In a recent ruling the Delhi High Court, upheld the Income Tax Appellate Tribunal’s ( ITAT ) decision to invalidate an assessment order for exceeding the statutory timelines under the Income Tax Act, 1961.
The Revenue-petitioner appealed under Section 260A of the Income Tax Act, 1961, against the order dated 05.01.2024 issued by the ITAT for the assessment year (AY)2013-14.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
Mavenir UK Holidays,the respondent-assessee, filed an had its appeal upheld by the ITAT against the Assessing Officer’s order dated 27.12.2022, which had been passed under Section 147 read with Section 144 of the Act. The ITAT found that the order had exceeded the time limit set by Section 144C of the Act and, therefore, had been set aside.
As per Section 144C(4) of the Act, the Assessing Officer must pass the assessment order under Section 144C(3) within one month from the end of the month in which the time for filing objections under Section 144C(2) expires.
In this case, the draft assessment order was issued on 04.03.2022, and the assessee was required to file objections before the Dispute Resolution Panel ( DRP ) within one month. The assessee, however, submitted the objections on 06.04.2022, after the 30-day period specified under Section 144C(2) of the Act.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
There was no doubt that the Assessing Officer had to pass the assessment order within one month from the end of the month when the period for filing objections under Section 144C(2) expired. Consequently, the order was due by 30.05.2022. However, in this case, the final assessment order was issued on 27.12.2022, which was beyond the specified period.
The court found no fault in the ITAT’s decision to set aside the final assessment order for being beyond the limitation period prescribed by the Act.
The Revenue counsel, Mr. Bhatia, argued that the assessee should not benefit from filing objections after the 30-day period. However, this argument was unconvincing. Section 144C(4) of the Act clearly stated that the Assessing Officer was still required to issue the final order within the stipulated timeframe, regardless of the late objections.
A coram of Vibhu Bakhru ( Justice ) and Swarana Kanta Sharma ( Justice ) dismissed the appeal.
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