2021 (12) TMI 458 - AT - Income Tax

Validity of assessment u/s 144C - Period of limitation - whether the impugned assessment order is barred by limitation prescribed under the statutory provisions? - HELD THAT - As per the mandate of sub-section (4)(b) of section 144C, the Assessing Officer was duty-bound to complete the assessment based on the draft assessment order on expiry of thirty days from the date of receipt of draft assessment order, since, by that time the assessee had not filed the objections before learned DRP. Whereas, it is a fact on record that the AO passed the final assessment order on 12.01.2021, i.e., much beyond the period of limitation prescribed under section 144C(4)(b) of the Act. Contention of DR that before the Assessing Officer could have passed the final assessment order, the assessee filed objections before learned DRP, i.e., on 27.01.2020 and the Assessing Officer had no other option but to wait for the directions of the DRP, in our view, is unacceptable and has to be rejected at the threshold. Combined reading of the provisions contained under Section 144C(1), (2), (3) and (4) makes it abundantly clear that there is no compulsion on the AO to wait beyond the period of limitation prescribed under the statute for completing the final assessment, anticipating that the assessee would be filing an objection before the DRP. The period of limitation prescribed under sub-sections (2) and (4) is sacrosanct and has to be strictly followed, both, by the assessee as well as the Revenue. Therefore, the final assessment order having been passed beyond the period of limitation prescribed under Section 144C(4)(b) of the Act, has to be declared invalid. Accordingly, we do so. The decisions relied upon by the learned counsel for the assessee are clearly in support of the view expressed hereinabove. Resultantly, the impugned assessment order dated 12.01.2021 is quashed.

Summary

Issues:
- Whether the impugned assessment order is barred by limitation prescribed under statutory provisions?

Analysis:
The appeal pertains to the final assessment order dated 12.01.2021 for the assessment year 2012-13. The main issue is whether the assessment order is barred by limitation as per statutory provisions. The assessee, a non-resident company incorporated in Singapore, had its assessment reopened under Section 147 of the Income-tax Act, 1961. The Assessing Officer framed a draft assessment order on 18.12.2019, determining the total income of the assessee at ?45,17,870. The assessee raised objections before the Dispute Resolution Panel (DRP) on 27.01.2020, which were dismissed as being beyond the period of limitation prescribed under Section 144C(2) of the Act.

The counsel for the assessee argued that the final assessment order passed on 12.01.2021 is beyond the limitation period prescribed under Section 144C(4) of the Act, rendering it invalid. The Departmental Representative contended that since the assessee filed objections before the DRP on 27.01.2020, the final assessment order passed on 12.01.2021 is within the time limit. However, the Tribunal analyzed the relevant provisions of Section 144C, emphasizing the importance of timelines and limitations in the assessment process.

The Tribunal noted that the assessee failed to file objections within thirty days of receiving the draft assessment order, as required by Section 144C(2)(b) of the Act. Consequently, the Assessing Officer was duty-bound to complete the assessment within one month from the end of the month in which the period for filing objections expired. As the final assessment order was passed on 12.01.2021, well beyond the prescribed period of limitation, it was deemed invalid.

The Tribunal rejected the contention that the Assessing Officer had to wait for DRP directions before passing the final assessment order, emphasizing the strict adherence to statutory timelines. The decisions cited by the assessee supported the view that the final assessment order, passed beyond the limitation period, should be quashed. Therefore, the impugned assessment order dated 12.01.2021 was declared invalid, and the appeal was allowed.