2023 (5) TMI 1405 - AT - Income Tax

Assessment Order as barred by limitation u/s 144C(13) - HELD THAT - The undisputed facts are that the DRP had passed order on 31.012.2021. The copy of the DRP s directions was received by the AO on 10.01.2022. Therefore, the time barring date for passing the Final Assessment Order was admittedly on 28.02.2022 (this fact is also admitted by the AO). However, the digital signature in the Final Assessment Order has been affixed only on 01.03.2022, which is beyond the limitation date. As in the case of Pfizer Healthcare India Pvt. Ltd 2021 (2) TMI 1152 - MADRAS HIGH COURT while deciding the issue of validity and issue of limitation of TPO s order has held coming to the question of how 60 day period is to be computed, the critical question would be whether the period of 60 days would be computed including the 31 December or excluding it. Section 153 states that no order of assessment shall be made at any time after the expiry of 21 months from the end of assessment year in which the income was first assessable. Applying the above judgment to the facts of the instant case, the impugned order had got barred by limitation by 11.59.59 on 28.02.2022. The AO has digitally passed the impugned order on 1.03.2022 at 2.00 am, which is beyond the limitation time and hence the impugned order is bad in law and is liable to be quashed. Whether curable defect u/s 292BB? - An order passed contrary to the provisions of Section 144C of the Act and failure to follow the binding procedure would render the order without jurisdiction and void-ab-initio. Passing of the order beyond the limitation date is a fundamental error and is not a curable defect under Section 292B of the Act.

Summary

Issues Involved:

1. Whether the Final Assessment Order is barred by limitation under Section 144C(13) of the Income Tax Act.
2. Applicability of procedural compliance under Section 292BB of the Income Tax Act.

Detailed Analysis:

1. Barred by Limitation under Section 144C(13):

The primary legal issue raised by the assessee was that the Final Assessment Order was barred by limitation as per Section 144C(13) of the Income Tax Act. The assessee argued that the order was digitally signed on 01.03.2022, which is beyond the prescribed limitation date of 28.02.2022. The Department contended that the order was approved in the system on 28.02.2022, and the subsequent digital signing on 01.03.2022 was due to technical reasons, which should not affect the limitation period.

The Tribunal examined the timeline of events and noted that the DRP's directions were received by the AO on 10.01.2022, making the deadline for passing the Final Assessment Order 28.02.2022. The Tribunal relied on the precedent set by the Hon'ble Madras High Court in Pfizer Healthcare India Pvt. Ltd. v. JCIT, which held that an order must be completed before 11:59:59 PM on the last day of the limitation period. Applying this principle, the Tribunal concluded that the order was barred by limitation as it was digitally signed on 01.03.2022, after the expiry of the limitation period.

2. Applicability of Section 292BB:

The Department argued that the procedural issue raised by the assessee is covered under Section 292BB, which precludes the assessee from objecting to any procedural irregularity if they have cooperated throughout the proceedings. However, the Tribunal found this argument untenable. It emphasized that passing an order beyond the limitation date is a fundamental error, not a mere procedural lapse that can be cured under Section 292BB or Section 292B. The Tribunal cited the Delhi High Court's judgment in PCIT v. Citi Financial Consumer Finance India, which held that Section 292B cannot save an order not passed in accordance with the Act.

The Tribunal further referred to the Hon'ble Mumbai High Court's ruling in Ramani Suchit Malushte v. UoI, which stated that an order without a digital signature has no legal effect, and the time for filing an appeal begins only when the order is signed. This reinforced the Tribunal's view that the digital signing date is crucial for determining the validity of the order concerning limitation.

Conclusion:

The Tribunal allowed the assessee's appeal on the legal issue, holding that the Final Assessment Order was indeed barred by limitation. Consequently, the grounds on merits were not adjudicated, and the appeal was partly allowed. The judgment underscores the significance of adhering to statutory timelines and the necessity of digital signatures for the validity of orders under the faceless assessment scheme.