2023 (7) TMI 974 - AT - Income Tax

Validity of assessment order passes pursuant to the DRP directions u/s 144C - Period of limitation - HELD THAT - It is clear from the copy of the order sheet that the A.O. received the documents on 30.12.2021. As per section 144C(13) of the Act, the order should have been passed on or before 31.01.2022, whereas the A.O. has passed final assessment order on 02.02.2022, which is beyond the time limit. Hence, the order passed by the A.O. is barred by limitation as per section 144C(13). Therefore, we find substance on the submission of the learned AR and the final assessment order passed is nonest in the eyes of law. Decided in favour of assessee.

Summary

Issues:
1. Timeliness of final assessment order under section 144C(13) of the Income Tax Act.

Analysis:
The appeal was filed against the final assessment order passed by the Assessing Officer (AO) under section 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act for the assessment year 2017-2018. The primary issue raised by the assessee was the timeliness of the final assessment order, specifically challenging whether the order was barred by limitation and should be quashed. The assessee contended that the AO should have passed the order within one month from the date of receipt of directions from the Dispute Resolution Panel (DRP) under section 144C(13) of the Act.

The facts of the case revealed that the AO received the DRP's directions on 30.12.2021, and subsequently passed the final assessment order on 02.02.2022. The relevant legal provision, section 144C(13) of the Act, mandates that the final assessment order should be passed within one month from the end of the month in which the directions are received. The Tribunal noted that the order should have been passed on or before 31.01.2022, but since it was issued on 02.02.2022, it was beyond the prescribed time limit. Consequently, the Tribunal held that the order passed by the AO was barred by limitation as per section 144C(13), rendering it nonest in the eyes of the law. Therefore, the Tribunal allowed ground No. 1 raised by the assessee, concerning the timeliness of the final assessment order.

Given the decision on the primary issue, the Tribunal did not delve into the other grounds raised by the assessee on merits, leaving them unadjudicated. Ultimately, the appeal filed by the assessee was partly allowed based on the finding that the final assessment order was not passed within the stipulated time frame as required by the Income Tax Act. The order was pronounced on the 05th day of December, 2022, by the Tribunal.