Assessment Order Issued Beyond Limitation Period is Invalid: ITAT Delhi

BBC World Service India Pvt. Ltd Vs ACIT (ITAT Delhi)

Income Tax Appellate Tribunal (ITAT), Delhi Bench, has quashed the assessment order for the assessment year 2017-18 against BBC World Service India Private Limited. The Tribunal’s decision, pronounced on February 7, 2025, determined that the final assessment order was issued beyond the statutory period of limitation, rendering it invalid.

The appeal by BBC World Service India Private Limited challenged an assessment order dated May 26, 2022, issued under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961. The core argument presented by the assessee’s counsel was that the order was time-barred.

BBC World Service India Private Limited is engaged in producing program content for its UK parent company, British Broadcasting Corporation (BBC, UK), and other group entities. Its revenue primarily stems from service fees from BBC UK and programming fees from licensing content for various media platforms. The company filed its income tax return on November 30, 2017, declaring a total income of Rs. 6,39,12,880.

A draft assessment order was issued on March 31, 2021, under Section 143(3) read with Section 144C of the Act. This order included a transfer pricing adjustment of Rs. 2,19,68,636, which was added to the company’s total income. Following this, BBC World Service India Private Limited filed objections with the Dispute Resolution Panel (DRP).

The DRP subsequently issued its directions under Section 144C(5) of the Act on September 16, 2021, upholding the draft assessment order. Crucially, these DRP directions were formally intimated to the Assessing Officer (AO) on September 22, 2021.

Under Section 144C(13) of the Income Tax Act, the Assessing Officer is mandated to pass the final assessment order “within one month from the end of the month in which such directions are received.” Given that the DRP directions were intimated to the AO on September 22, 2021, the statutory deadline for the AO to pass the final assessment order was October 31, 2021 (one month from the end of September 2021). However, the final assessment order in this case was passed on May 26, 2022, significantly beyond the prescribed time limit.

The ITAT noted that this issue is no longer a matter of debate, referencing a precedent set by a coordinate bench of the Tribunal in the case of Honda R&D (India) Pvt. Ltd. Vs. ACIT (207 ITD 278 (Delhi Tribunal)). In that case, the Tribunal had similarly quashed an assessment order due to it being time-barred, applying principles derived from Section 13 of the Information Technology Act, 2000, as interpreted by the Supreme Court in GS Chatha Rice Mills. The Honda R&D ruling emphasized that the date of uploading the DRP order onto the ITBA portal is the critical factor for determining when the AO receives the directions.

Based on the undisputed facts and in adherence to the cited judicial precedent, the ITAT concluded that the final assessment order against BBC World Service India Private Limited was indeed framed beyond the maximum time limit stipulated under Section 144C(13) of the Act. Consequently, the Tribunal declared the final assessment order null and void, allowing the assessee’s primary ground of appeal. The remaining grounds raised by the assessee were not addressed, having become academic due to the quashing of the entire assessment.

FULL TEXT OF THE ORDER OF ITAT DELHI

1. The appeal in ITA No.1627/Del/2022 for AY 2017-18, arises out of the order of the Assessing Officer [hereinafter referred to as ‘ld. AO’, in short] dated 26.05.2022.

2. At the outset, the ld DR sought an adjournment on the ground that Paper Book has been received only on 16.12.2024 but the ld AR stated that he will not referring to any paper book and would be addressing only ground No. 1 to state that the assessment order has been passed beyond the prescribed time.

3. We have heard the rival submissions and perused the material available on record. The assessee filed its return of income on 30.11.2017 declaring total income of Rs. 6,39,12,880/-. The assessee is primarily engaged in the business of producing program content for radio, television and websites under contractual agreement with its British Broadcasting Corporation UK (“BBC, UK”) and other group companies. The primary source of revenue is the service fee received from BBC UK and programming fee from licensing of programs for FM radio stations, television channels and other digital platforms within and outside India.

4. The draft assessment order was passed u/s 143(3) read with Section 144C of the Act on 31.03.2021 in which transfer pricing adjustment of Rs. 2,19,68,636/- as suggested by the ld TPO was added to the total income. The assessee filed its objection before the ld DRP. The ld DRP issued direction u/s 144C(5) of the Act on 16.09.2021 upholding the draft assessment order. The said DRP order was intimated to the ld AO on 22.09.2021. There is absolutely no dispute with regard to this fact of date of intimation to the ld AO on 22.09.2021. Hence, the time available to the ld AO to pass the final assessment order in terms of Section 144C(13) would be one month from the end of the month in which order is received which would expire on 31.10.2021. Whereas, in the instant case , the final assessment order has been passed by the ld AO u/s 143(3) read with Section 144C(13) of the Act on 26.05.2022 which is much beyond the prescribed time limit provided u/s 144C(13) of the Act. This issue is no longer res integra in view of the decision of the coordinate bench of this Tribunal in the case of Honda R&D (India) Pvt. Ltd Vs. ACIT reported in 207 ITD 278 (Delhi Tribunal) wherein it was observed as under:-

17. In the context of faceless assessment process time and place of dispatch and receipt of electronic document (in this case DRP order) is required to be ascertained by reference to section 13 of Information Technology Act, 2000 which is the basis prescribed under section 144B of Income Tax Act also (refer section 144 B (6)(v)). Hon’ble Supreme Court in case of GS Chatha Rice Mills [(2021)2SCC 209-J para 85), interpreted this very provision. Applying principles laid down by Hon’ble Supreme Court, only relevant fact necessary for deciding Ground No. 4 in present appeal relating to time barred assessment, is time of uploading by DRP of DRP order onto ITBA portal. Intimation letter to DRP order unambiguously shows 27th April 2022 as date of uploading of DRP order. This fact cannot be disputed. Except this critical and relevant information everything else (like when order is visible to AO, date of uploading some document by DCIT/ACIT circle 2 (1) (1) Delhi) has been submitted by Respondents. It is fair to conclude that date of uploading DRP order on ITBA portal is 27.04.2022. As per section 144C(13) of the Act, assessment had to be completed on or before 31.05.2022. In present case the assessment is completed only on 30.6.2022 i.e., it is time barred null and void. Therefore, impugned assessment order dated 30.06.2022 is set aside being barred by limitation. Other grounds having become academic in nature are left open.

18. In the result appeal of the assessee is allowed.”

5. The ld DR was given liberty to furnish written submission qua this ground argued by the ld AR, if he so desires, but no such written submission was filed by the ld DR till the time of dictation of the order. Hence, no further liberty need to be given to the revenue in this regard.

6. In view of the above facts and respectfully following the judicial precedent relied upon hereinabove, we have no hesitation to hold that the final assessment order in the instant case has been framed beyond the maximum time limit prescribed u/s 144C(13) of the Act and hence, become time barred. Accordingly, the final assessment order is hereby quashed as void ab initio and ground No. 1 is herby allowed. Since the entire assessment is quashed as barred by limitation, the other grounds raised by the assessee need not be gone into and they are left open.

7. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 07/02/2025.