ITAT: Assessment Beyond Excludable Period Under Section 153 Held Time-Barred

The appellant, Srinivasa Reddy Yeturu, challenged an assessment order passed under Section 143(3) of the Income-tax Act, 1961, for the Assessment Year 2022-23.

The primary grievance was that the order, dated September 27, 2024, was passed beyond the prescribed statutory time limit. Under the specific provisions of Section 153, the deadline for completing this assessment was March 31, 2024. However, clause xii of Explanation 1 to Section 153 allows for an extension of time equal to the period lost by the Assessing Officer (AO) while waiting for the physical handing over of seized books of account from the investigation wing. There was a delay of 144 days in the transfer of records.

Main Issue: Whether the assessment order passed on September 27, 2024, was legally valid or barred by limitation, after accounting for the 144-day extension permitted due to the delay in handing over seized documents.

ITAT’s Ruling: The ITAT ruled in favor of the taxpayer and quashed the assessment order. The Tribunal calculated that by adding the 144-day extension to the original deadline of March 31, 2024, the revised time limit for passing the assessment order was August 22, 2024.

As the AO passed the final order more than a month after the extended deadline,the order was held to be “clearly barred by limitation.” The Bench emphasized that statutory timelines are mandatory and any order passed after the expiry of such period is void ab initio. Thus, the entire tax demand arising from the late order was set aside.

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