TaxTMI 
TaxTMI 
2025 (8) TMI 698
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................................8 3. Opinion of Learned Satish Chandra Sharma J ........................................18 4. Relevant Provisions: ........................................24 5. Material relied upon by the Respondents in support of their Submissions: ........................................41 6. Principles of Statutory Interpretation: ........................................55 7. Non-Obstante Clause ........................................61 8. Analysis of the Provisions: ........................................71 9. Scheme of Section 144C: ........................................78 10. Relevant Case Law ........................................98 11. Meaning of Assessment Order ........................................103 12. Summary of Conclusions: .................................................................................. 107 JUDGMENT NAGARATHNA, J. Leave granted in SLP (Civil) Nos.20569-20572 of 2023. 2. I have perused the judgment authored by my learned Brother Satish Chandra Sharma, J. I am unable to persuade myself to concur with the reasoning adopted by my learned Brother, hence my separate opinion. 2.1 In the pre....
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....ment Year (A.Y.) 2014-15 and SLP(C) Nos.20571-20572/2023 concern A.Y. 2018-19. 3.1 The respondents in the above cases are non-resident assessees, which are engaged, inter alia, in the business of providing services or facilities in connection with prospecting for or extraction or production of mineral oils, had the option to compute their income on presumptive basis under Section 44BB of the Act; however, for A.Y. 2014-15, the respondents opted out of the option to compute their income on presumptive basis and declared a total loss of Rs.120,18,44,672/- in their Return of Income filed on 29.11.2014. Vide Notice issued under Section 143(2) dated 28.08.2015, respondents' Return of Income was selected for scrutiny. Subsequently, the Draft assessment order was issued on 26.12.2016 computing the respondent's total income at Rs.4,34,79,980/-. Undisputedly, Respondents are eligible assessees as per Section 144C(15) of the Act. In accordance with Section 144C, respondents filed their objections before the Dispute Resolution Panel (for short, 'DRP') against the draft assessment order, which eventually did not accept respondents' case and by an order dated 28.09.2017 gave directions to th....
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.... on remand, in these Petitions the original orders of assessment were required to be passed within the period of limitation set out in Section 153(1) of the Act. On 30.11.2018, the respondents therein filed their Return of Income declaring total loss for AY 2018-19. On 23.11.2020, the first notices under Section 142(1) were issued to them, which were replied to. Several other notices under Section 142(1) were issued and replies given before, finally, on 23.09.2021 a Show Cause Notice was issued in both cases and draft assessment orders under Section 144C passed on 28.09.2021. As per Section 153(1) of the Act, the limitation for passing of final assessment orders is eighteen months from the end of the Assessment Year. Ordinarily, the original due date would have been 30.09.2020, however, due to the operation of the TOLA and the Notifications issued thereunder, the due date was extended to 30.09.2021. Vide the Common Impugned Order, the High Court was of the view that there is no difference in the legal principle falling for consideration in all these petitions since, in these two petitions, the draft order under Section 144C was passed on 28.09.2021 and no final assessment order cou....
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....ng forth the intent of the legislature, which is the Parliament in the instant case. Having regard to the non-obstante clause in sub-section (1) of Section 144C of the Act, it was submitted that there is no time frame envisaged for passing of a draft order by the Assessing Officer when a matter is remanded from the Tribunal under Section 254 of the Act. That the non-obstante clause would indicate that the time frame of twelve months mentioned in the proviso to sub-section (3) of the Section 153 would not apply to the passing of a draft order under sub-section (1) of Section 144C of the Act. However, the non-obstante clauses in sub-sections (4) and (13) of Section 144C would indicate that the said clauses are referrable directly to Section 153(3) of the Act. That, having regard to the use of the non-obstante clauses under Section 144C of the Act, the said Section would have to be interpreted in juxtaposition with Section 153(3) of the Act which deals with the limitation for the passing of an assessment order pursuant to a remand order passed by the Tribunal. 4.3 Learned Additional Solicitor General further submitted that in the impugned orders of the Bombay High Court which have ....
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....mitation period contemplated over and above what is prescribed in Section 153(3) of the Act which deals with a de novo assessment being made on the setting aside or cancellation of the assessment by the Tribunal under Section 254 of the Act. That in the instant case, there has been a breach of the limitation period while passing the re-assessment order. Hence, the High Court held that the re-assessment order was barred by limitation. 5.3 Elaborating on the said contention, it was argued that the overall time frame for passing an assessment/reassessment order is prescribed under Section 153(1) of the Act, which is a period of twenty-one months subject to the provisos thereto but when Section 153(3) applies, the procedure under Section 144C must be completed within the overall period of twelve months prescribed under Section 153(3). That the expression "an order of fresh assessment" means a final assessment order and not to a draft order to be passed in twelve months. Hence, an intermediary mechanism has been envisaged under Section 144C of the Act before the final order is passed under that Section itself. Further, specific timelines have been indicated under Section 144C for var....
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.... in Kalyankumar Ray vs. Commissioner of Income Tax, West Bengal, (1991) 191 ITR 634 (SC) ("Kalyankumar Ray") to contend that assessment under the Act is an integrated process involving not only the assessment of the total income but also the determination of tax and the latter is as crucial for the assessee as the former. This is because under Section 143(3) the Assessing Officer has to determine, by an order in writing, not only the total income but also the net sum which will be payable by the assessee for the assessment year in question and the demand notice under Section 156 has to be issued in consequence of such an order. The same principle would squarely apply to Section 144C of the Act in the case of eligible assessees also insofar as the limitation period is concerned. 5.7 That an order passed under Section 144C of the Act is not appealable before the Commissioner (Appeal) but directly before the Tribunal vide Section 246A(1)(a). On the other hand, an assessment order made pursuant to the directions of the DRP is appealable under Section 253(1)(d) of the Act before the Tribunal. Thus, an assessment order made under Section 144C is also an assessment made within the mean....
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....s prescribed under Section 153(3) of the Act and not under an additional period of twelve months. The above reasoning has not been accepted by my learned Brother by observing that a fine balance has to be maintained between ensuring that the revenue authorities must have ample time and opportunity to assess the income and to ensure that there is no evasion of tax or escapement of income while at the same time, the rights of the assessees in having their return scrutinised on a timely basis must be balanced. 6.2 In the above backdrop, it has been reasoned that if the entire procedure contemplated in terms of Section 144C of the Act has to be subsumed within the overall time period prescribed under Section 153(3) of the Act, then it would result "in a complete catastrophe for recovering lost tax", as a narrower period of time will pressurise the Assessing Officer and as a result, the system will become unworkable. However, under Section 144C, specified timelines have been prescribed within which the assessment order must be passed. That although Section 153(3) does not distinguish between persons who are to be assessed under Section 144C of the Act or otherwise, in fact, those who....
