Case Law Details
ACIT Vs Rolls Royce India Private Limited (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, dismissed a Miscellaneous Application (MA) filed by the Revenue seeking recall of the Tribunal’s earlier order dated 04.07.2025 in ITA No. 252/Del/2022, which had quashed the final assessment order dated 18.11.2021 as being barred by limitation under Section 144C(13) of the Income-tax Act, 1961.
In its earlier order, the Tribunal had observed that Section 144C(13) mandates that once directions are issued by the Dispute Resolution Panel (DRP) under Section 144C(5), the Assessing Officer (AO) must complete the assessment in conformity with those directions, without granting any further opportunity of hearing to the assessee, within one month from the end of the month in which the directions are received. The Tribunal noted that the DRP had issued its directions on 21.09.2021 and, therefore, the AO was required to pass the final assessment order on or before 31.10.2021. However, the assessment order was passed only on 18.11.2021. Relying on judicial precedents, the Tribunal had held that an assessment completed beyond the prescribed limitation period becomes null and void and loses its legal validity. Consequently, it quashed the assessment order as void ab initio and, having allowed the limitation ground, did not adjudicate the remaining grounds of appeal.
In the Miscellaneous Application, the Revenue contended that the Tribunal had committed an apparent error by ignoring the Supreme Court’s order dated 10.01.2022 in In Re: Cognizance for Extension of Limitation, passed in view of the COVID-19 pandemic. According to the Revenue, the Supreme Court had directed that the period from 15.03.2020 to 28.02.2022 should be excluded while computing limitation under any general or special law in respect of judicial or quasi-judicial proceedings. Since the final assessment order was passed on 18.11.2021, which fell within the excluded period, the Revenue argued that the assessment was not barred by limitation. It submitted that the Tribunal’s failure to consider the Supreme Court’s order constituted a mistake apparent from the record within the meaning of Section 254(2) of the Income-tax Act and sought recall of the Tribunal’s order dated 04.07.2025.
The assessee opposed the application and submitted that there was no error in the Tribunal’s earlier order. It argued that the Income Tax Department was bound by the statutory time limits prescribed under the Income-tax Act for completing assessments. Although timelines for certain proceedings had earlier been extended under TOLA, those extensions had already expired before the assessment was framed, and the Revenue had still failed to complete the assessment within the prescribed period. The assessee further contended that the Supreme Court’s order extending limitation during the COVID-19 period applied only to litigants filing petitions, applications, suits, appeals and other judicial or quasi-judicial proceedings, where limitation was prescribed under general or special laws. According to the assessee, the order did not extend statutory timelines applicable to actions required to be performed by statutory authorities, such as framing assessments or issuing notices under Sections 143(2) or 148 of the Income-tax Act. In support of its submissions, the assessee relied upon decisions of the Hyderabad Bench of the Tribunal, including Prathima Infrastructure Limited, Expressway Services Pvt. Ltd., ER4M Systems India Private Limited, Repal Green Power Private Limited, and TMEIC Industrial Systems India (P.) Ltd.
After considering the rival submissions and examining the record, the Tribunal observed that while passing its order dated 04.07.2025, it had already considered the statutory limitation prescribed under the Income-tax Act and had rightly concluded that the assessment order dated 18.11.2021 was barred by limitation. The Tribunal held that, so far as framing of assessments is concerned, the Income Tax Department is required to complete assessments within the time prescribed under the Income-tax Act, 1961. It further held that the Supreme Court’s extension of limitation by excluding the period from 15.03.2020 to 28.02.2022 owing to the COVID-19 pandemic was not applicable to assessment proceedings undertaken by the Department. The Tribunal accepted the assessee’s reliance on the cited Hyderabad Bench decisions and held that its earlier order quashing the assessment as time-barred was correct.
FULL TEXT OF THE ORDER OF ITAT DELHI
This Miscellaneous Applications (“MA” in short) is filed by the Revenue. The main grievance of Revenue in this MA is that the ITAT vide order dated 04.07.2025 in ITA No. 252/Del/2022 in the case of this assessee has allowed the appeal of the assessee , and quashed the assessment order dated 18.11.2021 being barred by limitation , wherein the Tribunal at para 13.1 has held as under:
“13.1 As per section 144C(13), there is clear mandate that upon receipt of the directions issued u/s 144C(5), the Ld. AO shall supposed to complete the assessment inconformity with the directions of the Learned DRP without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such directions was received and in the present case, it is factually established that the Ld. DRP, issued directions on 21.09.2021 and u/s 144C(13), the Ld. AO was supposed to complete the assessment on or before 31.10.2021 but Ld. AO passed the impugned final assessment order on 18.11.2021, which is expressly time barred and as per judicial precedents mentioned hereinbefore, where the time barred final assessment passed, consequently assessment order itself reduced to be null and void and lost it’s legal value.
