2024 (10) TMI 188 - HC - Income Tax

Validity of order passed beyond the period prescribed u/s 144C - Reference to dispute resolution panel - HELD THAT - In terms of sub-section (4) of Section 144C of the Act, the AO is required to pass the assessment order under sub-section (3) of Section 144C of the Act within the period of one month from the end of the month in which the period for filing the objections under sub-section (2) of Section 144C of the Act expires. In the present case, the draft assessment order was passed on 04.03.2022, thus, the assessee was required to file its objections before the learned Dispute Resolution Panel (hereafter the DRP) within the period of one month from the said date. The assessee had filed such objection on 06.04.2022, which was beyond the period of thirty days stipulated under sub-section (2) of Section 144C of the Act. There is no cavil that the AO was required to pass the assessment order within a period of one month from the end of the month in which the period for filing the objections under sub-section (2) of Section 144C of the Act expired. Thus, the order was required to be passed within the period of one month from 30.04.2022. In the present case, the final assessment order was passed on 27.12.2022, which was beyond the stipulated period, Thus, we find no infirmity with the decision of the ITAT in setting aside the final assessment order as being beyond the period of limitation as prescribed under the Act. Revenue submitted that the assessee cannot be allowed to take advantage of its own wrong as it had filed the objections beyond the period of thirty days - This argument is insubstantial. There is no ambiguity in the language of sub-section (4) of Section 144C of the Act and notwithstanding that the assessee had not filed its objections within the period of thirty days, the AO was required to pass the final order, within the period as stipulated under sub-section (4) of Section 144C of the Act. No substantial question of law arises in the present appeal.

Summary

Issues:
1. Appeal under Section 260A of the Income Tax Act, 1961 against ITAT order.
2. Validity of the final assessment order passed by the Assessing Officer.
3. Interpretation of Section 144C of the Act regarding the timeline for passing the assessment order.
4. Discharge of caveat and acceptance of notice by the respondent.
5. Argument regarding the assessee filing objections beyond the stipulated period.

Analysis:

The High Court dealt with an appeal under Section 260A of the Income Tax Act, 1961, challenging an order passed by the Income Tax Appellate Tribunal (ITAT) in relation to the assessment year 2013-14. The ITAT had allowed the assessee's appeal against the Assessing Officer's order under Section 147 read with Section 144 of the Act, stating it was beyond the period prescribed under Section 144C of the Act and therefore, set it aside.

The court referred to Section 144C of the Act, emphasizing the timeline for passing the assessment order. The Assessing Officer is required to pass the assessment order within one month from the end of the month in which the period for filing objections expires. In this case, the final assessment order was passed beyond the stipulated period, leading to the ITAT's decision to set it aside.

The court rejected the argument presented by the Revenue's counsel that the assessee cannot benefit from filing objections beyond the thirty-day period. It clarified that the language of sub-section (4) of Section 144C is unambiguous, and the Assessing Officer was obligated to pass the final order within the prescribed period, irrespective of the timing of the objections filed by the assessee.

Ultimately, the court found no legal question arising from the appeal and dismissed it. The pending applications were also disposed of accordingly. The judgment highlights the importance of adhering to statutory timelines and the Assessing Officer's obligation to comply with the prescribed period for passing assessment orders under the Income Tax Act.