2024 (9) TMI 850 - AT - Income Tax

Validity of the re-assessment order passed beyond the time limit stipulated u/s 144C(13) r.w.s. 143(3) - Reckoning of time limit u/s. 144C(13) for passing the Final Assessment Order - relevance of date of Directions of the DRP passed u/s. 144C(5) of the Act are received by the AO - HELD THAT - In the instant case, it is not in dispute that the order of the ld. DRP was received by the Assessing Officer on 03/10/2018 and the last date for giving effect to the order of the DRP was one month from the end of the month in which the direction was received i.e., the last day to give effect was 30/11/2018. However, the assessment order in question has been framed on 06/12/2018, which is beyond the prescribed time limit. As decided in the case of Envestnet Asset Management (India) (P.) Ltd. 2014 (12) TMI 879 - ITAT COCHIN dealing with the similar issue has observed that where the Assessing Officer passed an assessment order after expiry of one month from the end of the month in which the directions of DRP was received in terms of Section 144C(13) of the Act, the said order was set aside for being barred by limitation. Similar view was also taken in the case of Dentsply India (P.) Ltd. v/s. ITO 2019 (5) TMI 1505 - ITAT DELHI Respectfully following the decisions supra and also considering the provisions of Section 144C(5) and (13) of the Act, we find that the directions of the ld. DRP u/s 144C(5) were issued on 25/09/2018 and the same were communicated to the Assessing Officer on 03/10/2018 and the time limit to give effect to the order of the ld. DRP was expiring on 30/11/2018 but since the AO failed to adhere to the said provisions and gave effect to the order of the ld. DRP on 06/12/2018, the impugned assessment orders u/s 144C(13)/147/143(3) of the Act for Assessment Year 2010-11 and similarly for Assessment Year 2011-12, are barred by limitation and, therefore, are quashed. Thus, the additional ground raised by the assessee are allowed.

Summary

Issues: Validity of re-assessment order passed beyond the time limit stipulated under section 144C(13) of the Income Tax Act, 1961.

Analysis:

1. The appeals were directed against the separate orders of the Assistant Commissioner of Income Tax, Circle-8(2), Kolkata, for the Assessment Years 2010-11 and 2011-12, framed under sections 144C(13), 147, and 143(3) of the Income Tax Act, 1961, as per the directions of the Dispute Resolution Panel-2, New Delhi.

2. The additional ground raised by the assessee challenged the validity of the Final Assessment Order passed by the Assessing Officer beyond the statutory time limit prescribed under section 144C(13) of the Act. The Assessing Officer failed to pass the final assessment order within the specified time limit, leading to the appeal.

3. The Assessing Officer received directions from the Dispute Resolution Panel on 03 October 2018, and the time limit to pass the Final Assessment Order ended on 30 November 2018. However, the Final Assessment Order was passed on 06 December 2018, beyond the prescribed due date, as per section 144C(13) of the Act.

4. The contention was raised that the Assessing Officer's time limit for giving effect to the directions of the Dispute Resolution Panel was expiring on 31 December 2018. However, the Tribunal disagreed, stating that the time limit prescribed under section 144C(13) of the Act was one month from the end of the month in which the directions were received, i.e., 30 November 2018.

5. Citing precedents and legal provisions, the Tribunal held that the assessment orders for both years were barred by limitation and quashed them. The orders were set aside as being beyond the prescribed time limit, in line with the decisions of other Co-ordinate Benches.

6. As a result of quashing the assessment orders, no additions remained, rendering the remaining grounds of appeal academic and not needing adjudication. The appeals of the assessee were allowed based on the issue of the assessment orders being barred by limitation.