TaxTMI 
TaxTMI 
2026 (1) TMI 1123
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.... on merits at a later stage if required, addressed on Ground No. 3 of the Assessee, submitted that the impugned Final Assessment Order dated 26/07/2024 passed u/s 143 (3) r.w. Section 144C(13) r.w. Section 144B of the Act is barred by limitation in terms of Section 153r.w.s Section 144C of the Act and is liable to be quashed. The Ld. Counsel has relied on the Judgment of Hon'ble High Court of Madras in the case of Commissioner of Income Tax Vs. Roca Bathroom Products (P) Ltd. (2022) 445 ITR 537 (Madras) and submitted that, the Hon'ble High Court of Madras held that the time limit prescribed u/s 153 of the Act has to be adhered to and that both Section 144C and 153 of the Act are mutually inclusive and interdependent. Further submitted that, presence of notwithstanding clause in Section 144C(13) of the Act would not exclude the operation of Section 153 of the Act. Hence, the Assessing Officer is required to complete the assessment proceedings within the time prescribed under Section 153 of the Act. 3. The Ld. Senior Counsel for the Assessee also relied on the several orders of the Hyderabad Bench of the Tribunal, wherein the Co-ordinate Bench of the Tribunal decided the s....
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....er Section 153 of the Act r.w. Section 144 of the Act. 5. Further, in so far as initial Interim Order granted by Hon'ble Supreme Court dated 22/09/2023 and the dissenting Judgment by the Hon'ble Supreme Court in the case of ACIT Vs. Shelf Drilling Ron Tappmeyer Ltd. in Special Leave to Appeal (C) Nos. 20569- 20572/2023 is concerned, the Ld. Senior Counsel contended that, it is admitted fact that as per the Interim Order of the Hon'ble Supreme Court dated 22/09/2023, the Judgment passed by Hon'ble Court of Judicature at Bombay dated 04/08/2023 (in the case of Shelf Drilling Ron Tappmeyer Ltd. Vs. Assistant Commissioner of Income Tax (International Taxation) Circle-4 (2)(1) Mumbai, reported in 2023 (8) TMI 460-Bombay High Court) cannot be cited as a precedent in any other subsequent matters until further order. The Ld. Counsel further submitted that the Hon'ble Supreme Court has not stayed the Judgment of the Hon'ble High Court of Mumbai and further contended that in the very same Interim Order dated 22/09/2023, the Hon'ble Supreme Court extended the benefit of Judgment of the Hon'ble High Court (Shelf Drilling Ron Tappmeyer Ltd. 2023 (8) TMI 460-Bombay....
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....supra). Further submitted that the issue of limitation arising from the interplay between Section 144C and Section 153 of the Act is presently unsettled and pending adjudication before the Hon'ble Supreme Court and therefore, deciding the very same issue by this Tribunal at this stage would be premature, thus submitted that the Tribunal cannot decide the issue of limitation in terms of the ratio laid down by the Hon'ble High Court of Madras in the case of Roca Bathroom Products (P) Ltd. (supra). Accordingly, the Ld. Department's Representative sought for deferral of adjudication of the present Appeal and also the issue of limitation. The Ld. Department's Representative has also filed written submission which is reproduced as under:- "1. At the outset, the Revenue submits that the present written submissions are confined only to the preliminary issue of limitation arising from the interplay between section 144C and section 153 of the Income-tax Act, 1961. The Revenue respectfully reserves the right to make comprehensive submissions on all other issues on merits, as and when the same are taken up for hearing. A. Introductory submission 2. Th....
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....Supreme Court had, on 22.09.2023, directed that the Shelf Drilling judgment shall not be cited as precedent and clarified that the operative portion applies only inter partes. The Hon'ble High Court further noted that there was "quite a debate" on what one is permitted to do with the Shelf Drilling decision in view of the Supreme Court restraint. 9. The said order reinforces the Revenue submission that, pending Supreme Court adjudication, the Shelf Drilling Bombay High Court judgment does not operate as precedent for other matters and cannot be relied upon before this Hon'ble Tribunal. 10. Hon'ble Bombay HC, in its wisdom, has not quashed the assessment and gave the parties the liberty to apply in the event of rendering a final order by Hon'ble Supreme Court (iii) Grant of leave in Roca Bathroom and pendency before Hon'ble SC - legal implications 11. The Hon'ble Supreme Court has granted leave in CIT v. Roca Bathroom Products (P.) Ltd., reported in [2023] 147 taxmann.com 224 (SC) (Annexure-C). The grant of leave signifies that the issue is admitted for final adjudication, and the correctness of the Madras High Court judgme....
