Income-tax assessment deadline after s.142A property fair market value reference-order dated 02.07.2024 quashed as time-barred u/s153(1)

The dominant issue was whether the assessment order was time-barred under s.153(1) of the Income-tax Act. Applying the 4th proviso to s.153(1), the Tribunal held the order had to be passed by 31.03.2024 (twelve months from the end of AY 2022-23), and an order dated 02.07.2024 was beyond limitation. The Revenue could not invoke the extended limitation under clause (v) of Explanation 1 to s.153 because that extension is inapplicable where a reference under s.142A is made for determination of fair market value of immovable property; relying on prior ITAT precedent, the assessment was quashed as unsustainable and the appeal was allowed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether an additional ground raising a pure question of law on limitation/jurisdiction could be admitted at the appellate stage when all relevant facts were already on record.

(ii) Whether the assessment order dated 02.07.2024 for AY 2022-23 was barred by limitation under section 153(1) (as modified for AY commencing on/after 01.04.2022), and whether the time-exclusion under clause (v) of Explanation 1 to section 153 could be availed on the basis of a reference made under section 142A for valuation of immovable property (FMV/cost) in the context of capital gains.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Admissibility of additional ground (pure legal issue)

Legal framework (as discussed): The Court considered the principle that a legal issue can be raised for the first time before an appellate forum where the necessary facts are already available on record and no further fact-finding is required.

Interpretation and reasoning: The Tribunal found that the additional ground challenged the jurisdiction/validity of the assessment on limitation and the necessary facts were available in the appeal record. Since no further verification was required, it treated the ground as a purely legal issue capable of being raised for the first time at the appellate stage.

Conclusion: The additional ground on limitation/jurisdiction was admitted for adjudication.

Issue (ii): Limitation under section 153(1) and availability of time-exclusion for a section 142A reference

Legal framework (as discussed): The Tribunal applied the fourth proviso to section 153(1), under which (for an assessment year commencing on or after 01.04.2022) the assessment must be made within twelve months from the end of the relevant assessment year. It also considered clause (v) of Explanation 1 to section 153, which excludes the period between making a reference to the Valuation Officer under section 142A(1) and receipt of the Valuation Officer's report.

Interpretation and reasoning: The Tribunal held that, for AY 2022-23, the limitation expired on 31.03.2024. The assessment was made on 02.07.2024 and would be time-barred unless the Revenue could validly claim exclusion of time under clause (v) of Explanation 1 based on the section 142A reference. The Tribunal concluded that where a reference under section 142A is made for determination of FMV/valuation of immovable property in connection with capital gains computation, the extended time contemplated by clause (v) of Explanation 1 to section 153 cannot be taken. Therefore, the Revenue could not rely on the section 142A reference to extend the limitation period for completing the assessment.

Conclusion: Since the assessment was not completed within the twelve-month period ending 31.03.2024 and the time-exclusion under clause (v) was held unavailable on these facts, the assessment order was barred by limitation and unsustainable. The Tribunal quashed the orders of the authorities below and allowed the appeal.

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