2025 (1) TMI 599 - HC - Income Tax

Assessment u/s 144C beyond period of limitation - determination of the date on which the directions from the Dispute Resolution Panel (DRP) were received by the AO- whether directions of DRP can be said to be received by the assessing officer on 30.06.2022? - HELD THAT - A conjoint reading of Section 144C (5) and (13) makes it clear that upon receipt of directions issued under Section 144C(5), it is imperative for assessing officer to complete the proceedings within one month from end of the month in which such a direction is received. Thus, key words used in Section 144C(13) are upon receipt of directions issued under Sub-Section (5) . Thus once such directions of DRP are uploaded on the portal, the DRP lost control over it and date on which it entered the portal, the recipient i.e, the assessing officer comes to know about it. Once originator enters a computer resource outside his control, despatch takes place. Sub-Section 2 (a) of Section 13 of the I.T.Act deals with receipt which makes it clear that receipt occurs at the time when the electronic record enters the designated computer resource. Thus, the meaning of despatch or receipt is elaborately defined in aforesaid Sub-sections of Section 13 of the I.T.Act. The word computer resource is also defined under Section 2(k) of the I.T.Act, which reads thus In the instant case, parties have taken a diametrically opposite view on the aspect whether the directions uploaded on the portal on 30.06.2022 can be treated to be receipt on the part of the assessing officer. Sri Vijhay K Punna, learned Standing Counsel for revenue contends that receipt will be the date when the e-mail was received by the revenue containing the DRP directions i.e., on 05.07.2020. As per the view taken by the aforesaid three High Courts there is no doubt that when the originator/DRP sends its directions in computer resource outside its control, it amounts to despatch and similarly, receipt takes place when said electronic record enters the computer resource. A conjoint reading of communications dated 30.01.2024 and 05.03.2024 (Annexure P-18) and communication dated 30.06.2022 (Annexure P-19) leaves no room for any doubt that DRP s directions were despatched on 30.06.2022 and also uploaded on the portal on the same date. Thus, the DRP/originator had lost control over it on the date and time the said directions were uploaded on the portal. Hence, same must be treated to be a receipt by the recipient i.e., the assessing officer on the same day i.e., 30.06.2022. See Suman Jeet Agarwal 2022 (9) TMI 1384 - DELHI HIGH COURT where the Delhi High Court poignantly held that the portal of the department is the computer resource in the control of the department . There is no cavil of doubt that assessing officer received the DRP s directions on 30.06.2022 and therefore, the limitation must be counted from that date and not from 05.07.2022. The impugned assessment orders dated 30.08.2022 and 01.09.2022 that were issued counting the limitation from 05.07.2022 in both the Writ Petitions are liable to be set aside as the same are issued beyond permissible period of limitation.

Summary

1. ISSUES PRESENTED and CONSIDERED

The judgment revolves around the following core legal issues:

• Whether the final assessment orders dated 30.08.2022 and 01.09.2022 were issued within the statutory time limit prescribed under Section 144C(13) of the Income Tax Act, 1961.
• The determination of the date on which the directions from the Dispute Resolution Panel (DRP) were "received" by the assessing officer, and its impact on the limitation period for passing the assessment order.
• The applicability and interpretation of Section 13 of the Information Technology Act, 2000, in determining the time and place of dispatch and receipt of electronic records.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Timeliness of the Assessment Orders

• Relevant Legal Framework and Precedents: Section 144C(13) of the Income Tax Act mandates that the assessing officer must complete the assessment within one month from the end of the month in which the DRP's directions are received. The court considered precedents from the Delhi, Bombay, and Madras High Courts, which emphasized strict adherence to this timeline.
• Court's Interpretation and Reasoning: The court interpreted that the "receipt" of DRP directions occurs when the directions are uploaded to the ITBA portal, as this is when the assessing officer is deemed to have access to them.
• Key Evidence and Findings: The DRP's directions were uploaded on the ITBA portal on 30.06.2022. The court found that this constituted the "receipt" date, not the date when the directions were accessed or acknowledged by the assessing officer.
• Application of Law to Facts: Based on the upload date of 30.06.2022, the assessment order should have been completed by 31.07.2022. The orders dated 30.08.2022 and 01.09.2022 were therefore beyond the permissible period.
• Treatment of Competing Arguments: The revenue argued that the receipt date should be 05.07.2022, when the directions were accessed via email. The court rejected this, emphasizing the statutory language and the precedents that consider the upload date as the receipt date.
• Conclusions: The court concluded that the assessment orders were barred by limitation and thus invalid.

Issue 2: Determination of Receipt Date under IT Act

• Relevant Legal Framework and Precedents: Section 13 of the Information Technology Act, 2000, outlines the time and place of dispatch and receipt of electronic records. The court referenced this section to determine when the DRP's directions were "received."
• Court's Interpretation and Reasoning: The court held that the dispatch occurs when the electronic record enters a computer resource outside the control of the originator, and receipt occurs when it enters the designated computer resource of the addressee.
• Key Evidence and Findings: The DRP's directions were uploaded to the ITBA portal on 30.06.2022, which is considered the designated computer resource for the assessing officer.
• Application of Law to Facts: The court applied Section 13 to conclude that the directions were received on 30.06.2022, as they entered the designated computer resource on that date.
• Treatment of Competing Arguments: The revenue's argument that receipt occurred upon email access was dismissed, as it conflicted with the statutory interpretation of electronic record receipt.
• Conclusions: The court affirmed that the receipt date was 30.06.2022, aligning with the statutory provisions and precedents.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The common string traveling through the judgments of the aforesaid three High Courts leaves no room for any doubt that the Courts have taken a uniform view that Section 144C(13) mandates the assessing officer to complete the assessment within one month from the end of the month in which such a direction is issued."
• Core Principles Established: The court established that the date of uploading DRP directions to the ITBA portal is the critical date for determining receipt, not the date of email access or acknowledgment.
• Final Determinations on Each Issue: The court set aside the assessment orders dated 30.08.2022 and 01.09.2022 as they were issued beyond the statutory time limit. The receipt date for DRP directions was confirmed as 30.06.2022, based on the upload to the ITBA portal.