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....thereafter within a statutorily defined time. The Act itself allocates specific time windows. indicating that Parliament contemplated a multi-stage mechanism operating beyond the draft assessment order. 15. A harmonious construction suggests that section 153 governs the stage up to passing of the draft order in time, while the special regime of section 144C governs completion after the draft stage. Otherwise, the mandatory statutory time windows within section 144C would be rendered redundant or illusory. 16. Moreover, the non obstante language in section 144C dealing with passing of the final order makes it evident that Parliament intended post-draft finalisation under section 144C to operate notwithstanding the general limitation in section 153. 17. A further significant facet is that the eligible assessee activates the DRP route. If objections are not filed, the statute permits expedited finalisation. If objections are filed, the statutory mechanism consumes time by design. The assessee cannot, after choosing the statutory route, contend that the assessment becomes void due to the time consumed in the process statutorily created for his benefit. ....
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....rnish a safe precedent for the disposal of the present appeals before this Hon'ble Tribunal. F. No prejudice to assessee; demand protection already available 24. Without prejudice, the Revenue respectfully submits that deferral of adjudication on the limitation issue causes no prejudice to the assessee. It is a matter of record in several cases where Roca Bathroom has been relied upon by assessee's that either (1) stay of demand has been granted by the Tribunal, or (ii) the Assessing Officers are not pressing for coercive recovery during pendency. Therefore, the assessee is adequately protected against hardship, and deferral would serve the larger interest of uniformity and certainty. G. Judicial propriety and institutional restraint 25. Where a controversy is pending before a Larger Bench of the Hon'ble Supreme Court, judicial discipline warrants restraint by subordinate forums. 26. In the present matter, this is fortified by: (i) a Larger Bench reference, (ii) grant of leave in Roca Bathroom; and (iii) an express Supreme Court restraint on citing the Bombay High Court judgment. 27. In such ex....
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....enue reiterates its reservation to address all other issues on merits separately at the appropriate stage. Filed on behalf of the Revenue." Thus, the Ld. Department's Representative sought for deferring the adjudication on the issue of limitation. 8. We have heard both the parties and perused the material available on record. The preliminary contention of the Revenue is that, the issue regarding the limitation arising from the interplay between Section 144C and 153 of the Act is pending consideration before the Hon'ble Supreme Court and the said issue has already been referred to Larger Bench of the Hon'ble Supreme Court in the case of Shelf Drilling Ron Tappmeyer Ltd. Further, there is an Interim Order passed by the Hon'ble Supreme Court dated 22/09/2023against citing the Judgment (of Hon'ble High Court of Judicature at Bombay) of Shelf Drilling Ron Tappmeyer Ltd., therefore deferral of adjudication on the limitation issue is the most appropriate course by the Tribunal instead of deciding the said issue. 9. It is the matter of record that Hon'ble Supreme Court vide order dated 22/09/2023, passed an interim order in Petitions for Special Le....
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....llegium may, decide and inform the Principal Commissioner or Commissioner not to file any appeal, at this stage, to the Appellate Tribunal under sub-section (2) of section 253 or to the jurisdictional High Court under sub-section (2) of section 260A in the relevant case against the order of 29[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) or the Appellate Tribunal, as the case may be. (2) The Principal Commissioner or the Commissioner shall, on receipt of a communication from the collegium under subsection (1), notwithstanding anything contained in subsection (3) of section 253 or clause (a) of sub-section (2) of section 260A, direct the Assessing Officer to make an application to the Appellate Tribunal or the jurisdictional High Court, as the case may be, in such form as may be prescribed within a period of one hundred and twenty days from the date of receipt of the order of 29[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) or of the Appellate Tribunal, as the case may be, stating that an appeal on the question of law arising in the relevant case may be filed when the decision on such question of law becomes final in the other case. ....
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....f the Judgment passed by the Hon'ble High Court in following manners:- "In the instant case, the proceedings before the Board under ss. 15 and 16 of the Act had been terminated by order of the Board dated April 26, 1990 whereby the Board, upon consideration of the facts and material before it, found that the appellant-company had become economically and commercially non-viable due to its huge accumulated losses and liabilities and should be wound up. The appeal filed by the appellant-company under s. 25 of the Act against said order dated January 7, 1991. As a result of these orders, no proceedings under the Act was pending either before the Board or before the Appellate Authority on February 21, 1991 when the Delhi High Court passed the interim order staying the operation of the Appellate Authority dated January 7, 1991. The said stay order of the High Court cannot have the effect of reviving the proceedings which had been disposed of by the Appellate Authority by its order dated January 7, 1991. While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of ope....
