2022 (2) TMI 1149 - HC - Income Tax

Faceless assessment u/s 144B - time-limit to complete the assessment - whether the petitioner s case is covered under the Relaxation Act? - HELD THAT - CBDT issued the first Notification No.20/2021. Clause A of this notification provides that where the specified Act is the Income-tax Act, and the completion of any action referred to in clause (a) of sub-section (1) of Section 3 of the Act relates to passing of an order under Section 144C(13) of the Act and 31st March 2021 is the end date, during which the time-limit specified in the Act falls for completion of such action, 30th April 2021 shall be the end date to which the time-limit for completion of such action shall stand extended. The notification, therefore, provides that if the time-limit to complete the assessment u/s 144C(13) was expiring on any date upto 31st March 2021, the said date for completion was extended upto 30th April 2021. Since in this case, the time-limit for completion of assessment was not expiring as of 31st March 2021, in our view, Notification No.20/2021 is not applicable. Coming to the applicability of Notification No.38/2021 issued on 27th April 2021 - The expiry of time-limit for completion of assessment or for passing the order in petitioner s case under Section 144C(13) of the Act on 30th April 2021 was not due to an earlier extension of time-limit by an earlier notification but was on account of the fact that the directions were issued by the DRP on 20th March 2021. As per Section 144C(13) of the Act, an assessing officer has one month from the date of the end of the month in which the directions are received by him to pass the final order / complete assessment, therefore, in our view, the time-limit of 30th April 2021 not being on account of extension by earlier notification, Notification No.38/2021 is also inapplicable to petitioner s case. Coming to Notification No.74/2021 issued on 25th June 2021, Clause (A) of the notification provides that where the specified Act is the Income-tax Act, and the completion of any action referred to in clause (a) of subsection (1) of Section 3 of the Relaxation Act, relates to passing of an order for assessment or re-assessment under the Act and the time limit for completion of such action under Section 153 or Section 153B thereof expires on 30th June 2021 due to its extension by earlier notifications, such time-limit shall further stand extended to 30th September 2021. There is no extension of time-limit under this notification for completion of assessment or passing of any order under Section 144C(13) of the Act. In our view, therefore, Notification No.74/2021 is also not applicable to the case at hand. Even if we hold that the Relaxation Act was applicable to petitioner s case as well, still, the extension vide Notification No.74/2021 is applicable only to cases where the time-limit has already been extended by earlier notifications. Since the time-limit in petitioner s case has not been extended by earlier notifications, Notification No.74/2021 was not applicable to petitioner s case. Even if for a moment we hold that Relaxation Act is applicable to petitioner s case, the time-limit provided by Notification No.38/2021 expired on 30th June 2021. Notification No.74/2021, on which respondents have relied upon to submit that time has been extended upto 30th September 2021, specifically excludes Section 144C(13) of the Act. If that also was to be included, Notification No.74/2021 would have expressly provided for it as it has provided in Notifications No.20/2021 and 38/2021. Notification No.20/2021 and Notification No.38/2021 specifically referred to the time-limit for passing the final assessment order under Section 144C(13) of the Act. There is, however, no specific reference to the time-limit under Section 144C(13) of the Act in Notification No.74/2021. Therefore, it is clear that CBDT has not extended the time-limit for passing any order under Section 144C(13) of the Act vide Notification No.74/2021 dated 25th June 2021, and hence, there is no extension of time-limit to 30th September 2021 to pass the order under Section 144C(13).

Summary

Issues Involved:
1. Legality of the assessment order dated 30th September 2021.
2. Applicability of the Relaxation Act and subsequent notifications to the time-limit for completing the assessment.

Issue-Wise Detailed Analysis:

1. Legality of the Assessment Order:
The petitioner challenged the assessment order dated 30th September 2021, asserting it was ex-facie illegal and contrary to the provisions of the Income Tax Act, 1961. The petitioner contended that the assessment should have been completed within one month from the end of the month in which the directions from the Dispute Resolution Panel (DRP) were received, i.e., by 30th April 2021. However, the assessment order was passed on 30th September 2021, which the petitioner argued was beyond the permissible time limit.

2. Applicability of the Relaxation Act and Subsequent Notifications:
The court examined whether the Relaxation Act and the notifications issued under it extended the time limit for completing the assessment in the petitioner’s case.

- Section 144C(13) of the Income Tax Act: This section 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 DRP’s directions were received on 20th March 2021, making the deadline 30th April 2021.

- Section 3 of the Relaxation Act: This section extends the time limit for actions falling between 20th March 2020 and 31st December 2020. Since the DRP’s directions were received on 20th March 2021, the petitioner’s case did not fall within this period.

- Notification No. 20/2021: Issued on 31st March 2021, this notification extended the time limit for completing actions under Section 144C(13) to 30th April 2021. However, since the original deadline for the petitioner’s case was already 30th April 2021, this notification was deemed inapplicable.

- Notification No. 38/2021: Issued on 27th April 2021, this notification extended the deadline to 30th June 2021 for actions whose time limit expired on 30th April 2021 due to earlier notifications. The court found this inapplicable as the petitioner’s deadline was not extended by any earlier notification but was based on the statutory provision itself.

- Notification No. 74/2021: Issued on 25th June 2021, this notification extended the deadline to 30th September 2021 for actions under Sections 153 or 153B of the Act. The court noted that this notification did not specifically include Section 144C(13), making it inapplicable to the petitioner’s case.

Court’s Conclusion:
The court concluded that none of the notifications extended the time limit for completing the assessment under Section 144C(13) beyond 30th April 2021. The assessment order dated 30th September 2021 was therefore deemed illegal and beyond the permissible time limit. The court allowed the petition, quashing the assessment order, computation of income, demand notice, and penalty notice issued on 30th September 2021. The petitioner was also directed to withdraw any appeal filed against the assessment order within two weeks.