Eaton Power Quality Pvt. Ltd. Vs DCIT (ITAT Chennai)
One Month Means One Month: DRP Delay Dooms Final Order u/s 144C(13)-Faceless Cannot Be Timeless: Final Order Struck Down as Time-Barred
Chennai ITAT ‘D’ Bench quashed the final assessment order for AY 2021-22 holding it to be time-barred u/s 144C(13). Tribunal noted that DRP directions were issued & received on 21.09.2024, hence the AO was statutorily bound to pass the final order within one month from end of that month, i.e. on or before 31.10.2024. Since the AO passed the final order only on 28.11.2024, the order was held to be without jurisdiction & null in law. Relying on binding Madras HC rulings (including Taeyang Metal India (P) Ltd.) & Bombay HC (Vodafone Idea Ltd.), Tribunal held that timelines under section 144C are mandatory & internal faceless processes cannot extend limitation. Appeal allowed on limitation alone; merits not adjudicated.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This is an appeal preferred by the assessee against the final assessment order dated 28.11.2024 which was passed vide DIN No. ITBA/AST/S/143(3)/2024-25/1070773150(1) for AY 2021-22.
2. The assessee has, inter-alia, raised the legal ground assailing the final assessment order framed u/s.143(3) r.w.s.144C(3) r.w.s.144B of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) on the ground that the same was time-barred, since it had been passed beyond the timelines prescribed under section 144C(13) of the Act. Ground Nos.2 & 3, which reads as under:
2. That on the facts and circumstances of the case and in law, the assessment order dated November 28, 2024 is bad in law and liable to be quashed as the same has been passed beyond the timelines prescribed under section 144C(13) of the Act.
3. That on the facts and circumstances of the case and in law, the assessment order dated November 28, 2024 passed by the AO is barred by limitation and liable to be quashed, as the same has been passed beyond the time limit prescribed under third proviso to section 153(1) of the Act.
3. For adjudicating the legal issue, it would be gainful to refer to the relevant date of events in this matter:
| Sl.No. | Date | Event |
|---|---|---|
| 1 | ITR filed on 09.03.2022 | 28.06.2022 notice issued u/s.143 (2) of the Act |
| 2 | 27.10.2023 | TP order u/s.92CA(3) of the Act |
| 3 | 20.12.2023 | Draft assessment order u/s.144C(1) of the Act |
| 4 | 19.01.2024 | Objections raised before the DRP |
| 5 | 21.09.2024 | DRP directions |
| 6 | 28.11.2024 | Final assessment order |
4. The main grievance of the assessee is that the AO has not passed the final assessment order, within the time-limit stipulated u/s.144C(13) of the Act. To appreciate the legal issue, it would be gainful to reproduce the relevant provisions of Sec.144C(13) of the Act, which reads as under:
Section 144C [ Reference to dispute resolution panel]
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(13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.[emphasis given]
5. According to the Ld.AR, upon receipt of the directions of Dispute Resolution Panel (DRP), the AO should complete the final assessment as per section 144C(13) of the Act, i.e. within one month from the end of the month of receipt of the directions of the DRP. It is the case of assessee that the directions of the DRP was dated 21.09.2024 and hence, the limitation for passing the final assessment order starts running from the end of the month i.e. 30.09.2024 and it expires on 31.10.2024, whereas the AO passed the final assessment order only on 28.11.2024. Hence, the final assessment order passed by the AO dated 28.11.2024 is time-barred. For such a proposition, relied on the decision of the Hon’ble jurisdictional High Court in the case of CIT v. Ramco Cements Ltd., reported in [2025] 171 taxmann.com306 (Mad) and the Hon’ble Madras High Court decision in the case of M/s. Taeyang Metal India (P) Ltd., reported in [2024] 160 taxmann.com536 (Mad.) and Chennai-Tribunal order in the case of Conference Service India v. DCIT 207 ITD 435 and several other decisions placed in case law Paper Book.