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....-company. The said appeal, therefore, fails and is liable to be dismissed." 12. Further the Hon'ble High Court of Bombay in the case of CIT v. Smt. Godavari Devi Saraf (1978) 113 ITR 589, observed that Income Tax Act is an all India statute and until a contrary decision given by any other competent High Court, the ratio laid down by the Hon'ble High Court is binding on the Tribunal. The relevant portion of the Judgment of Hon'ble High Court of Bombay is as under: - 9 ......It should not be overlooked that the Income-tax Act is an All- India statute and if an Income-tax Tribunal in Madras, in view of the decision of the Madras High Court, has to proceed on the footing that section 1404(3) was non-existent, the order of penalty there under cannot be imposed by the authority under the Act. Until a contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land..... Emphasis Supplied 13. Further the Co-ordinate Bench of the Tribunal of Mumbai Bench in the case of Kaybee Pvt. Ltd....
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....ent of Hon'ble High Court of Madras in the case of Roca Bathroom Products (P) Ltd. (supra). It was informed to the Bench that none of the orders of the Tribunal Hyderabad Bench are stayed by the Jurisdictional High Court. 16. It is also brought to the notice of the Bench during the hearing regarding the orders passed by Co-ordinate Bench of the Tribunal, Hyderabad Bench (mentioned in paragraph 3 above), wherein the Coordinate Bench of the Tribunal followed the ratio laid down by the Hon'ble High Court of Madras in the case of Roca Bathroom Products (P) Ltd. (supra) and also protected the rights of the parties by granting liberty to the parties to get the Appeal revived if the decision of Larger Bench of Hon'ble Supreme Court on the issue necessitates modification of the order and kept open of all other issues on merits. Therefore, in our considered opinion, there cannot be any prejudice or legitimate grievance to the Revenue in deciding the present Appeal. 17. The Co-ordinate Bench of the Tribunal of Hyderabad Bench in the case of Interwrap Corp Private Ltd (Successor of Owens Corning Industries (India) Pvt. Ltd. (Successor of Owens Corning Industries (India) Priv....
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....rly beyond the limitation prescribed under Section 153(4) of the Income-tax Act, 1961, and thus, liable to be quashed, as held by the Hon'ble Madras High Court and Hon'ble Bombay High Court in the cases of CIT Vs. Roca Bathroom Products Private Limited (supra) and Shelf Drilling Ron Tappmeyer Limited Vs. ACIT, International Taxation (supra) respectively. Therefore, by respectfully following the decisions of the Hon'ble Madras High Court and the Hon'ble Bombay High Court in the above cases, we hold that the final assessment order passed by the A.O. under Section 143(3) r.w.s. 144C(13) r.w.s. 144B dated 28.07.2022 is barred by limitation and accordingly quashed. 19. We further noted that, although the decisions of the Hon'ble Madras High Court in the case of CIT Vs. Roca Bathroom Products Private Limited (supra) and the Hon'ble Bombay High Court in the case of Shelf Drilling Ron Tappmeyer Limited Vs. ACIT, International Taxation (supra) are in favour of the assessee, and we dispose of the appeal filed by the assessee by following the above two decisions and quashed the assessment order, but the fact remains that the revenue has challenged the decision....
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....of the Act. 27.09.2023 3 As per Section 153(1) of the Act, the limitation period for completion of assessment for an assessment year commencing on or after 01.04.2020 is 18 months from the end of the relevant assessment year i.e., 30.09.2022. Since, reference was made to the Transfer Pricing Officer under Section 92CA of the Act: consequently, the limitation to pass the Final Assessment Order was extended by 12 months under Section 153(4) of the Act. 30.09.2023 4 Objections filed by the Appellant before the Dispute Resolution Panel in Form 35A within 30 days of receipt of the draft order. in compliance with Section 144C(2) of the Act. 27.10.2023 5 Directions of the Dispute Resolution Panel were passed under Section 144C(5) of the Act. 28.06.2024 6 Final Assessment Order passed under Section 143(3) r.w.s144C(13) of the Act. 26.07.2024 21. The Hon'ble High Court of Madras in the case of Roca Bathroom Products Pvt. Ltd (supra) held that, time limit prescribed u/s 153 of the Act has to be adhered to and that both Section 144C and 153 of the Act are mutually inclusive and interdependent. The presence of notwithstanding clause in Section 1....
