2020 (2) TMI 1277 - AT - Income Tax

Validity of assessment u/s. 144C(13) - Whether objections filed by the assessee were time barred and hence no cognizance could have been taken of them? - HELD THAT - If the objections are invalid as time barred having not been filed within the time prescribed under sub-section (2) of section 144C, the AO will have to act in terms of Section 144C(3)(b) and complete the assessment within the time prescribed u/s 144C(4)(b) of the Act, namely, within one month from the end of the month in which the period of filing of objections under sub-section (2) expires. Adverting to the facts of the instant case, it is found that, the period of 30 days for filing objections within sub-section (2) of section 144C expired on 23.01.2019. Going by the mandate of sub-section (3) of section 144C(3)/144C(4), the AO was supposed to complete the assessment on the basis of the draft order by February, 2019. As against this, the AO actually completed the assessment u/s. 144C(13) on 24.10.2019. Such a completion of assessment not only under the wrong provision but also beyond the limitation period is ultra vires and hence cannot stand. We declare the assessment order to be time barred and ex consequenti null and void, with the effect that the returned income will automatically get accepted as finally assessed income. Appeal allowed.

Summary

Issues Involved:
1. Delay in filing objections before the Dispute Resolution Panel (DRP).
2. DRP's power to condone delay.
3. Validity of the assessment order passed by the Assessing Officer (AO).

Issue-wise Detailed Analysis:

1. Delay in filing objections before the Dispute Resolution Panel (DRP):
The assessee, a non-resident company, filed objections to the draft assessment order one day late. The draft order was received on 24.12.2018, and the objections were filed on 24.01.2019, while the deadline was 23.01.2019. The DRP dismissed the objections as time-barred, stating it had no power to condone the delay.

2. DRP's power to condone delay:
Section 144C(2) mandates that objections to the draft order must be filed within 30 days. The DRP, relying on the judgment of the Hon’ble Bombay High Court in CIT Vs. Grasim Industries Ltd. (2009) 319 ITR 154, held it had no power to condone the delay. The Tribunal noted that the Income-tax Act, 1961, provides specific provisions for condonation of delay in certain sections (e.g., sections 249(2), 253(3), 260A(2A), and 264(3)), but no such provision exists in section 144C for the DRP. Thus, the DRP rightly held itself incompetent to condone the delay.

3. Validity of the assessment order passed by the Assessing Officer (AO):
Since the objections were time-barred, the AO should have completed the assessment based on the draft order within one month from the end of the month in which the period for filing objections expired, i.e., by February 2019. However, the AO completed the assessment on 24.10.2019, which was beyond the prescribed period. The Tribunal declared this assessment order ultra vires and null and void, resulting in the acceptance of the returned income as the final assessed income.

Conclusion:
The Tribunal allowed the appeal, holding that the DRP correctly dismissed the objections as time-barred due to the lack of power to condone the delay. Consequently, the assessment order passed by the AO was declared time-barred and invalid, resulting in the acceptance of the returned income.