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....) of the Act. But learned Brother Sharma, J. has opined that the timelines in sub-sections (4) and (13) of Section 144C of the Act are independent of the timeline contemplated under Section 153(3) of the Act and Section 144C operates in a timeline in addition to the timeline contemplated under Section 153(3) of the Act. Therefore, the Bombay and Madras High Courts were not correct in their conclusions. 6.5 It is further reasoned by my learned Brother that Section 153(3) of the Act which prescribes the period of twelve months is only for the purpose of passing a draft order. The non-obstante clause contained in sub-sections (4) and (13) of Section 144C of the Act extend the timeline for passing a final order; that sub-section (4) of Section 144C operates only when the variation proposed in the draft assessment order is not accepted or when the period of filing objections before DRP has expired, which is subsequent to the passing of the draft assessment order. Therefore, the Assessing Officer has to comply with the requirements of Section 153(3) of the Act only insofar as the passing of the draft assessment order is concerned and if the variations made by him in the said order are....
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....sees. The explanation in Section 44BB states that a plant includes ships, aircrafts, vehicles, drilling units, scientific apparatus and equipment, used for the purposes of such business and the expression "minerals oil" includes petroleum and natural gas. 7.2 Section 139 speaks of filing of return of income. Section 143 deals with 'assessment' while Section 144 deals with 'best judgment assessment'. Under Section 144A the Joint Commissioner has the power to issue directions in certain cases while under Section 144BA reference can be made to the Principal Commissioner or Commissioner in certain cases. Section 144C deals with reference to dispute resolution panel. The time limit for completion of assessment, reassessment and recomputation is prescribed under Section 153 of the Act. The said Section prescribes the limitation period for the making of, inter alia, assessment orders on the application of several other provisions which is relevant for the purposes of this case. Sections 144C and 153 are extracted as under: "144C. Reference to dispute resolution panel. - (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the firs....
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....The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. Explanation.-For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee. (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, res....
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.... purpose; (b) "eligible assessee" means,- (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any non-resident not being a company, or any foreign company: Provided that such eligible assessee shall not include person referred to in sub-section (1) of section 158BA or other person referred to in section 158BD. (16) The provisions of this section shall not apply to any proceedings under Chapter XIV-B. xxx 153. Time limit for completion of assessment, reassessment and recomputation. - (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable: Provided that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April, 2018, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted: Provided furt....
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.... 263 or section 264, setting aside or cancelling an assessment, or an order under section 92CA, as the case may be, may be made at any time before the expiry of nine months from the end of the financial year in which the order under section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be: Provided that where the order under section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted. (3A) Notwithstanding anything contained in sub-sections (1), (....
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....ssessing Officer or the Transfer Pricing Officer, as the case may be, if satisfied, may allow an additional period of six months to give effect to the order: Provided further that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 shall be made within the time specified in sub-section (3). (5A) Where the Transfer Pricing Officer gives effect to an order or direction under section 263 by an order under section 92CA and forwards such order to the Assessing Officer, the Assessing Officer shall proceed to modify the order of assessment or reassessment or recomputation, in conformity with such order of the Transfer Pricing Officer, within two months from the end of the month in which such order of the Transfer Pricing Officer is received by him. (6) Nothing contained in sub-sections (1), (1A) ....
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....t day of June, 2016: Provided that where a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 has been issued prior to the 1st day of June, 2016 and the assessment or reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of this section as it stood immediately before its substitution by the Finance Act, 2016 (28 of 2016). Explanation 1.-For the purposes of this section, in computing the period of limitation- (i) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proviso to section 129; or (ii) the period commencing on the date on which stay on the assessment proceeding was granted by an order or injunction of any court and ending on the date on which certified copy of the order vacating the stay was received by the jurisdictional Principal Commissioner or Commissioner; or (iii) the period commencing from the date on which the Assessing Officer intimates the Central Government or ....
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....e the Authority for Advance Rulings or before the Board for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Principal Commissioner or Commissioner under sub-section (7) of section 245R; or (x) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or (xi) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub-section (1) of section 144BA and ending on the date on which a direction under sub-section (3) or sub-section (6) or an order under sub-section (5) of the said section is received by the Assessing Officer; or (xii) the period (not exceeding one hundred and eighty days) commencing from the date on wh....
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....under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub-section (4) of section 245HA, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year; and for the purposes of determining the period of limitation under sections 149, 154, 155 and 158BE and for the purposes of payment of interest under section 244A, this proviso shall also apply accordingly: Provided also that where the assessee exercises the option to withdraw the application under sub-section (1) of section 245M, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub- section (5) of the said section, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year: Provided also that for the purposes of determining the period of limitation under sections 149, 154 and 155,....
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....ssment order in the case of eligible assessees. The relevant portions are extracted as under : (i) Speech of Finance Minister on July 6, 2009 "96. In order to further improve the investment climate in the country, we need to facilitate the resolution of tax disputes faced by foreign companies within a reasonable time frame. This is particularly relevant for such companies in the Information Technology (IT) sector. I, therefore, propose to create an alternative dispute resolution mechanism within the Income Tax Department for the resolution of transfer pricing disputes. To reduce the impact of judgemental errors in determining transfer price in international transactions, it is proposed to empower the Central Board of Direct Taxes (CBDT) to formulate 'safe harbour' rules. (underlining by me) (ii) Memorandum Regarding Delegated Legislation Clause 55 "Clause 55 of the Bill seeks to insert a new section 144C relating to reference to Dispute Resolution Panel. The proposed new section provides for a dispute resolution mechanism for the purpose of speedy disposal of the objections raised by the eligible assessee under this new section. ....
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....o complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in sub-section (5), after considering the following, namely:- (a) Draft order; (b) Objections filed by the assessee; (c) Evidence furnished by the assessee; (d) Report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) Records relating to the draft order; (f) Evidence collected by, or caused to be collected by, it; and (g) Result of any enquiry made by, or caused to be made by it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5), - (a) Make such further enquiry, as it thinks fit; or (b) Cause any further enquiry to be made by any income tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. (9) I....
