Effect of Section 92CA(1) Reference on Assessment Limitation: Application of Section 153(4) in Transfer Pricing Assessments

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....l assessment orders were barred by limitation under Section 153 read with Section 153(4) of the Income-tax Act, 1961, notwithstanding the timeline contemplated under Section 144C(13). The tribunal admitted the additional grounds as pure questions of law arising from facts already on record, and proceeded to decide the limitation issue. The tribunal held that the outer limitation under Section 153(1) read with Section 153(4) governs, and that the impugned final assessment orders were time-barred. The appeals were allowed on this legal issue, with other merits kept open subject to the outcome of pending proceedings on the legal issue before the Supreme Court (as noted by the tribunal). Material Facts The assessee was subjected to the eligib....

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....ting for the Dispute Resolution Panel route. Issue Involved (i) Whether additional grounds raising a legal challenge to validity of the final assessment orders as time-barred could be admitted at the tribunal stage under Section 254 of the Income-tax Act, 1961 read with Rule 11 of the Income Tax Appellate Tribunal Rules, 1963. (ii) Whether the limitation for passing the final assessment order in an eligible assessee case governed by Section 144C is to be computed with reference to the outer time limit under Section 153(1) read with Section 153(4) (where a reference under Section 92CA(1) exists), or whether compliance with the time requirement under Section 144C(13) suffices by virtue of the non-obstante clause. (iii) Whether the Supreme....

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....within the outer limitation computed under Section 153(1) read with Section 153(4), and that Section 144C(13) does not enlarge that outer limitation. The non-obstante clause in Section 144C(13) was treated as operating for a limited purpose requiring the Assessing Officer to pass the final order within the specified short window after receipt of Dispute Resolution Panel directionsrather than displacing the overall time bar under Section 153. Applying this construction, the tribunal concluded that the impugned final assessment orders were passed beyond the permissible outer time limit, and were therefore barred by limitation and liable to be quashed. The appeals were allowed on this legal ground. The tribunal recorded that, since the legal ....

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....ections (Section 144C(13)). On this approach, Section 144C(13) is not a source of additional time; it is a restraint ensuring expedited completion within the overall statutory framework. 4. Harmonious construction despite non-obstante language. While Section 144C(13) begins with a non-obstante clause, the tribunals reasoning proceeds on a harmonious construction: provisions relating to eligible assessee assessment (Section 144C) and time limit for completion of assessment (Section 153) are to be read in an integrated manner, so that the special procedure does not render the general time bar ineffective. The tribunal rejected the proposition that choosing the Dispute Resolution Panel route creates a separate and independent limitation regim....