14. On the basis of foregoing fact situation and by following the principles of law laid down in the above cited judicial precedents, we find that final assessment order dated 18.11.2021 has been framed beyond the prescribed time limit u/s 144C(13) of the Act and, so, it is time barred, and accordingly, the impugned final assessment order is quashed being void ab initio. Consequently, the ground no. 2 is hereby deserves to be allowed.
15. Since the entire assessment quashed as barred by limitation, there is no need to adjudicate the other grounds.”
2. It is the say of Revenue that Hon’ble Supreme Court vide order dated 10.01.2022 in Civil Misc. Application No.21 of 2022 in MA No.665 of 2021 in Suo Motu Writ Petition (C) No.3 of 2020 in Re: Cognizance for Extension of Limitation, has held keeping in view Covid 19 pandemic that the period from 15th March, 2020 to 28.02.2022 shall be excluded for the purpose of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. . Thus, it was submitted by Revenue that the final assessment order was passed by the AO on 18.11.2021 which is a period covered by exclusion for computing limitation as per aforesaid Hon’ble Supreme Court direction and, hence, that the final assessment order dated 18.11.2021 was not barred by limitation. It was submitted that the ITAT committed grave error in quashing assessment on limitation ground keeping in view limitation as provided under the Income-tax Act, 1961 but ignoring aforesaid order dated 10.01.2022 of Hon’ble Supreme Court. It was submitted that an mistake apparent from record has crept in the order dated 04.07.2025 of the ITAT , Delhi Bench which is covered u/s 254(2) of the 1961 Act. Prayers were made by Revenue to recall order in ITA No.252/Del/2025 dated 04.07.2025. The Ld. Sr. DR relied upon the aforesaid MA filed by the Revenue , and prayed before the Bench that the order dated 04.07.2025 passed by ITAT in ITA no. 252/Del/2022 be recalled.
2.2. On the other hand, the Ld. Counsel for the assessee submitted that there is no error in the order dated 04.07.2025 passed by ITAT, It was submitted that for completing the assessment proceedings, the Revenue is bound by the time granted by the statute i.e. Income-tax Act, 1961 . It was submitted that time limit was extended by TOLA for framing assessment , but the time limit under TOLA had already expired and the Revenue did not frame assessment order in time, and hence ITAT order dated 04.07.2025 in assessee’s own case in ITA no. 252/Del/2022 need not to be recalled. It was submitted that the ITAT has elaborately discussed in the order dated 04.07.2025 that the assessment order was not passed within limitation period as provided under the 1961 Act. It was submitted that the order of the Hon’ble Supreme Court extending the limitation during Covid 19 Period by excluding the period 15.03.2020 to 28.02.2022 vide aforesaid order dated 10.01.2022 was with respect to litigants filing petitions/ applications/suits/appeals /all other quasi proceedings before judicial and quasi judicial proceedings, wherein the period prescribed under the general law of limitation or under any special laws(both Central and/or State) due to outbreak of Covid-19 pandemic stood extended by way of exclusion of period 15.03.2020 to 28.02.2022. It was submitted that the aforesaid extension of limitation is not applicable to statutory acts to be performed by statutory bodies i.e. by Income Tax Department such as framing of assessment , issue of notices u/s 143(2), 148 etc.. The Ld. Counsel for the assessee relied upon the following judgments:
1. Prathima Infrastructure Limited (ITA No. 1089 to 1095/Hyd/2025) dated 27 March 2026 (Relevant extracts)
2. Expressway Services Pvt. Ltd. (ITA No. 484 to 486/Hyd/2025) dated 27 March 2026 (Hyderabad Trib)
3. ER4M Systems India Private Limited [ITA No. 83 & 498/Hyd./2022 dated 26 November 2025 (Hyderabad – Trib)
4. Repal Green Power Private Limited [ITA No. 125/Hyd/2022 dated 26 November 2025) (Hyderabad – Trib.)]
5. TMEIC Industrial Systems India (P.) Ltd [ITA No.898/Hyd/2024 dated 12 December 2025) Hyderabad-Trib.)] “
3. We have considered the rival contentions and perused the material on record. We have observed that the Tribunal while passing order dated 04.07.2025 in ITA No. 252/Del/2022 in assessee’s case has considered the limitation for passing assessment order under the Income Tax Act , and came to conclusion that the assessment order dated 18.11.2021 was barred by limitation and, hence, the same was quashed. We are of the view that so far as framing of assessment is concerned, the Department has to frame assessment within time provided under the Income Tax Act, 1961. So far as Extension of limitation by way of exclusion of period from 15.03.2020 to 28.02.2022 owing to Covid-19 granted by Hon’ble Supreme Court is not applicable to the assessment proceedings. The Ld. Counsel for the assessee has rightly relied upon the decisions stated as above in this order, and the Tribunal has rightly quashed the assessment being framed by the AO vide assessment order dated 18.11.2021 beyond prescribed time limit under the 1961 Act. Thus, this M.A. lacks merit and is accordingly, dismissed.
4. In the result, the Miscellaneous Application filed by the Revenue is dismissed.
Order pronounced in the open Court on 08.06.2026.
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