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....pealable order; (iii) in sub-section (1) of section 253 so as to include an order of assessment passed under sub-section (3) of section 143 in pursuance of directions of "Dispute Resolution Panel" as an appealable order. These amendments will take effect from 1st October, 2009. [Clauses 49,55,71,72]" (underlining by me) (iii) Notes on Clauses Clause 55 of the Bill seeks to insert a new section 144C in the Income-tax Act relating to Dispute Resolution Panel. The subjects of transfer pricing audit and the taxation of foreign company are at nascent stage in India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view. The correction of such view take very long time with the existing appellate structure. With a view to provide speedy disposal, it is proposed to amend the Income-tax Act so as to create an alternative dispute resolution mechanism within the income-tax department and accordingly, section 144C has been proposed to be inserted so as to provide inter alia the Dispute Resolution Panel as an alternative dispute resolution mechanism. This amendment will take effect f....
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....r Principal Commissioner or Commissioner. It is also provided that in a case where it is not possible for the Assessing Officer to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such reasons in writing from the Assessing Officer, if satisfied, may allow additional time of six months to give effect to the said order. However, in respect of cases pending as on 1st June 2016, the time limit for passing such order has been extended to 31.3.2017. 57.3 It is also provided that where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, 254, 260, 262, 263, or section 264 of the Income-tax Act or in an order of any court in a proceeding otherwise than by way of appeal or reference under the Income-tax Act, then such assessment, reassessment or recomputation shall be made on or before the expiry of twelve months from the end of the month in which such order is received by the Principal Commissioner or Commissioner. However, for cases pending as on 1.6.20....
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....nt year 2019-20 and onwards, the said time limit shall be twelve months from the end of the assessment year in which the income was first assessable. 60.3 Sub-section (2) of section 153 of the Income-tax Act has further been amended to provide that the time limit for making an order of assessment, reassessment or recomputation under section 147 of the Income-tax Act, in respect of notices served under section 148 of the Income- tax Act on or after the 1st day of April, 2019 shall be twelve months from the end of the financial year in which notice under section 148 is served. 60.4 Sub-section (3) of section 153 of the Income-tax Act has also been amended to provide that the time limit for making an order of fresh assessment in pursuance of an order passed or received in the financial year 2019-20 and onwards under sections 254 or 263 or 264 of the Income- tax Act shall be twelve months from the end of the financial year in which order under section 254 is received or order under section 263 or 264 is passed by the authority referred to therein. (underlining by me) (vi) Memorandum Explaining the provisions in the Finance Bill 2021 Reduction of t....
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.... assessment years. This amendment will take effect from 1st April, 2021 [Clause 41]" (underlining by me) (vii) Memorandum Explaining the provisions in the Finance Bill 2022 2. As part of this process of making the tax administration transparent and efficient, provisions for notifying faceless schemes under sections 92CA, 144C, 253 and 264A were introduced in the Act through Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from 01.11.2020 and under section 255, was inserted through Finance Act, 2021 with effect from 01.04.2021: S. No. Section Scheme Date of Limitation 1. 92CA Faceless determination of arm's length price 31st day of March, 2022 2. 144C Faceless Dispute Resolution Panel 31st day of March, 2022 3. 253 Faceless appeal to Appellate Tribunal 31st day of March, 2022 4. 255 Faceless procedure of Appellate Tribunal 31st day of March, 2023 3. Section 92CA and section 144C are principally related to the transfer pricing functions and international taxation which are presently out of the regime of faceless assessment. New schemes for t....
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....ispute mechanism was being brought in precisely to usher in a regime of expeditious resolution of tax disputes. The note on clause (55) exhibits a similar intent. It is noted that the 'subjects of transfer pricing audit and the taxation of foreign company are at nascent stage in India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view.' The same note further explained that course correction from such a view took a very long time within the then existing appellate structure, and therefore Section 144C was inserted to ensure speedy disposal by the creation of the DRP as an 'alternative dispute resolution mechanism within the income-tax department'. In my view, these notes reinforce the evident parliamentary intent. In particular, it is useful to emphasise that DRP was envisioned as an alternative dispute resolution mechanism 'within the income-tax department'. This informs us that the procedure under Section 144C envisions the procedure to be completed between the Revenue and the assessee and within such procedure, the compartmentalised limitations for the DRP and Assessing Officer are outlined in the relevant sub-sections. The import of this....
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....g, unreasonable or unjust or oppressive. Gajendragadkar, J. in Kanailal Sur vs. Paramnidhi Sadhu Khan, AIR 1957 SC 907 opined thus: "If the words used are capable for one construction only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act." S.R. Das, J. in CIT, Agri vs. Keshab Chandra Mandal, AIR 1950 SC 265 observed thus: "Hardship or inconvenience cannot alter the meaning of the language employed by the Legislature if such meaning is clear on the face of the statute or the rules." He further observed that: "The spirit of the law may well be an elusive and unsafe guide and the supposed spirit can certainly not be given effect to in opposition to the plain language of the sections of the Act". Vide Rananjaya Singh vs. Baijnath Singh, AIR 1954 SC 749." 9.3 Similarly, Subba Rao, J. observed that in interpretation of a statute, the primary test is - the language employed in the Act and when the words are clear and plain, the court is bound to accept the expressed intention of the Legislature, vide MV J....
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..... State of Mysore AIR 1958 SC 255, Venkatarama Aiyar, J. said that "the rule of construction is well settled that when there are in an enactment two provisions which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This is what is known as the rule of harmonious construction." 9.7 Therefore, effect should be given to both provisions. Thus, a construction which reduces one of the provisions to a "useless lumber" or 'dead letter' is to be avoided. One of the ways in dealing with such a situation is to find out which of the two apparently conflicting provisions is more general and which is more specific and to construe the same accordingly. However, if a specific provision has to be read within the mandate of a general provision then the same has to be accordingly construed so as to give effect to the mandate of the general provision. However, if a situation arises where two Sections of the Act cannot be reconciled, as there is an absolute contradiction between them, it is often said that the latter must prevail. Another way of looking at such a situation is to ascertain which is the leading provision and which i....
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....ell settled that while dealing with a non obstante clause under which the legislature wants to give overriding effect to a section, the court must try to find out the extent to which the legislature had intended to give one provision overriding effect over another provision. Such intention of the legislature in this behalf is to be gathered from the enacting part of the section. In Aswini Kumar Ghose v. Arabinda Bose [(1952) 2 SCC 237 : AIR 1952 SC 369] Patanjali Sastri, J. observed: (AIR p. 377, para 27) '27. ... The enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously';'" 10.3 In Interplay Between Arbitration Agreements under A&C Act, 1996 and Stamp Act, 1899, (2024) 6 SCC 1, a sevenJudge bench of this Court observed in Paragraphs 83-84 as under: "83. .... A clause beginning with the expression 'notwithstanding anything contained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any contract' is more often than not appended to a section in the beginning with a view to give the enacting part of the se....
