ITAT Quashes Assessment Order Passed Beyond Limitation u/s 153(2A)

ITAT Quashes Assessment Order Passed Beyond Limitation u/s 153(2A)

The matter related to the assessment year 2007-08 where a transfer pricing adjustment of Rs. 3,54,99,029/- was proposed in the distribution segment. A final assessment order was passed under section 143(3) read with section 144C(5)/254.

The issue had arisen from a remand by a prior order of the Tribunal by virtue of which the case was restored for reconsideration. Following such remand, the Dispute Resolution Panel passed its order on 24/03/2014. Thereafter, the Assessing Officer passed the impugned final order on 26/05/2014. It was challenged on the ground that the order was beyond the period envisaged under Section 153(2A). It was submitted that the fresh assessment should have been completed by 31/03/2014, being one year from the end of the financial year in which the Tribunal’s order was received. Since the order was made after this date, it was argued to be without jurisdiction. The Department maintained that the order was valid.

Issue Raised: Whether the last order of examination date 26/05/2014 for AY 2007-08 was barred by limitation under Section 153(2A).

ITAT’s Decision: The Tribunal held that the provision of limitation under Section 153(2A) was directly applicable. Section was incorporated to grant finality and certainty to assessment proceedings in case of remand, and for the case at hand, the statutory period had unequivocally lapsed. The order of the Tribunal dated 31/08/2012 had remanded the matter back, and once such a remand was made, the statute mandated that the fresh assessment be completed within the prescribed time. The period available for completion of the assessment expired on 31/03/2014. The Bench recorded that the Assessing Officer had instead passed the order on 26/05/2014. Such an order, made beyond the statutory period, was therefore without jurisdiction. The Tribunal noted that the statute does not permit enlargement of time in such circumstances, and any order made after the expiry of limitation is non est in the eyes of law.

The Tribunal also added that the case of the Revenue Department could in no way supplant the clear mandate of Section 153(2A). The section was enacted for giving the proceeding of assessment after remand of finality and certainty, and in the case at hand, the statutory period had unequivocally lapsed.It was held that once the foundation of the order itself was time-barred, the same could not be sustained. Consequently, the assessment was quashed purely on the ground of limitation. The Tribunal clarified that, having annulled the order, there was no requirement to go into the merits of the transfer pricing adjustment or other grounds raised in the appeal.

Thus, the appeal was allowed, and the assessment order dated 26/05/2014 was declared invalid and annulled.

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