TaxTMI 
TaxTMI 
2026 (1) TMI 1481
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....oom Products P Ltd. reported as 140 taxmann.com 304 (Mad.), submits that the assessment orders in the impugned assessment years are barred by limitation. He submitted that for determining the period of limitation for passing final assessment order the provisions of section 144C of the Act, are to be read with section 153 of the Act. He furnished the date chart tabulating the relevant dates for ascertaining the period of limitation within which the final assessment order was required to be passed and also the dates on which the final assessment orders for respective assessment years were actually passed by the Assessing Officer (AO). The ld. Counsel submits that various Benches of the Tribunal have been taking consistent view in quashing the final assessment order passed beyond the period of limitation as per section 144C(13) r.w.s. 153 of the Act. The said legal ground raised by the assessee following ratio laid down in the case of Roca Bathroom Products P Ltd. (supra). To further buttress his submissions, he placed reliance on following Tribunal orders: - * Aveva Solutions India LLP [TS-681-ITAT-2025 (HYD-TP] (Hyd-Trib.); * Ethan Energy India P. Ltd. [Ts-704-ITAT....
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....oceedings undertaken after draft assessment order under section 144C of the I.T. Act before the Dispute Resolution Panel ("DRP") and the Assessing officer get subsumed within the time limitation prescribed under section 153 of the I.T. Act or whether section 144C operates as a special statutory mechanism with its own distinct timelines for completing the assessment after passing of the draft assessment order. 3. The Revenue respectfully submits that this issue is highly contentious one and has not reached finality as it is pending before the Hon'ble Supreme Court for consideration of Larger Bench. Therefore, final adjudication of limitation issue by this Hon'ble Tribunal at this stage would be premature and will result in avoidable multiplicity of proceedings, which will involve incurrence of significant cost and resources and lead to uncertainty in tax administration. B. Supreme Court / High Court proceedings governing the issue (i) Split verdict by S.C. and Larger Bench reference in case of Shelf Drilling 4. In ACIT (International Taxation) v. Shelf Drilling Ron Tappmeyer Ltd. reported in [2025] 177 taxmann.com 262 (SC), the Hon'ble....
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....ent paragraph. (iii) Bombay High Court decision in case of Paypal Payments Pvt. Ltd. (WPL (L) No.30944 of 2023, order dated 07.08.2024) 8. The Revenue further places reliance on the order dated 07.08.2024 passed by the Hon'ble Bombay High Court in case of Paypal Payments Private Limited v. ACIT (Writ Petition (L) No.30944 of 2023). In the said order, the Hon'ble Bombay High Court, while considering the very issue of interpretation of section 144C(1), 144C(4) and 144C(13) vis-à-vis section 153, recorded that the 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. After hearing both parties in detail and after taking into consideration judgement of Hon'ble Madras High Court in the case of Roca Bathroom, Hon'ble Bombay HC, in its wisdom, has not quashed the assessment order and gave the parties the liberty to apply in the event of rendering a final ....
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.... has been granted by the Hon'ble Supreme Court. Accordingly, Roca Bathroom decision or any other decision on the said issue cannot be treated as determinative or enforced as a basis to conclude the controversy in present appeals, and the issue ought to await authoritative settlement by the Hon'ble Supreme Court. (v) Hon'ble Supreme Court judgment in case of UP Rashtriya Chini Mill Adhikari Parishad, Lucknow Vs. State of U.P. and others, I.A No. 4 of 1995 in SLP(C) no 19963 of 1992 dated 2nd July 1995 (copy enclosed) : 12. In this case, Hon'ble Supreme Court had made following observation when a Division Bench of High Court decided an issue which was pending consideration before Full Bench of High Court. "The matter was pending consideration before a Full Bench of High Court. Needless to say that the appropriate course for the Division Bench would have been to wait the decision of the Full Bench which finally delivered his verdict on 15.11.1994 overruling the Division Bench." The above observation of Hon'ble Supreme Court even if in the nature of obiter dicta would be binding on this Hon'ble Bench as in present appeals too,....
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....s not result in quashing of the impugned order. It only means that the order will not be operative from the date that it is stayed. In the case of Govt of AP vs. N. Rami Reddy & Others 2011 AIR-AP 226, one of the issue for consideration before the Hon'ble High Court was; Whether the interim stay of a High Court order by the Hon'ble Supreme Court of India has the effect of wiping out the ratio of the High Courts order or otherwise nullifying the precedent relied upon by the petitioner? The Hon'ble High Court held that the ratio of judgment represents the reasons assigned in support of the conclusion. An order of interim stay actually stays the operative part of the decision, but does not wipe out its ratio decidendi. 6. Be that as it may, the assessee has not placed reliance on the judgment rendered in the case of Shelf Drilling (supra) but has pleaded its case following the decision rendered in the case of Roca Bathroom Products P Ltd. (supra) in which there is no stay order. Therefore, in our humble opinion there is no impediment in hearing the appeal of the assessee on the issue of "limitation in passing the final assessment order with reference to the provisions of sect....
