BBC World Service India Pvt. Ltd v. ACIT, Circle-4(2), Delhi, ITA No. 331/DEL/2021, ITAT Delhi
The Income Tax Appellate Tribunal (ITAT) Delhi ruled that an assessment order passed beyond the statutory time limit under Section 144C(13) is void ab initio, making the entire assessment invalid.
Key Facts of the Case
- The assessee filed its return of income on 30.11.2017, declaring a total income of ₹6.39 crore.
- The draft assessment order under Section 143(3) r.w. 144C was passed on 31.03.2021, adding a transfer pricing adjustment of ₹2.19 crore.
- The assessee filed objections before the DRP, which issued directions on 16.09.2021, and the order was received by the AO on 22.09.2021.
- As per Section 144C(13), the final assessment order should have been passed by 31.10.2021.
- However, the AO passed the final order on 26.05.2022, well beyond the statutory deadline.
Key Observations by ITAT
1. Statutory Time Limit Under Section 144C(13) Was Exceeded
- ITAT ruled that the final order should have been passed within one month from the end of the month in which the DRP order was received, i.e., by 31.10.2021.
- Since the order was passed on 26.05.2022, it was clearly beyond the permissible time limit.
2. ITAT Relied on Judicial Precedents
- ITAT cited Honda R&D (India) Pvt. Ltd vs. ACIT (207 ITD 278, Delhi Tribunal), where an assessment order passed after the deadline was declared null and void.
- The tribunal reiterated that failure to adhere to statutory time limits renders an assessment order legally unsustainable.
3. No Justification Provided by Revenue for Delay
- The Deptmearntal Representative (DR) was given an opportunity to provide reasons for the delay, but no valid explanation was submitted.
- ITAT ruled that the delay was unjustifiable, and the assessment could not be sustained.
Final Verdict
- The assessment order was quashed as time-barred.
- Since the entire assessment was invalid, ITAT did not examine other grounds of appeal.
- The appeal was allowed in favor of the assessee.
Key Takeaway for Taxpayers
✔️ Strict adherence to statutory deadlines is essential—any assessment order passed beyond the prescribed time limit can be challenged and quashed.
✔️ Taxpayers should track the timeline of their DRP proceedings to ensure that the AO does not exceed the timeframe under Section 144C(13).
✔️ Unjustified delays by tax authorities can render the entire assessment null and void, protecting taxpayers from wrongful additions.
This ruling reinforces that tax authorities must comply with statutory deadlines, failing which their orders become legally unsustainable.