ITAT: Final Assessment Order Time-Barred, Upload Date Triggers Limitation:

ITAT: Final Assessment Order Time-Barred, Upload Date Triggers Limitation

The assessee group filed its return for AY 2020-21, declaring income of Rs. 417.42 crore. The case was selected for scrutiny involving international transactions, ICDS adjustments, and large refund claims. The Assessing Officer proposed a transfer pricing adjustment of Rs. 369.62 crore based on the TPO’s order, which was challenged before the Dispute Resolution Panel (DRP). The DRP issued directions on 31.05.2024, which were uploaded on the Income Tax Business Application (ITBA) portal the same day. However, the final assessment order was passed only on 30.07.2024 under Sections 143(3) read with Section 144C(13) and 144B of the Income Tax Act. Aggrieved, the assessee challenged the order before the ITAT on multiple grounds, including limitation.

The assessee argued that as per Section 144C(13), read with the Information Technology Act, 2000, the date of uploading the DRP’s order electronically triggers the limitation period for passing the final assessment order. Relying on binding precedents, including Microsoft Corporation India Pvt. Ltd. and Supreme Court rulings, the assessee contended that the order was time-barred and therefore void.

Issue Raised: Whether the final assessment order issued after the statutory deadline under Section 144C(13), based on the date the DRP's instructions were sent electronically, is barred by limitation and, as a result, invalid.

Tribunal's Ruling: The ITAT allowed the assessee's appeal, holding that the assessment order dated July 30, 2024, was passed beyond the limitation period specified under Section 144C(13). It held that the relevant date for limitation is the date on which the DRP's directions are uploaded to the ITBA portal, which, in this case, was May 31, 2024. Relying on Section 13 of the Information Technology Act and various binding decisions, including those of Microsoft Corporation India Pvt. Ltd. and Honda R&D India Pvt. Ltd., the Tribunal ruled that the time starts running from the date of upload, not from the date the AO acknowledges or processes the order. Since the final assessment order was passed after June 30, 2024, it was held to be time-barred.

Thus, the final assessment order was quashed, rendering all other grounds academic. The connected stay application was dismissed as infructuous.

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