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....n of the section an overriding effect, not otherwise. In other words, only in a case of a conflict, a provision in an enactment containing a non-obstante clause, would be given its full operation and what is stated in the non-obstante clause will not be an impediment for the operation of the particular provision in the enactment. This would mean that what is stated in the non-obstante clause would not take away the effect of any provision of the Act which follows the same. 10.5 In Aswini Kumar Ghose vs. Arabinda Bose, (1952) 2 SCC 237 : AIR 1952 SC 369, this Court speaking through Patanjali Sastri, C.J. observed that only when there is any inconsistency between what is contained in a provision of an enactment and a non-obstante clause would make the latter in what is to yield to what is stated in the provision following the same. In other words, it is only when the enacting part of the statute cannot be read harmoniously with what is stated in the non-obstante clause, would the non-obstante clause result in yielding to what is stated in the enacting part. Similarly, in Municipal Corpn., Indore vs. Ratnaprabha, (1976) 4 SCC 622 : AIR 1977 SC 308, it was observed that there should....
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....cted as under: "27. Regarding the interpretation of taxation statutes, the parties have relied on several decisions. The law laid down on this aspect is fairly well settled. The principles governing the interpretation of the taxation statutes can be summarised as follows: 27.1. A taxing statute must be read as it is with no additions and no subtractions on the grounds of legislative intendment or otherwise; 27.2. If the language of a taxing provision is plain, the consequence of giving effect to it may lead to some absurd result is not a factor to be considered when interpreting the provisions. It is for the legislature to step in and remove the absurdity; 27.3. While dealing with a taxing provision, the principle of strict interpretation should be applied; 27.4. If two interpretations of a statutory provision are possible, the Court ordinarily would interpret the provision in favour of a taxpayer and against the Revenue; 27.5. In interpreting a taxing statute, equitable considerations are entirely out of place; 27.6. A taxing provision cannot be interpreted on any presumption or assumption; 27.7. A taxing stat....
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....tion and observed as under: "33. Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everyth....
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.... under sub- section (1) of Section 139 and has not made a return or a revised return of that section or fails to comply with all the terms of a notice issued under Section 142 or having made a return fails to comply with all the terms of a notice issued under sub-section (2) of Section 143, then the Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered, shall, after giving the assessee an opportunity of being heard, make an assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment. It is not necessary to go into the other aspects of Section 143 or Section 144 of the Act. 11.1 The other relevant provisions which could be referred to are Section 144A which deals with power of Joint Commissioner to issue directions in certain cases; Section 144B which speaks of faceless assessment and Section 144C discusses a reference to a DRP with which we are concerned in the present cases. 11.2 The time limit for completion of an assessment, re- assessment and re-computation is delineated in Section 153 of the Act. The said Section has been substituted ....
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....Principal Commissioner or Commissioner, as the case may be, the order under Section 263 or Section 264 is passed by the Principal Commissioner or Commissioner on or after the 1st day of April, 2019, the provisions of this sub-section should have been, as if for the words "nine months", the words "twelve months" have been substituted. 11.5 Sub-section (3A) of Section 153 also begins with a non- obstante clause with reference to sub-sections (1), (1A), (2) and (3). Sub-section (4) states that notwithstanding anything contained in sub-sections (1), (1A), (2), (3) and (3A), where a reference under sub-section (1) of Section 92C A is made during the course of the proceedings for the assessment or re-assessment, the period available for completion of assessment or re-assessment, as the case may be, under the said sub-sections (1), (1A), (2), (3) and (3A) shall be extended by twelve months. This sub-section was added by an amendment with effect from 01.04.2023. However, the same is not applicable to the facts of the case. Section 92CA deals with a reference to the Transfer Pricing Officer. Sub-section (3A) of Section 92CA, inter alia, refers to Section 153 of the Act, which deals with ....
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....ven for the conclusion of the proceedings initiated under the said provision which is totally only eleven months from the date of passing the draft order. The procedure contemplated under Section 144C applies to only two categories of assesses, who are called as eligible assessees under clause (b) of sub-section 15 to Section 144C. The first category of eligible assessee is any person in whose case the variation referred to in sub-section (1) of Section 144C arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of Section 92CA and the second category is in the case of any non-resident not being a company or any foreign company. The proviso thereto states that such eligible assessee shall not include persons referred to in sub-section (1) of Section 158BA or other persons referred to in Section 158BD. Therefore, in the case of only the aforesaid two categories of eligible assesses, the procedure contemplated under Section 144C applies. 11.10 When Section 92CA applies to any eligible assessee, then sub-section (4) of Section 153 states that the period available for completion of an assessment or re-assessment, as the case may be, under s....
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....ions are received within the aforesaid period of thirty days or the assessee intimates to the Assessing Officer the acceptance of the variation, then in terms of sub-section (3) of Section 144C, the Assessing Officer shall complete the assessment on the basis of the draft order within the prescribed period of limitation as per sub- section (4) of Section 144C. 12.2 Sub-section (4) is significant inasmuch as it contemplates a limitation period within which the Assessing Officer has to pass an assessment order in terms of sub-section (3) of Section 144C. This sub-section again contains a non-obstante clause. This non- obstante clause is however notwithstanding anything contained in Section 153 or Section 153B. The Assessing Officer shall, notwithstanding the aforesaid provisions, pass the assessment order under sub-section (3) within one month from the end of the month in which-(a) the acceptance is received, or (b) the period of filing objections under sub-section (2) expires. Thus, the stipulation of period of one month in sub-section (4) is for the Assessing Officer to complete the assessment order having regard to either clauses (a) or (b) of sub-section (2) of Section 144C, a....
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....such direction. 12.6 Sub-section (12) of Section 144C is significant inasmuch as it states that no direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. Therefore the DRP is rendered functus officio on completion of the period of nine months as stipulated. Thus, this period of limitation is to be strictly complied with by the DRP. 12.7 As already noted, a draft order is forwarded to the eligible assessee under sub-section (1) of Section 144C and thirty days' time is granted to pass a final order, if no objections are received or if there is an acceptance of the variation of the draft order by the assessee in a month's time. Thus, in the above circumstances the period of limitation is thirty days from date of forwarding the draft orders to an eligible assessee. This is as opposed to sub-section (3) of Section 153 and the proviso thereto where the period of limitation is twelve months to make a final order. Hence, the non- obstante clause under sub-section (4) of Section 144C of the Act. However, if there are objections, which have to be made within thirty days from the date of....
