Appeal Dismissed as Final Assessment Order Passed After Statutory Period under Section 144C(13)

The appellant is the Commissioner of Income Tax (International Taxation); the respondent is Hyundai Rotem Company, a company incorporated in Korea engaged in the manufacture of railway vehicles. The assessee filed its return for AY 2018-19 declaring a total income of Rs. 13,64,92,120. The assessment was selected under CASS, referred to a Transfer Pricing Officer on 24.06.2021, and the TPO initially proposed an upward adjustment of Rs 7,36,34,508 under Section 92CA(3). Subsequently, following DRP directions and re-verification, the TPO revised the adjustment to Rs. 6,12,26,135, and the AO passed the Final Assessment Order dated 01.07.2022, assessing total income at Rs. 19,77,18,255.

The assessee challenged the FAO before the ITAT on the ground that the FAO was barred by limitation under Section 144C(13) because the Dispute Resolution Panel (DRP) directions had been uploaded on the ITBA portal (with a DIN/intimation) on 26.05.2022 and, therefore, the one month for passing the FAO expired on 30.06.2022. The Revenue argued that the AO did not see the upload on his worklist and that the physical dak was received on 01.06.2022, hence the FAO dated 01.07.2022 was within the one month computed from receipt.

Central Issue: Whether, for the purpose of computing the limitation under Section 144C(13) of the Income-tax Act, directions of the DRP are to be treated as “received” by the Assessing Officer on the date they are uploaded on the ITBA portal (with DIN), thereby rendering FAO dated 01.07.2022 time-barred.

High Court’s Ruling: The High Court upheld the ITAT’s reasoning. It accepted that, in terms of the E-Assessment Scheme, 2019 and Section 13 of the Information Technology Act, once the DRP (the originator) uploads its directions on the ITBA portal and a Document Identification Number (DIN) is generated, the originator loses control of the record and dispatch/receipt for electronic records is complete on upload; therefore the period under Section 144C(13) must be computed from the upload date (26.05.2022). The Court relied on precedents, including Louis Dreyfus and Vodafone Idea, interpreting portal uploads as effective communication for limitation purposes.

Applying that principle, the Court held the FAO dated 01.07.2022 to be beyond the one-month period (which expired on 30.06.2022) and therefore time-barred; thus, no substantial question of law arose and the appeal was dismissed. The Court also observed that internal departmental delays or reliance on physical dak to delay computation of limitation could not be permitted to frustrate the statutory timeline created by Section 144C(13) read with the E-Assessment Scheme.

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