2021 (3) TMI 1419 - AT - Income Tax

Assessment u/s 144C - time limit prescribed for competing of assessment proceedings u/s 153 - no draft assessment order could have been issued in this case - HELD THAT - There is no dispute that if there would not have draft assessment order, the assessment would have been time barred as on 31.12.2016, the present assessment order dated 16.10.2017. Once, we hold that no draft assessment order would have been issued in this case as the provisions of Section 144C(1) of the Act could not have been invoked in this case. The time limit for completion assessment was available only to 31.12.2016, hence, we are of the view that the issuance of draft assessment order cannot end up increasing the time limit for completion of the assessment under section 143(3) of the Act. This issue has been adjudicated by the co-ordinate bench of this Tribunal in the case of IPF India Property Cyprus (No.1) Ltd. 2020 (2) TMI 1500 - ITAT MUMBAI We noted that in the present case neither the learned Sr. DR nor the assessee has disputed the fact and there is proposed variation in the income or losses reported by the assessee to the Income Tax Authorities. The matter before the Assessing Officer was only with respect to the rate of tax chargeable by the assessee and actually there is no variation in income or losses - we allow this additional ground of the assessee and hold that the assessment framed by Assessing Officer is time barred and hence quashed.

Summary

Issues:
Time barring of assessment under section 153 of the Income Tax Act for assessment years 2013-14 and 2014-15.

Analysis:
1. The appeals arose from orders of the Dispute Resolution Panel-I, Mumbai, regarding assessment years 2013-14 and 2014-15. The Assessing Officer passed draft assessment orders for both years, denying beneficial provisions of the India-Cyprus tax treaty to the assessee. The issue primarily focused on the time barring of assessment under section 153 of the Act.

2. The assessee contended that the Assessing Officer erred in not passing the assessment order within the prescribed time limit. The additional ground raised was related to the time barring of assessment, specifically under ground No. 8. The Counsel for the assessee argued that the final assessment order was time-barred and should be quashed.

3. The Revenue argued that the provisions of Section 144C(1) of the Act did not apply as there was no proposed variation to the returned income. The Counsel for the assessee highlighted that the matter before the Assessing Officer pertained only to the tax rate on interest income, with no variation in income or losses reported by the assessee.

4. The Tribunal noted that if no draft assessment order had been issued, the assessment would have been time-barred. Referring to a previous decision, the Tribunal upheld the assessee's plea, stating that the mere issuance of a draft assessment order could not extend the time limit for completing the assessment under section 143(3) of the Act.

5. As there was no proposed variation in income or losses reported by the assessee, the Tribunal allowed the additional ground raised by the assessee, holding that the assessment was time-barred and subsequently quashed. The Tribunal did not adjudicate on other additional grounds or grounds raised on merits.

6. The Tribunal applied the same reasoning to AY 2014-15, finding the facts identical and the issue the same. Consequently, the appeal for that year was also allowed.

In conclusion, the appeals of the assessee were allowed based on the time barring of assessment under section 153 of the Income Tax Act for the assessment years 2013-14 and 2014-15. The Tribunal held that the assessment was time-barred and quashed the final assessment order.