Assessment Quashed as Time-Barred in Absence of Actual FT&TR Reference: ITAT

The assessee, an individual, filed his return of income for AY 2020-21 on 08.01.2021, declaring a total income of Rs. 5,41,98,020 and claiming carry forward of losses amounting to Rs. 1,14,76,791. The return was selected for complete scrutiny, inter alia, for verification of foreign financial interest. The Assessing Officer completed the assessment under section 143(3) read with section 144B on 28.03.2023, determining total income at Rs. 84,527,103.

Before the NFAC, the assessee raised a specific objection that the assessment was barred by limitation, contending that the statutory time limit expired on 30.09.2022. The NFAC accepted the contention and quashed the assessment. Aggrieved, the Revenue preferred an appeal before the ITAT.

Issue Before ITAT: Whether the assessment framed on 28.03.2023 was within limitation on the ground that time stood extended due to an alleged reference for exchange of information with Singapore tax authorities under Explanation 1(x) to section 153 of the Income-tax Act.

ITAT’s Decision: The Tribunal held that no evidence was placed on record to show that any actual reference for exchange of information had been made by the competent authority to the Singapore tax authorities. It was observed that the documents relied upon by the Revenue merely showed a proposal and internal correspondence seeking approval, and not a confirmed reference. The conditions of Explanation 1(x) to section 153 were not satisfied and no extension of limitation was available.

Since the assessment ought to have been completed by 30.09.2022 and was instead framed on 28.03.2023, it was rightly held to be barred by limitation. The Revenue’s appeal was dismissed and the quashing of assessment was upheld.

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