Limitation for final assessment under section 144C versus section 153 found to bar and quash the assessment order

The limitation period for passing a final assessment under section 144C(13) must be determined with reference to section 144C read with section 153, because the two provisions are interdependent and govern assessment timelines for transfer pricing matters; applying that ratio, the final assessment order for the year under challenge was held to be barred by limitation and was quashed. The Tribunal followed earlier decisions establishing mutual inclusivity of sections 144C and 153 and, noting the Supreme Court reference on this issue, granted liberty to revive the appeal on merits if the larger bench decision necessitates modification.

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Issues: Whether the Final Assessment Order dated 27/05/2024 for Assessment Year 2020-21 is time-barred under Section 153 read with Section 144C of the Income-tax Act, 1961.

Analysis: The legal framework comprises the timelines prescribed by Section 153 for completion of assessments (including extended timelines where reference is made to the Transfer Pricing Officer) and the DRP timelines under Section 144C (including subsection (12) and the finalisation requirement under subsection (13)). The approach of harmonious construction requires reconciling Sections 144C and 153 so that neither provision is rendered otiose. Precedents applying these principles have held that the non-obstante clause in Section 144C(13) does not wholly exclude the operation of Section 153; time limits under Section 153 apply on remand and the DRP and TPO must adhere to the statutory timelines. Applying these principles to the agreed chronology (TPO order 28/07/2023; draft assessment 04/08/2023; DRP directions 23/04/2024; final order 27/05/2024) shows the outer statutory limit under Section 153 expired before the final order was passed. Consistent authority and coordinate-bench decisions adopting the above construction support treating Sections 144C and 153 as mutually inclusive, requiring completion of proceedings within the prescribed outer limit and entitling quashing where the final order is beyond that limit. Liberty to revive other issues is permissible if a higher court ruling later requires modification.

Conclusion: The Final Assessment Order dated 27/05/2024 is barred by limitation under Section 153 read with Section 144C and is quashed; relief is in favour of the assessee.

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