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of <h1>Limitation for passing final assessment order under section 144C read with section 153: time-bar quashes assessments beyond prescribed period</h1> Interplay between limitation provisions requires determining the time limit for final assessment by reference to both section 144C and section 153; the ... Validity of the assessment order on the ground of limitation as per the provisions of section 144C(13) r.w.s. 153 - Limitation for passing final assessment order - Interplay of Sections 144C and 153 - Limitation for passing final assessment order - maintainability of reliance on precedent pending Larger Bench reference - whether we can proceed with the hearing of issue in appeal when on a similar issue the operative portion of the judgment passed by the Hon’ble High Court in the case of Shelf Drilling Ron Tappmeyer Ltd. [2023 (8) TMI 460 - BOMBAY HIGH COURT] has been stayed by the Hon’ble Supreme Court of India [2025 (8) TMI 698 - SUPREME COURT]? HELD THAT:- It is a well settled legal proposition that when the operation of a specific order is stayed by the Higher Court, then its enforcement is stayed but the ratio decidendi of such order/judgment is not nullified unless explicitly set aside. The Hon’ble Supreme Court of India in the case of Shree Chamundi Mopeds Ltd. v. Church of South India Trust [1992 (4) TMI 183 - SUPREME COURT] has held that an order of interim stay does not result in quashing of the impugned order. It only means that the order will not be operative from the date that it is stayed. In the case of Govt of AP vs. N. Rami Reddy & Others [2000 (12) TMI 934 - HYDERABAD HIGH COURT], one of the issue for consideration before the Hon’ble High Court was; Whether the interim stay of a High Court order by the Hon’ble Supreme Court of India has the effect of wiping out the ratio of the High Courts order or otherwise nullifying the precedent relied upon by the petitioner? The Hon’ble High Court held that the ratio of judgment represents the reasons assigned in support of the conclusion. An order of interim stay actually stays the operative part of the decision, but does not wipe out its ratio decidendi. Be that as it may, the assessee has not placed reliance on the judgment rendered in the case of Shelf Drilling (supra) but has pleaded its case following the decision rendered in the case of Roca Bathroom Products P Ltd. [2021 (4) TMI 355 - MADRAS HIGH COURT] in which there is no stay order. Therefore, in our humble opinion there is no impediment in hearing the appeal of the assessee on the issue of “limitation in passing the final assessment order with reference to the provisions of section 144C r.w.s. 153 of the Act”. Thus, the preliminary objection raised by the Department is rejected. Whether limitation for passing the final assessment order under section 144C(13) of the Act is to be seen only with reference to the timeline specified u/s. 144C of the Act only without referring to provisions of section 153 of the Act? - We find that identical submissions were made by the Department before the Hon’ble Madras High Court in the case of Roca Bathroom Products P. Ltd. [2021 (4) TMI 355 - MADRAS HIGH COURT] as rejected the arguments of the Department and held that provisions of section 144C and 153 of the Act are mutually inclusive as both contain provisions relating to section 92CA of the Act and are inter-dependent and are overlapping. Hence, the period of limitation for passing the final assessment order u/s.144C(13) of the Act has to be determined with reference to section 144C r.w.s 153 of the Act. A perusal of sequence of dates for AY 2018-19 & 2020-21 would clearly show that the date on which final assessment order is passed by the AO is beyond the period of limitation for passing the order u/s.144C(13) r.w.s. 153 of the Act. Thus, following the ratio laid down in Roca Bathroom Products P. Ltd. (supra), we hold that where the final assessment order passed by the AO is beyond the time limit as determined u/s.144C r.w.s.153 of the Act, the final assessment orders are barred by limitation, hence, are quashed. Issues: Whether the final assessment orders passed under section 143(3) read with section 144C(13) are barred by limitation and must be determined with reference to section 153 of the Income-tax Act, 1961.Analysis: The Tribunal examined the interplay between section 144C and section 153, considering the Madras High Court decision in Roca Bathroom Products P. Ltd. and subsequent authorities addressing whether the timelines under section 153 subsume or apply to final assessment orders under section 144C(13). The analysis focused on the statutory scheme of section 144C (including its staged timelines for draft order, DRP objections, DRP directions and finalization) and on section 153's outer time limits for completing assessment proceedings, including extensions. The Tribunal compared the statutory timelines with the factual date charts for the relevant assessment years and applied the principle that DRP proceedings are part of assessment proceedings and that the provisions are inter-dependent rather than mutually exclusive. The Tribunal found that, on the facts and dates before it, the final orders were passed after the time limits as determined by reading section 144C with section 153.Conclusion: The final assessment orders passed beyond the time limit determined by reading section 144C with section 153 are barred by limitation and are quashed; the appeal is allowed in favour of the assessee.Ratio Decidendi: Sections 144C and 153 are mutually inclusive for computing the limitation for final assessment orders under section 144C(13); where the final order is passed beyond the time-limit so determined, the order is time-barred and liable to be quashed.
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