Facts of the Case

The Revenue filed an appeal under Section 260A of the Income-tax Act, 1961 challenging the order dated 05.01.2024 passed by the Income Tax Appellate Tribunal for Assessment Year 2013-14. The ITAT had allowed the assessee’s appeal and set aside the final assessment order dated 27.12.2022 passed under Section 147 read with Section 144 of the Act on the ground that it was barred by limitation prescribed under Section 144C of the Act.

The Assessing Officer had issued a draft assessment order on 04.03.2022 proposing variations prejudicial to the interest of the assessee, an eligible assessee within the meaning of Section 144C. The assessee filed objections before the Dispute Resolution Panel on 06.04.2022, which was beyond the thirty-day period stipulated under Section 144C(2).

Despite this, the Assessing Officer passed the final assessment order on 27.12.2022, well beyond the statutory time limit prescribed under Section 144C(4). The ITAT held that the final order was time-barred and liable to be set aside.

Issues Involved

Whether the final assessment order passed under Section 144C(3) was barred by limitation under Section 144C(4)
Whether belated filing of objections before the DRP by the assessee extends or alters the statutory time limit for passing the final assessment order

Petitioner’s Arguments

The Revenue argued that the assessee could not be permitted to take advantage of its own wrong by filing objections before the DRP beyond the prescribed thirty-day period. It was contended that since the objections were belated, the limitation under Section 144C(4) should be computed differently, and the final assessment order could not be treated as time-barred.

Respondent’s Arguments

The assessee contended that the statutory language of Section 144C(4) is clear and unambiguous and mandates that the final assessment order must be passed within one month from the end of the month in which the period for filing objections under Section 144C(2) expires. It was argued that belated filing of objections does not extend or suspend the limitation period prescribed by statute.

Court Order / Findings

The Delhi High Court examined the scheme of Section 144C and held that sub-section (4) unequivocally mandates that the Assessing Officer must pass the final assessment order within one month from the end of the month in which the period for filing objections under Section 144C(2) expires.

The Court noted that in the present case, the draft assessment order was issued on 04.03.2022 and the period for filing objections expired on 04.04.2022. Accordingly, the Assessing Officer was required to pass the final assessment order within one month from the end of April 2022. However, the final order was passed on 27.12.2022, which was clearly beyond the statutory time limit.

The Court rejected the Revenue’s contention that belated filing of objections by the assessee could extend the limitation period. It held that there is no ambiguity in the statutory language of Section 144C(4) and that the limitation prescribed therein is mandatory and absolute.

The Court found no infirmity in the ITAT’s decision and held that no substantial question of law arose for consideration.

Important Clarification

The High Court clarified that limitation under Section 144C(4) is mandatory and not dependent on the conduct of the assessee. Even where objections before the DRP are filed beyond the stipulated period, the Assessing Officer remains bound by the statutory time limit for passing the final assessment order. Belated objections do not extend or revive jurisdiction once the limitation period expires.

If you want, I can now prepare a concise case-law headnote, align this with other DRP limitation judgments, or convert it into a practitioner-ready client alert for publication.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770193318_THECOMMISSIONEROFINCOMETAXINTERNATIONALTAXATION2VsMAVENIRUKHOLDINGS.pdf  

 

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