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.... to be made within twelve months as stipulated in the proviso to sub-section (3) of Section 153 which delineates the time frame for completion of assessment or a re-assessment etc. As already noted, the period of twelve months commences from the end of the financial year in which the order under Section 254 is received by the Principal Chief Commissioner or Chief Commissioner etc. On receipt of such an order from the Tribunal, when a re-assessment has to be made and Section 144C is applicable, then a fresh draft assessment order has to be forwarded to the assessee as per sub-section (1) of Section 144C of the Act. 12.11 There is no time limit stipulated under sub-section (1) of Section 144C for forwarding a draft order to the eligible assessee after receipt of the order from the Tribunal under Section 254 of the Act. The question that would arise is, whether, the Assessing Officer can forward the draft order at any point of time or take his own sweet time to do so, since sub-section (1) of Section 144C contains a non-obstante clause which is notwithstanding anything contained under the Act or, on the contrary, the Assessing Officer is bound to follow a timeline for forwarding a ....
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....tante clause under sub-section (1) of Section 144C of the Act. 12.13 To reiterate, the non-obstante clause in sub-section (1) of Section 144C of the Act has been invoked by the Parliament in order to make a distinction between eligible assessees and other category of assessees in the matter of assessment/re-assessment where a draft assessment order has to be made by the Assessing Officer in the first instance leading to DRP directions being issued to the Assessing Officer in case there is a reference to the DRP, which is not so in the case of other assessees. The discussion in this regard has been made above and hence would not call for a repetition. Thus, the non-obstante clause in sub-section (1) of Section 144C is not related to the overall limitation period prescribed under Section 153 of the Act but with the aspect of there being a distinct procedure which has been envisaged in the case of only eligible assessees. 12.14 On the other hand, if the non-obstante clause under sub-section (1) of Section 144C is to be construed only in the context of the limitation period under Section 153 inasmuch as the procedure contemplated under Section 144C would be a time frame to be con....
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....h from the end of the month in which the direction is received from the DRP under sub-section (5) of Section 144C. This is notwithstanding anything contained to the contrary in Section 153 or Section 153B. 12.17 Therefore, on a comparison of the expressions of the non-obstante clause in sub-section (1) of Section 144C with sub- section (4) and sub-section (13) thereof, it is clear that the Parliament has applied the legislative device of the non-obstante clause in different ways to bring out distinct legislative intents. Therefore, sub-section (1) of Section 144C is not relatable to Section 153 i.e., the limitation period at all. It deals with a totally distinct procedure to be adopted in the case of an eligible assessees as compared to other category of assessees in terms of the procedure contemplated under the said Section by initially making a draft assessment order, whereas sub-section (4) and sub-section (13) of Section 144C directly refer to and have a bearing on Sections 153 or 153B, which deal with limitation period. This is because narrower limitation periods are prescribed to do certain things as contemplated under the said sub-sections. The object and purpose of presc....
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....copy of the same would also have to be simultaneously sent to the Assessing Officer concerned and the minimum period that the Assessing Officer would have for making the draft order would be thirty days, depending on when the order is received by the Principal Chief Commissioner or Chief Commissioner, etc., as the case may be. 12.21 In this context, it is relevant to note the non-obstante clause in sub-section (4) of Section 153 of the Act which applies when a reference under sub-section (1) of Section 92CA is made during the course of the proceeding for the assessment or re- assessment, then the period available for completion of assessment or re-assessment, as the case may be, under sub-section (3) of Section 153 shall be extended by twelve months. This provision applies with effect from 01.04.2023. However, such a provision is wholly conspicuous by its absence in the case of an eligible assessee who falls under the category of any non-resident not being a company, or a foreign company. Therefore, what follows is that in the case of any non-resident not being a company, or a foreign company, there is no extension of the period of limitation beyond twelve months as stipulated u....
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....4C. Arguendo, that the Parliament could not have conceived such a procedure to be followed by Assessing Officers, it is not for a court to import provisions in the statute to supply any assumed deficiency, especially when the statute is otherwise workable. In the present case, the Act is certainly workable if the proceedings under Section 144C are subsumed within the limitation prescribed under Section 153(1) or (3), or as the case may be. 12.25 It was also argued that if the scheme of Section 144C is interpreted such that the Assessing Officer has to work backwards, then the failure of an Assessing Officer to stick by the timeline would lead to absurdity and render the Act unworkable. In my view, the failure of an Assessing Officer to abide by the statutory timelines cannot be the basis for assuming any absurdity in the statute. A provision in a taxing statute which is ostensibly beneficial to the assessee must be interpreted as it is and not by hypothetical scenarios. Relevant Case Law : 13. The judgments cited at the Bar on the provisions under consideration could be discussed at this stage. 13.1 The judgment of the Madras High Court in Roca Bathroom Products has bee....
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....period under Section 153(2A) had expired on 31.03.2017 and for the assessment year 2010-11 the period had expired on 31.12.2017. 13.3 While discussing the procedure contemplated under Section 144C of the Act, the Madras High Court held that sub-section (13) of Section 144C imposes a restriction on the Assessing Officer and denies him the benefit of the more extensive time limit available under Section 153 to pass the final order of assessment as he has to do so within one month from the end of the month when the directions of the DRP are received by him and there is also no requirement for hearing the assessee at that stage. That Section 144C(13) contains a non-obstante clause which is to emphasize the urgency contemplated as compared to Section 153. 13.4 Reliance was placed on the judgment of the Bombay High Court in the case of Pr. CIT vs. Lionbridge Technologies Pvt. Ltd. (2019) 260 Taxman 273 (Bom.), wherein it was held that the final assessment could be made only if the draft assessment had been forwarded by the Assessing Officer to the assessee within the time limit prescribed under Section 153(2A) of the Act. Nokia India P. Ltd. vs. DCIT, (2018) 407 ITR 20 (Delhi) (HC)....