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....in a reasonable time. 20. As rightly contended by the learned senior counsels and affirmed by the Learned Judge, the DRP proceedings is a continuation of assessment proceedings. To put it further, it is a part of assessment proceedings, once the objections are filed and under section 144C (12) a period of 9 months is prescribed, within which, directions are to be issued by the DRP, failing which any directions are to be treated as otiose. As seen from the timeline discussed in the earlier paragraphs, the original assessment proceedings are to be completed within 21 months and the additional time of 12 months is granted when proceedings before TPO is pending. The TPO has to pass orders before 60 days prior 19 to the last date. Then 30 days time is given to the assessee to file their objection before the DRP and the DRP is given 9 months time and thereafter, within one month from the end of the month of receipt of directions from DRP, the final order is to be passed. This court is not in consonance with the contention of the learned senior panel counsel for the appellants/ revenue that the time period of 33 months, provided initially is for the draft order and not for the fi....
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....tion 153 or Section 153 B is for a limited purpose to ensure that dehors larger time is available, an order based on the directions of the DRP has to be passed within 30 days from the end of the month of receipt of such directions. The section and the sub-section have to be read as a whole with connected provisions to decipher the meaning and intentions. At this juncture it would be useful to refer to the following decisions: (i) Sultana Begum v. Prem Chand Jain, (1997) 1 SCC 373 at page 381: 21 "11. The statute has to be read as a whole to find out the real intention of the legislature. 12. In Canada Sugar Refining Co. v. R. [1898 AC 735 : 67 LJPC 126], Lord Davy observed: "Every clause of a statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject-matter." .......... 14. This rule of construction which is also spoken of as "ex visceribusactus" helps in avoiding any inconsistency either within a section or between two different sections or provisions of the same statute. 15. ....
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....It is the duty of the court to avoid a head-on clash between two sections of the same Act. (See Sultana Begum v. Prem Chand Jain [(1997) 1 SCC 373 : AIR 1997 SC 1006])." (iii) Franklin Templeton Trustee Services (P) Ltd. v. AmrutaGarg, (2021) 6 SCC 736 : 2021 SCC OnLine SC 88 at page 752: " 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 [ SeeBennion 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 solution that will serve the needs of society [Id, p. 971, quoting Griffiths, L.J.]. Therefore, when there is choice between two interpretations, we would avoid a "construction"....
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....z., W.A.No. 1517/2021 etc. batch, the findings rendered above are equally applicable. In these cases, for the assessment year 2009-10, the order of remand to the Assessing officer was passed on 18.12.2015 and insofar as the assessment year 2010-11 is concerned for one issue, it was passed on 18.12.2015 and for other two issues, it was passed on 23.09.2016 after the amendment, by which time, the time limit was brought down to 9 months. As such, fresh orders ought to have been passed before 31.03.2017 for the assessment year 2009- 10 and for one issue relating to the assessment year 2010-11 reckoning the 12 months from the financial year 2015-16 and on or before 31.12.2017 reckoning 9 months from the financial year 2016- 17. Therefore, the Assessing officer ought to have passed a draft assessment order immediately and asked the assessee to file their objections with the DRP. For the mistake and the lapse of the Assessing officer, the vested right of the Assessee cannot be taken away. 26. We are not oblivious of the fact that any finding on the aspect of reasonableness in time in passing orders when no time is provided would be superfluous in view of our decision in earlier p....
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....ery of the duty as contemplated by Rule 12. the officer may act arbitrarily in recovering the amount after lapse of long period of time. We find no substance in the submission While it is true that Rule 12 does not but that by itself does not render the rule unreasonable or violative of Article 14 of the Constitution prescribed any period within which recovery of any duty as contemplated by the rule is to be made. in the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period What would be reasonable period, would depend upon the facts of each case Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the assessee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice of demand for recovery was made within reasonable period. No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case (iii) (State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd., [(2....
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....se" 23. The question at would be the reasonable period did not fall for consideration there The binding precedent of this Court, some of which had been referred to us here to before had not The counsel appearing for the parties were remissin bringing the same to the notice of the Court Furthermore from a perusal of the impugned notice dated 4-9-2006 is Apparent that the resvisional authority did not assign any reason as to why such a notice was being issued considered after a period of 53% years" Generally no hard and fast rule can be laid down to indicate what a reasonable time is. It though depends upon the facts of the each case drawing a clue from Article 113 of the Limitation Act the residual entry, it would be reasonable to conclude that in such cases, action is to be concluded within 3 years Needless to say if the statute prescribes shorter period, the doctrine of reasonable time will not be applicable and the timeline under the statute is to be strictly followed 27. For the reasons set out before, we conclude as under:- (a) The provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually Inclusive. The period of....