applied by the Tribunal): The Tribunal considered whether a new ground could be admitted at the appellate stage where it is a pure question of law going to the root of validity and does not require further fact-finding beyond the record.

Interpretation and reasoning: The Tribunal held the DIN-related challenge to DRP directions to be a legal ground affecting validity of proceedings and not requiring fresh investigation, and therefore admissible.

Conclusion: Although admitted, the Tribunal expressly kept this issue open and did not adjudicate it on merits because the appeal was allowed by quashing the assessment as time-barred; all remaining issues were left open with liberty to seek revival if required based on the pending resolution of the limitation controversy at the highest level.

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