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.... the operation of section 153 as a whole. It only implies that irrespective of availability of larger time to conclude the proceedings, final orders are to be passed within one month in line with the scheme of the Act. (g) When no period of limitation is prescribed, orders are to be passed within a reasonable time, which in any case cannot be beyond three years. However, when the statute prescribes a particular period within which orders are to be passed, then such period, irrespective of whether it is short or long, shall be applicable." Meaning of Assessment Order: 14. Sub-section (1) as well as sub-section (3) of Section 153 of the Act use the expression "no order of assessment" and "an order of fresh assessment" respectively. The word "assessment" is the process of determining the total income of the assessee and the sum payable by the assessee as income tax/surcharge/super tax etc. vide CIT vs. JK Commercial Corpn. Ltd., (1976) 4 SCC 517. In Auto & Metal Engineers vs. Union of India (1997) 7 SCC 734, the Supreme Court held that the expression "assessment proceeding" occurring in Section 153 Explanation (1) means the entire process of assessment starting from the....
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....ction 254 is received by the Principal Chief Commissioner or Chief Commissioner etc,... as the case may be. When the aforesaid provisions are harmoniously read, it would inevitably mean that the procedure contemplated under Section 144C applicable to an eligible assessee has to be concluded within a period of twelve months as stipulated in proviso to sub-section (3) of Section 153 as interpreted by me above. 15. Having considered the language of Sections 144C and 153, the High Court refused to accept that the provisions of Section 153 are excluded to the operation of Section 144C. Even when the Assessing Officer has to follow the procedure prescribed under Section 144C of the Act, the same has to be commenced and concluded in terms of sub-section (3) of Section 153 of the Act. The said provision is applicable to an eligible assessee inasmuch as when the procedure under Section 144(C)(1) has to be followed. Consequently, the rest of the provisions of Section 144C would become applicable. This is only when the Assessing Officer intends to make any variation which is prejudicial to the interest of the eligible assessee. Then a draft order has to be made in the first instance. In my....
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....iation in the return which is prejudicial to the interest of such an assessee only a draft order has to be made and not a final assessment order. Therefore, the non-obstante clause in sub-section (1) of Section 144C has to be juxtaposed with reference to Section 143 of the Act and all other Sections which deal with making of an assessment order. This is because both Section 143 of the Act as well as Section 144C of the Act deal with the passing of assessment orders depending on the category to which the assessee belongs, as already stated: if the assessee is an eligible assessee, sub- section (1) of Section 144C would apply, if a variation is to be made, and in all other cases sub-section (3) of Section 143 of the Act would apply. (iii) On the other hand, the non-obstante clauses in sub-sections (4) and (13) of Section 144C are only with reference to Section 153 of the Act. The time lines provided under the aforesaid sub-sections 144C and the time line provided under Section 153 of the Act deal with respective limitation periods and therefore, the Parliament has used the expression "notwithstanding anything contained in Section 153". Sub-sections (4) and ....
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....to the operation of the TOLA and the Notifications issued thereunder the due date was extended to 30.09.2021. Finally, draft assessment orders under Section 144C were passed only on 28.09.2021. As we have already held that the period under Section 144C of the Act is to be subsumed within the time prescribed under Section 153(1) of the Act, we find that the High Court was correct in taking the view that since the draft order under Section 144C was passed only on 28.09.2021, the proceedings had become time-barred as no final assessment order in compliance with the provisions of Section 144C could be passed due to the impending expiry of the limitation period on 30.09.2021. 15.4 I therefore find that the High Court was right in allowing the writ petitions filed by the respondents-assessees by holding that no final assessment orders can be passed in these cases as the same would be time barred and hence the return of income filed by the respondents-assessees have to be accepted. I reiterate the same and also state that this would not preclude the Revenue from taking any other step in accordance with law. Consequently, I do not find any merit in these appeals filed by the Revenue ....
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.... carry out the assessment afresh. This order came to be passed on 04.10.2019. 7. It is a matter of record that after the remand order passed by the Appellate Tribunal, a notice was issued on 23.09.2021, and a Draft Assessment Order was passed on 28.09.2021. This Draft Assessment Order was challenged before the High Court of Bombay on the ground that the maximum permissible time period as prescribed under Section 153(3) of the Income Tax Act had already expired and that, therefore, subsequent proceedings were vitiated and could not continue, and no final assessment order could be passed. 8. The writ petition filed by the Respondent was allowed by way of judgment and order dated 04.08.2023. The High Court took the view that the time period provided by Section 153(3) of the Income Tax Act is subsumed within the time contemplated in terms of Section 144C of the Income Tax Act. This Court is therefore required to analyze and interpret the maximum permissible time periods prescribed as per the Income Tax Act in terms of proceedings under Section 144C read with Section 153(3) of the Income Tax Act. 9. It is therefore appropriate to refer to Section 153 of the Income Tax Act. ....
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....on shall be made under Section 147 after the expiry of nine months from the end of the financial year in which the notice under Section 148 was served: [Provided that where the notice under Section 148 is served on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted.] (3) Notwithstanding anything contained in [sub- sections (1), (1-A) and (2)], an order of fresh assessment [or fresh order under Section 92-CA, as the case may be,] in pursuance of an [order under Section 250 or Section 254] or Section 263 or Section 264, setting aside or cancelling an assessment, [or an order under Section 92-CA, as the case may be] may be made at any time before the expiry of nine months from the end of the financial year in which the [order under Section 250 or Section 254] is received by the Principal Chief Commissioner or Chief Commissioner or [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be,] or, as the case may be, the order under Section 263 or Section 264 is passed by the [Principal Chief Com....
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....ef Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under Section 263 or Section 264 is passed by 3407[the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be,]: Provided that where it is not possible for the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer, 3409[or the Transfer Pricing Officer, as the case may be,] if satisfied, may allow an additional period of six months to give effect to the order: [Provided further that where an order under Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under Section 250 or Section 254 or Section 260 or Section 262 or Section 263 o....
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....58-BE], the order of assessment or reassessment, relating to any assessment year, which stands [revived under sub-section (2) of Section 153-A or sub-section (5) of Section 158- BA], shall be made within a period of one year from the end of the month of such revival or within the period specified in this section or sub-section (1) of [Section 153-B or Section 158-BE], whichever is later. (9) The provisions of this section as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment, reassessment or recomputation made before the 1st day of June, 2016: [Provided that where a notice under sub-section (1) of Section 142 or sub-section (2) of Section 143 or Section 148 has been issued prior to the 1st day of June, 2016 and the assessment or reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of this section as it stood immediately before its substitution by the Finance Act, 2016 (28 of 2016).] Explanation 1.- For the purposes of this section, in computin....
