2026 (2) TMI 150 - AT - Income Tax

Limitation for final assessment under section 144C(13) determined by section 153, resulting in quashing of timebarred orders

Limitation for passing a final assessment under section 144C(13) must be determined with reference to section 153 read with section 144C, because 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 - HELD THAT:- 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. [2022 (6) TMI 848 - MADRAS HIGH COURT]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. In view of the ratio laid down in the case of Roca Bathroom Products Pvt. Ltd (supra) and Teva Pharmaceutical & Chemical Industries India Private Limited [2026 (1) TMI 1123 - ITAT DELHI] in order to follow the principals of consistency as mere keeping the captioned Appeal pending in the Tribunal will not serve any purpose, by respectfully following those binding precedents, we hold that the impugned Final Assessment Order passed u/s 143(3) r.w.s. 144C(13) is barred by limitation as per Section 153 r.w. Section 144C of the Act. Accordingly, the impugned Final Assessment Order is hereby quashed. Since above issue of Limitation is pending adjudication before the Hon'ble Supreme Court in case of Shelf Drilling Ron Tappmeyer Ltd. [2023 (9) TMI 1529 - SC ORDER] and to be reached finality by the Larger Bench of the Hon'ble Supreme Court, we grant liberty to the parties to get the present Appeal revived for adjudication of the other issues on merits if the decision of the Hon'ble Supreme Court on this issue necessitates modification of this order. Issues: (i) Whether the final assessment orders passed under section 144C(13) read with section 153 of the Income-tax Act, 1961 are barred by limitation.Analysis: The legal framework involves the timelines prescribed under section 144C (including subsections 1, 4, 12 and 13) and the outer limitation periods under section 153 (including sections 153(2A) and 153(3)) of the Income-tax Act, 1961. The question requires determining whether the time taken in post-draft proceedings (including DRP proceedings and remand-related steps) must be reckoned in accordance with section 153 timelines or only with the standalone timelines prescribed under section 144C. Relevant precedents and interim directions from higher courts addressing the interaction between section 144C and section 153 were considered. For each assessment year, the due date for passing the final assessment order under section 144C(13) read with section 153 was compared with the actual date on which the final order was passed to ascertain whether the orders fell beyond the applicable limitation period.Conclusion: The final assessment orders in the matters under consideration are barred by limitation and are quashed. The appeals are allowed.