Limitation for final tax assessment under overlapping regimes: tribunal quashes timebarred assessment, allows revival pending supreme review

Interplay between limitation regimes for final assessment under the transfer pricing assessment framework was examined: the tribunal applied binding precedents holding that limitation must be determined by considering both the transfer pricing-specific timeline and general limitation provisions as mutually inclusive, and consequently held the impugned final assessment for the relevant year to be timebarred and quashed. The tribunal followed earlier authoritative rulings and granted liberty to revive the appeal on merits if the pending Supreme Court larger bench decision on the limitation issue alters this conclusion.

---

---

Issues: Whether the final assessment orders passed under Section 143(3) read with Section 144C(13) (and related provisions) are barred by limitation under Section 153(1) read with Section 153(4) of the Income-tax Act, 1961.

Analysis: The Tribunal examined the interaction between Section 144C (including the non-obstante clause in Section 144C(13)) and the time limits prescribed under Section 153(1) and Section 153(4). It considered the Madras High Court judgment in Roca Bathroom Products Pvt. Ltd., decisions of coordinate Benches of the Tribunal (notably Hyderabad Bench), and relevant principles of statutory interpretation including harmonious construction and the effect of interim orders in higher courts. The Tribunal analysed the statutory timeline for draft orders, DRP directions under Section 144C(12), and the final assessment under Section 153, including extensions where a TPO reference exists, and noted that the non-obstante clause in Section 144C(13) does not, in toto, negate the applicability of the outer time limits under Section 153. The bench also considered authorities on reasonable time where no statute prescribes a period and the doctrine that vested rights cannot be defeated by undue delay. The Tribunal followed coordinate decisions which applied the outer time limit under Section 153 to final assessments made after DRP directions and held that a final assessment passed beyond the statutory outer limit is time-barred.

Conclusion: The impugned final assessment orders dated 15/07/2024 (A.Y. 2020-21) and 30/09/2024 (A.Y. 2021-22) passed under Section 143(3) read with Section 144C(13) are barred by limitation under Section 153 read with Section 144C and are quashed. The parties are granted liberty to seek revival of the appeals for adjudication of remaining issues if the Supreme Court's Larger Bench decision on the issue requires modification of this outcome.

---