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.... 245-C and ending with the date on which the order under sub-section (1) of Section 245-D is received by the Principal Commissioner or Commissioner under sub-section (2) of that section; or (viii) the period commencing from the date on which an application is made before the [Authority for Advance Rulings or before the Board for Advance Rulings] under sub-section (1) of Section 245-Q and ending with the date on which the order rejecting the application is received by the Principal Commissioner or Commissioner under sub-section (3) of Section 245-R; or (ix) the period commencing from the date on which an application is made before the [Authority for Advance Rulings or before the Board for Advance Rulings] under sub-section (1) of Section 245-Q and ending with the date on which the advance ruling pronounced by it is received by the Principal Commissioner or Commissioner under sub-section (7) of Section 245-R; or (x) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in Section 90 or Section 90-A and ending with the date on which the ....
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....emed to be extended accordingly: Provided further that where the period available to the Transfer Pricing Officer is extended to sixty days in accordance with the proviso to sub-section (3-A) of Section 92-CA and the period of limitation available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly: Provided also that where a proceeding before the Settlement Commission abates under Section 245- HA, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub-section (4) of Section 245-HA, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year; and for the purposes of determining the period of limitation under Sections 149, [* * *] 154, 155 and 158-BE and for the purposes of payment of interest under Section 244-A,....
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....e authorities to take appropriate steps against assessees. 11. Section 153 of the Income Tax Act prescribes various time limits within which assessment, reassessment, and recomputation of income of Assessees has to take place by the revenue authorities. Section 153(3) of the Income Tax Act specifically deals with orders of fresh assessments passed as a result of setting aside or cancelling an assessment. This is an event likely to happen when an appellate authority such as the Income Tax Appellate Tribunal or the High Court sets aside any order of an assessing officer, and asks for fresh computation. Section 153(3) of the Income Tax Act provides that a fresh order must be passed before the expiry of 9 months from the end of the financial year in which the order is received by the Commissioner. The proviso to this sub-section also provides that in case the order is received on or after the first day of April 2019, the 9 month period shall be 12 months. 12. In the facts of the present case, it is clear that the Income Tax Appellate Tribunal passed an order of remand on 04.10.2019. The end of the financial year insofar as this order is concerned would be 31.03.2020, as a result ....
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....such action under Section 153 or Section 153-B thereof, - (i) expires on the 31st day of March, 2021 due to its extension by the said notification, such time limit shall stand extended to the 30th day of April, 2021; (ii) is not covered under (i) and expires on 31st day of March, 2021, such time limit shall stand extended to the 30th day of September, 2021; (B) where the specified Act is the Prohibition of Benami Property Transaction Act, 1988, (45 of 1988) (hereinafter referred to as the Benami Act) and the completion of any action, as referred to in clause (a) of sub-section (1) of Section 3 of the said Act, relates to issue of notice under sub- section (1) or passing of any order under sub- section (3) of Section 26 of the Benami Act,- (i) the 30th day of June, 2021 shall be the end date of the period during which the time limit specified in or prescribed or notified under the Benami Act falls, for the completion of such action; and (ii) the 30th day of September, 2021 shall be the end date to which the time limit for completion of such action shall stand extended. [Notification No. 10/2021/F. No. 370142/35/2020-TPL]....
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....- (i) the Dispute Resolution Panel; and (ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if- (a) the assessee intimates to the Assessing Officer the acceptance of the variation; or (b) no objections are received within the period specified in sub-section (2). (4) The Assessing Officer shall, notwithstanding anything contained [in Section 153 or Section 153-B], pass the assessment order under sub- section (3) within one month from the end of the month in which,- (a) the acceptance is received; or (b) the period of filing of objections under sub- section (2) expires. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in sub-section (5), after considering the following, namely:- (a) draft order; (b) objections filed by the assessee; (c) evidence furnished b....
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....ch such direction is received. (14) The Board may make rules for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee. [(14-A) 3363[* * *]] [(14-A) The provisions of this section shall not apply to any assessment or reassessment order passed by the Assessing Officer with the prior approval of the [Principal Commissioner or Commissioner] as provided in sub-section (12) of Section 144-BA.] [(14-B) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of issuance of directions by the dispute resolution panel, so as to impart greater efficiency, transparency and accountability by- (a) eliminating the interface between the dispute resolution panel and the eligible assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a mechanism with dynamic jurisdiction for issuance of directions by dispute resolution panel. (14-C) The Centr....
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....its objections to this variation with the Dispute Resolution Panel and the Assessing Officer. If no objections are received within the 30-day time period, or an acceptance is received, Sub-Section (3) mandates that the Assessing Officer complete the assessment, and pass a final Assessment on the basis of the Draft Order. On the other hand, if objections are received by the Dispute Resolution Panel, it must, in terms of Sub-Sections (5) and (6), issue directions as it thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment. Sub-Section (8) also empowers the Dispute Resolution Panel to confirm, reduce, or enhance variations proposed in the Draft Order. Sub- Section (11) specifically provides that an opportunity of hearing must be given in case directions prejudicial to the revenue or the Assessee are being passed. Sub-Section (12) also prescribes that no direction shall be issued after 9 months from the end of the month in which the Draft Order is forwarded to the eligible Assessee. Sub-Section (13) provides that the Assessing Officer, in conformity with the directions of the Dispute Resolution Panel, must complete the assessment within one month....
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....d to ensure that the Draft Assessment Order is passed in terms of the timelines prescribed under Section 153 of the Income Tax Act. 24. It has also been mentioned before this Court that the total tax implication of the decision of the Bombay High Court, which is under challenge before this Court, can have a revenue impact of nearly 1.3 lakh crores, as that is the quantum of dispute in various appeals which are pending in the country which will otherwise be deemed to be time-barred if the interpretation of the High Court of Bombay by way of the impugned order is upheld. 25. A preliminary objection has been taken by the learned Senior Counsel appearing on behalf of the Respondent that the present Special Leave Petition ought to be dismissed on account of the fact that there is a low tax effect. This submission need not detain me any further. Obviously, there is an extremely important question of law which has to be decided by this Court and has country-wide ramifications. The Court is not compelled to dismiss a petition merely because it has a low tax effect. 26. The learned Senior Counsel Mr. Mistry appearing on behalf of the Respondents has contended that Section 153 of th....
