In a recent decision the Madras High Court observed that the assessment order issued beyond time-limit under Section 144C(13) of the Income Tax Act, 1961 is unsustainable.
The petitioner filed objections against the draft assessment order before the Dispute Resolution Panel (the DRP) under Section 144C(2) of the Income Tax Act. The DRP confirmed the addition made in the draft assessment order and issued directions on 16.06.2022 under Section 144C(5) of the Income Tax Act.
Such directions were received by the petitioner on 16.06.2022 by e-mail. The directions were also sent to the assessee, the assessment officer/2 nd respondent and the TPO. According to the petitioner, the DRP’s directions were uploaded on the ITBA portal on 17.06.2022 and also served on the TPO on 27.06.2022. Thereafter, the final assessment order was issued on 25.03.2023.
The counsel for the petitioner assailed the impugned order largely on two grounds. The primary ground of challenge was on limitation. By adverting to Section 144C(13) of the Income Tax Act, learned counsel submitted that the said provision sets out the period of limitation for passing an assessment order upon receipt of directions from the DRP. Since such directions were received by the 2 nd respondent through the portal on 17.06.2022, the counsel submitted that time would run from the end of the relevant month, i.e. 30.06.2022. If so computed, the counsel submitted that the limitation period of one month expired on 31.07.2022.
The second ground of challenge was that the jurisdictional assessing officer did not have the authority to issue the assessment order. In support of this contention, the counsel referred to clause (xx) of subsection (1) of Section 144B. He pointed out that the said clause provides that the assessment unit shall send the draft order prepared under sub-clause (a) of clause (xvi) or under clause (xix) to the National Faceless Assessment Centre.
The senior standing counsel, made submissions in response and to the contrary. As regards the contention relating to limitation, he relied on the language of sub-section (13) of Section 144C to contend that the period of limitation would run from the date of receipt of directions by the jurisdictional assessing officer. By relying on the counter of Mr.S.R.Nedumaran, Deputy Commissioner of Income Tax, the counsel submitted that the jurisdictional assessing officer received the directions only on 17.03.2023.
A Single Bench of Justice Senthilkumar Ramamoorthy observed that “In view of the conclusion that the assessment proceedings are barred by limitation, it is unnecessary to examine as to whether the assessing officer was duly authorised to exercise jurisdiction either under the Whatsapp message issued on 13.04.2022 or upon the physical file being signed on 21.04.2022.”
“If so computed, the period of one month expired on 31.07.2022, whereas the assessment order came to be issued on 25.03.2023. Hence, the assessment order was issued beyond the time limit specified in sub-section (13) of Section 144C. By taking into account not only statutory prescription but also the interpretation thereof by the Division Bench of this Court in Roca and that of the Division Bench of the Delhi High Court in Louis Dreyfus, I conclude that the assessment order cannot be sustained” the Court noted.
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