The Supreme Court of India, in Civil Appeals arising out of SLP (Civil) Nos. 20569–20572 of 2023, reported as 2025 INSC 946, examined the statutory framework governing assessment proceedings for eligible assessees under Section 144C of the Income-tax Act, 1961. The appeals were filed by the Revenue against Shelf Drilling Ron Tappmeyer Ltd., a non-resident company engaged in offshore drilling activities and taxable under Section 44BB of the Act.

The principal issue before the Court was whether the time consumed in proceedings before the Dispute Resolution Panel under Section 144C operates in addition to, or is required to be accommodated within, the limitation period prescribed under Section 153 of the Act. The Revenue argued that Section 144C is a self-contained code and that the statutory timelines under Section 153 stand extended by the duration of DRP proceedings. The assessee, on the other hand, contended that Section 144C is purely procedural and cannot enlarge the limitation expressly prescribed under Section 153.

The Supreme Court undertook a detailed analysis of the statutory scheme, legislative intent, and principles governing interpretation of fiscal statutes. It observed that Section 153 exhaustively prescribes the outer limits for completion of assessment, reassessment, and fresh assessment, along with specific situations where such limitation may be extended or excluded. The Court noted that the legislature did not provide for exclusion of time spent in DRP proceedings while computing limitation, and such exclusion cannot be inferred by implication.

The Court further held that a draft assessment order under Section 144C is not an enforceable assessment but only an intermediate procedural step. Consequently, both the draft assessment order and the final assessment order passed pursuant to DRP directions must be completed within the limitation period stipulated under Section 153, including in cases involving remand or fresh assessment. Any interpretation permitting extension beyond the statutory limitation was held to be impermissible.

Accordingly, the Supreme Court affirmed the view taken by the High Courts and held that assessment orders passed beyond the limitation period prescribed under Section 153 are invalid, even in cases involving proceedings under Section 144C. The appeals filed by the Revenue were dismissed, reinforcing the principle that limitation provisions under tax law are mandatory and must be strictly complied with.

LINK TO DOWNLOAD THE ORDER
https://mytaxexpert.co.in/uploads/1767668300_ASSISTANTCOMMISSIONEROFINCOMETAXVSSHELFDRILLINGRONTAPPMEYERLIMITED.pdf 

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