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....incorrect, and unworkable. 29. In the facts of Roca Bathroom Products Private Limited (supra), it is relevant to mention that the time period under Section 153(4) of the Income Tax Act was applicable, which provides for an additional period of 12 months to complete the assessment and pass the final order in case a reference has been made to the Transfer Pricing Officer in terms of Section 92CA of the Income Tax Act. The High Court took the view that in view of the additional time period of 12 months provided, the proceedings before the Dispute Resolution Panel, the passing of draft assessment and thereafter final assessment order ought to have taken place within this extended period of limitation. I am of the view that this interpretation is totally erroneous. 30. In interpreting the provisions that form the subject matter of the present controversy, this Court is alive to the fact that a fine balance has to be maintained between ensuring that the revenue authorities have ample time and opportunity to assess income and ensure that those who attempt tax evasion, are prosecuted, and the income escaping taxation, is brought within the tax fold. At the same time, the rights of th....
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....at it takes because it is something that an Assessee will initiate and not something that he/she must mandatorily go through. 35. The High Courts of Bombay and Madras have taken the view that the fact that no exception has been carved out for Section 144C of the Income Tax Act in any of the sub-sections of Section 153 of the Income Tax Act makes it clear that the time of Section 144C of the Income Tax Act proceedings must necessarily conclude within the time period prescribed under Section 153 of the Income Tax Act. I agree with this view only to a limited extent, insofar as the timelines prescribed under Section 153 of the Income Tax Act must apply to proceedings under Section 144C of the Income Tax Act, but only insofar as they relate to the passing of the Draft Assessment Order contemplated under Sub-Section (1) of Section 144C of the Income Tax Act. 36. My view in this regard stems from the fact that Sub- Section (4) and Sub-Section (13) of Section 144C of the Income Tax Act provide clear and unequivocal non obstante clauses, which remove the application of Section 153 of the Income Tax Act and the timelines prescribed thereunder. The High Courts of Madras and Bombay have....
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....re accepted or the period of limitation for filing objections expires. In my opinion, this would extend the time available to the Assessing Officer from 31st March of any year to 30th April of that year. In the facts of the present case, this would mean that the Assessing Officer ought to have passed his Draft Assessment Order before 30th September 2021, and in case acceptance was received or no objections were filed, the final assessment order by or before 30th October 2021. 41. Similarly, in the event objections were filed, Section 144C(12) of the Income Tax Act states that such objections have to be decided and directions have to be issued within a period of 9 months. Sub-Section (13) makes it clear that regardless of how long it takes the Dispute Resolution Panel to pass its directions, the Assessing Officer will only have an additional period of one month to pass the Final Assessment Order. This means that if the Dispute Resolution Panel disposes of the objections and issues directions within a period of one month from the date of filing of objections, the Final Assessment Order must be passed within one month from such date which will be practically impossible. 42. I....
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....ectively mean that an assessing officer would have to firstly foresee that an eligible assessee would compulsorily file objections to the draft assessment order under Section 144C(2)(b) and the Dispute Resolution Panel would require the entire nine months period to issue any direction. The Parliament while enacting Section 144C, could not have conceived such a procedure to be followed by an assessing officer in the Country. 45. This can also be approached from another angle. If the contentions of the Respondents were to be accepted, and assuming a scenario where the assessing officer does not accommodate for the entire nine-month period for the Dispute Resolution Panel to issue directions, it would result in a scenario where an assessing officer would eat into the time available for the Dispute Resolution Panel to issue directions, which would effectively result in amending the Income Tax Act and the timeline of nine months available with the Dispute Resolution Panel available under Section 144C(12). 46. The non-obstante clauses in Section 144C must therefore be harmoniously construed. The timelines prescribed under Section 153 will be applicable upto the stage of passing the....
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....r simply reiterate the draft assessment order as a final assessment order if no objections are filed. The assessing officer acts in an executory role once the draft assessment order is issued under section 144C(1). 51. In this context, if Explanation 1 to Section 153 is examined, it deals with situations where the Assessing Officer's Quasi-Judicial Role is eclipsed for a certain period and he is re- vested with the Quasi-Judicial power. The Explanation merely excludes the period of eclipse while computing the limitation under Section 153. The Explanation to Section 153 merely serves this purpose. Since the assessing officer performs an executory role under Section 144C after the draft assessment order is issued, Explanation 1 to Section 153 has no relevance in the context of Section 144C. 52. Even otherwise, since when Section 144C operates not withstanding Section 153, and since the timelines under Section 144C are over and above the timelines under Section 153, Explanation 1 to Section 153 has no relevance. 53. It is settled law that while interpreting statutes the Court must avoid an absurd interpretation and must always strive to interpret the provisions to ensure that....
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.... v. Union of India [1992 Supp (1) SCC 594 : 1992 SCC (L&S) 455 : (1992) 19 ATC 881 : AIR 1992 SC 1]. 18. The statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make a consistent enactment of the whole statute." 54. The Constitution Bench in the case of Franklin Templeton Trustee Services Private Limited & Anr. v. Amruta Garg & Ors., (2021) 6 SCC 736, has held as under:- "17. The concept of "absurdity" in the context of interpretation of statutes is construed to include any result which is unworkable, impracticable, illogical, futile or pointless, artificial, or productive of a disproportionate counter-mischief [ See Bennion on Statutory Interpretation, 5th Edn., p. 969.]. Logic referred to herein is not formal or syllogistic logic, but acceptance that enacted law would not set a standard which is palpably unjust, unfair, unreasonable or does not make any sense. [Bennion on Statutory Interpretation, 5th Edn., p. 986.] When an interpretation is beset with practical difficulties, the courts have not shied from turning sides to accept an interpretation that offers a pragmatic ....
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....re necessary, the Court may even depart from the rule that plain words should be interpreted according to their plain meaning. There need be no meek and mute submission to the plainness of the language. To avoid patent injustice, anomaly or absurdity or to avoid invalidation of a law, the court would be justified in departing from the so-called golden rule of construction so as to give effect to the object and purpose of the enactment. Ascertainment of legislative intent is the basic rule of statutory construction." 56. Obviously, the two situations contemplated under the Income Tax Act in terms of assessment under Section 144C of the Income Tax Act are vastly different and will obviously take varying amounts of time depending on whether objections are filed before the Dispute Resolution Panel or not. At the cost of repetition, it must be remembered that this option is only exercised by the Assessee. It is also relevant to mention that if adequate opportunity or time is not granted to an Assessee or if the Dispute Resolution Panel is forced to decide the objections in a very quick manner inhibited by the timelines prescribed under Section 153 of the Income Tax Act, it would amou....