2024 (12) TMI 193 - AT - Income Tax

Legality of the final assessment order passed by AO u/s 147 r.w.s. 144C(13) as barred by limitation - HELD THAT - Except in a cases of reference to the TPO extended time limit of 12 months for completion of assessment is not available even in a case of Non-Resident assessment even though the said assessment proceedings is covered u/s 144C of the Act. Since the extended time limit of 12 months is not available in the case of Non-Resident as per section 153(4) of the Act in our considered view the Assessing Officer ought to have completed the assessment as per the provisions of section 153(2) of the Act which is one year from the end of the financial year in which notice u/s 148 was served. In the present case if we go by date of notice issued u/s 148 of the Act i.e. 29.03.2021 and probable service in the month of April 2021 the time limit for completing the assessment u/s 147 was available up to 31.03.2023 and thus the final assessment order passed by the Assessing Officer u/s 147 r.w.s. 144C(13) dated 08.01.2024 is clearly barred by limitation. In this view of the matter and considering the facts and circumstances of the case and also by following the decision of Syed Gulam Mohiuddin 2024 (6) TMI 269 - ITAT HYDERABAD we are of the considered view that the final assessment order passed by the AO under Section 147 read with Section 144C(13) dated 08.01.2024 is barred by limitation and is liable to be quashed and thus we quash the re-assessment order passed by the Assessing Officer u/s 147 r.w.s. 144C(13) of the Act dt.08.01.2024 for the A.Y. 2016-17.

Issues Involved:

1. Validity of the assessment order under Section 147 read with Section 144C(13) of the Income Tax Act, 1961, in light of the time limit prescribed under Section 153(2).
2. Applicability of Section 144C to non-resident individuals for assessment years prior to 2020-21.
3. Classification of agricultural land as a capital asset under Section 2(14) of the Income Tax Act.
4. Validity of the notice issued under Section 148 without PAN details.
5. Validity of the assessment order considering the pending disputes in the High Court.
6. Admission of additional grounds during appellate proceedings.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order under Section 147 r.w.s. 144C(13):

The primary issue was whether the assessment order passed on 08-01-2024 was barred by limitation under Section 153(2) of the Income Tax Act. The assessee argued that the order should have been completed by 31-03-2023, as the notice under Section 148 was served in April 2021. The Tribunal found merit in this argument, emphasizing that the extended time limit under Section 153(4) applies only when a reference to the Transfer Pricing Officer (TPO) is made, which was not the case here. Consequently, the assessment order was held to be barred by limitation and quashed.

2. Applicability of Section 144C to Non-Resident Individuals:

The assessee contended that the provisions of Section 144C, specifically the definition of 'eligible assessee' under Section 144C(15)(b), were not applicable as there was no reference to the TPO. The Tribunal agreed, noting that the extended period for assessment completion under Section 144C does not apply in the absence of a TPO reference. This interpretation was consistent with precedents, including the Tribunal's decision in similar cases.

3. Classification of Agricultural Land as a Capital Asset:

The assessee argued that the land sold was agricultural and located beyond 12 kilometers from the nearest municipality, thus not a capital asset under Section 2(14). Although the Tribunal found the argument convincing, it refrained from adjudicating this issue on merits, as the reassessment order was already quashed due to the limitation issue.

4. Validity of Notice under Section 148 without PAN Details:

The assessee challenged the validity of the notice issued under Section 148, citing the absence of PAN details. However, this issue became moot as the reassessment order was quashed on the grounds of being time-barred.

5. Validity of Assessment Order Considering Pending Disputes:

The assessee raised concerns about ongoing disputes in the High Court affecting the land in question. This issue was not adjudicated separately, as the reassessment order was quashed due to the limitation issue.

6. Admission of Additional Grounds:

The Tribunal admitted additional grounds raised by the assessee, emphasizing that legal grounds can be raised at any stage of appellate proceedings. This decision was supported by the Supreme Court's precedent in the National Thermal Power Co. Ltd. case, allowing for the consideration of new legal arguments during appeals.

Conclusion:

The Tribunal quashed the reassessment orders for the assessment years 2016-17 and 2018-19, as they were barred by limitation under Section 153(2). The appeals filed by the assessees were allowed, and the Tribunal refrained from adjudicating other issues on merits due to the quashing of the reassessment orders.

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