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....ost-draft finalization under section 144C to operate notwithstanding the general limitation in section 153. 17. A further significant facet is that it is the eligible assessee, which has option to activate or not to activate the DRP route. If objections before DRP are not filed, the statute permits expedited finalization. If objections are filed, the statutory mechanism consumes time by design. Still it remains expeditious way of finalization of dispute as stage of appeal before CIT(A) is done away with if option to file objection before DRP is chosen by the Assessee. Further, demand crystallizes only after DRP direction is given effect to by the Assessing officer. Hence, this is the way objective of expeditious disposal of disputes and ease of doing business is sought to be achieved by section 144C. The assessee cannot, after choosing the statutory route of DRP and availing benefit of expeditious and easier disposal of disputes provided by the code, contend that the assessment becomes void due to the time consumed in the process statutorily created for benefit of assessee. 18. In case, interpretation provided by the assessee is accepted, then it would lead to man....
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....section 153 of the Act. Section 144C is not meant for that as it has already very shortened and stiff timelines prescribed. Section 144C is meant for providing the alternate dispute resolution mechanism to eligible assessee and for doing away with one appellate level i.e. CIT(A) from entire chain of tax litigation. This objective requires to be appreciated for interpretation of section 144C of the Act. 19. Reliance is placed on principle of 'ut res magis valeat quam pereat' which has been upheld by Hon'ble S.C. In multiple cases (such as N B Sanjana Vs Elphinstone Spinning & Weaving Mills, AIR 1971 SC 2039, Cit Vs. Sun Engineering Works, AIR 1993 SC 43, P 57), it has been held by Hon'ble Supreme Court that one important consideration in construing a machinery section is that it should be so construed as to effectuate the liability imposed by the charging section and to make the machinery workable. Further, in case of W TRamsey Ltd v Inland Revenue Commissioners (1981) 1 All ER 865, it has been held that the context, scheme of the relevant Act as a whole and its purpose are as relevant in construing a taxing Act as in construing any other Act. (Source : Prin....
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....se of Roca Bathroom is distinguishable on facts and hence, no applicable to present appeals. Hence, the assessee's contention is required to be rejected on merit on this count." 6. We have considered the submissions made by rival sides on merits of the issue before us. The crux of submissions on merits by the department is, that limitation for passing the final assessment order under section 144C(13) of the Act is to be seen only with reference to the timeline specified u/s. 144C of the Act only without referring to provisions of section 153 of the Act. We find that identical submissions were made by the Department before the Hon'ble Madras High Court in the case of Roca Bathroom Products P. Ltd. (supra). The Hon'ble High Court rejected the arguments of the Department and held that provisions of section 144C and 153 of the Act are mutually inclusive as both contain provisions relating to section 92CA of the Act and are inter-dependent and are overlapping. Hence, the period of limitation for passing the final assessment order u/s. 144C(13) of the Act has to be determined with reference to section 144C r.w.s 153 of the Act. For the sake of completeness, the relevant excerpts f....
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....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 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 final order. A careful perusal of the timeline would indicate that the time limit is for the final assessment and not for the draft order. The anomaly in the argument i....
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....ns contained in the Act. The Hon'ble Single Judge of the Madras High Court in the case of Roca Bathroom Products (P.) Ltd. vs. Dispute Resolution Panel-2, 127 taxman.com 332 (Madras) while dealing with aforesaid arguments made on behalf of the Department in a lucid manner explained the reason for reading section 144C & 153 of the Act together for determining limitation for passing the final assessment order, and held:- "15. No doubt, section 144C is a self contained code of assessment and time limits are inbuilt each stage of the procedure contemplated. Section 144C envisions a special assessment, one which includes the determination of Arms Length Price (ALP) of international transactions engaged in by the assessee. The DRP was constituted bearing in mind the necessity for an expert body to look into intricate matters concerning valuation and transfer pricing and it is for this reason that specific timelines have been drawn within the framework of section 144C to ensure prompt and expeditious finalisation of this special assessment. 16. The purpose is to fast-track a specific type of assessment. This does not however lead to the conclusion that overall time limit....
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.... section 144C (13) and three months under section 153 (2A) is available, within which period no orders have been passed in the present cases. The reference made by the learned senior counsels on the judgments in Nokia India (P.) Ltd. (supra) and Vedanta Ltd. (Supra) is well founded. The timeline given under the Act is to be strictly followed." [Emphasized by us] Thus, the Hon'ble High Court negatived the arguments made by the Department on 'non obstante' clause used in section 144C of the Act. The Hon'ble High Court thus, concluded:- "27. For the reasons set out herein 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 limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders. (b) Even in case of remand, the TPO or the DRP have to follow the time limits as provided under the Act. The entire proceedings including the hearing and directions have to be issued by the DRP with....