2024 (6) TMI 289 - AT - Income Tax

Validity of assessment proceedings u/s 144 r.w.s. 144C exceeding period of limitation - scope of time limit prescribed u/s 153(2) - as submitted that no order of assessment, reassessment or re-computation shall be made u/s 147 after the expiry of 12 months from the end of financial year in which the notice u/s 148 was served on or after 1.4.2019 - HELD THAT - A perusal of the record shows that the notice u/s 148 was issued on 24.2.2021, a fact not disputed by the Revenue. There is no reference made to the TPO for making any adjustment of arm s length price of the international taxation. Referring to provisions of section 153(2) clearly shows that the time limit for completion of the assessment in the present case lapses on 31.3.2022. However, the final assessment order u/s 144 r.w.s. 144C has been passed on 30.01.2023 which is beyond the time limit prescribed u/s 153(2). Since the assessment order has been passed on 30.01.2023 as against 31.03.2022, therefore, the same, in our opinion, is barred by limitation and accordingly, the assessment order is liable to be quashed. We therefore, quash the re-assessment proceedings being barred by limitation. Since the assessee succeeds on this preliminary legal issue, the other grounds become academic in nature and therefore, are not being adjudicated. Appeal filed by the assessee is allowed.

Summary

Issues Involved:
1. Validity of the assessment order passed beyond the prescribed time limit.
2. Jurisdiction of the Assessing Officer to issue notice u/s 148.
3. Applicability of Section 69 of the I.T. Act to a Non-Resident Individual (NRI).
4. Merits of the addition made by the Assessing Officer.

Summary:

1. Validity of the assessment order passed beyond the prescribed time limit:
The assessee argued that the assessment order passed u/s 144 r.w.s 144C on 30.01.2023 was barred by limitation as per Section 153(2) of the I.T. Act, which mandates that no order of assessment, reassessment, or recomputation shall be made u/s 147 after the expiry of twelve months from the end of the financial year in which the notice u/s 148 was served. The Tribunal found merit in this argument, noting that the time limit for completion of the assessment lapsed on 31.03.2022, making the assessment order dated 30.01.2023 time-barred and liable to be quashed.

2. Jurisdiction of the Assessing Officer to issue notice u/s 148:
The assessee contended that the notice u/s 148 issued on 24.02.2021 was without jurisdiction as it was not issued in a faceless manner as mandated by Section 151A of the Act and the CBDT order dated 13.08.2020. The Tribunal did not specifically rule on this issue due to the quashing of the assessment order on the ground of limitation.

3. Applicability of Section 69 of the I.T. Act to a Non-Resident Individual (NRI):
The assessee, being an NRI, argued that the provisions of Section 69, which deal with unexplained investments, are not applicable as the income was not generated in India. The Tribunal noted that the assessee's residential status was Non-Resident Individual and that the income was earned in UAE, thus falling under Article 22 of the Indo-UAE DTAA, which makes such income taxable in the country of residence (UAE) unless proved to be generated in India.

4. Merits of the addition made by the Assessing Officer:
The assessee challenged the addition of Rs. 2,55,75,000/- made by the Assessing Officer u/s 69, arguing that the consideration for the property purchase was not paid due to ongoing litigation, and affidavits from the vendors confirmed non-receipt of the money. The Tribunal did not adjudicate on the merits of this argument due to the quashing of the assessment order on the ground of limitation.

Conclusion:
The Tribunal quashed the reassessment proceedings as the assessment order was barred by limitation. Consequently, the other grounds raised by the assessee became academic and were not adjudicated. The appeal filed by the assessee was allowed, and the Stay Application (S.A) filed by the assessee was dismissed as infructuous.