Case Note & Summary
The petitioner, Renaissance Services BV, a company and tax resident of the Netherlands, filed its original return of income for Assessment Year 2018-2019 on 29.10.2018 declaring total income of Rs. 19,96,290. The return was revised to claim correct tax deducted at source, with total income remaining the same. The return was picked up for scrutiny, and a notice under Section 143(2) of the Income Tax Act, 1961 was issued on 22.09.2019. Subsequent notices were issued and responded to by the petitioner. The first respondent, Deputy Commissioner of Income Tax (International Tax), passed a draft assessment order on 19.04.2021 under Section 143(3) read with Section 144-C of the Act, proposing an addition of Rs. 38,97,58,539. The petitioner challenged the final assessment order dated 27.09.2021 passed under Section 143(3) read with Section 144-C(3) and the consequent penalty notice, on the ground that the assessment order was passed beyond the period of limitation provided under Section 144-C of the Act. The court considered the timeline: the assessment year ended on 31.03.2019, and under Section 144-C(4) read with Section 144-C(1), the final assessment order was required to be passed within nine months from the end of the assessment year, i.e., by 31.12.2020. The draft assessment order itself was passed on 19.04.2021, which was after the limitation period. The court held that the limitation period under Section 144-C is mandatory and cannot be extended. Consequently, the final assessment order dated 27.09.2021 was invalid and was quashed. The court also quashed the penalty notice. The petition was allowed.
Headnote
A) Income Tax - Limitation - Section 144-C of Income Tax Act, 1961 - Assessment Order Beyond Limitation - The petitioner, a tax resident of Netherlands, challenged the assessment order dated 27.09.2021 passed under Section 143(3) r/w Section 144-C(3) of the Act on the ground that it was passed beyond the period of limitation provided under Section 144-C. The court held that the draft assessment order was passed on 19.04.2021 and the final assessment order was passed on 27.09.2021, which was beyond the nine-month period from the end of the assessment year 2018-2019 (i.e., 31.12.2020) as per Section 144-C(4) read with Section 144-C(1). The court found that the limitation period was mandatory and the order was invalid. (Paras 1-6) B) Income Tax - Draft Assessment Order - Section 144-C of Income Tax Act, 1961 - Time Limit for Passing Final Order - The court examined the timeline: the draft assessment order was passed on 19.04.2021, but the final assessment order was passed on 27.09.2021. The court noted that the limitation period under Section 144-C(4) read with Section 144-C(1) required the final order to be passed within nine months from the end of the assessment year, i.e., by 31.12.2020. Since the draft order itself was passed after that date, the entire assessment was time-barred. The court quashed the assessment order and the consequent penalty notice. (Paras 2-6)
Issue of Consideration
Whether the assessment order passed under Section 143(3) read with Section 144-C(3) of the Income Tax Act, 1961 is barred by limitation and therefore invalid.
Final Decision
The court allowed the petition and quashed the assessment order dated 27.09.2021 and the consequent penalty notice, holding that they were passed beyond the period of limitation under Section 144-C of the Income Tax Act, 1961.
Law Points
- Limitation period under Section 144-C of Income Tax Act
- 1961
- mandatory
- assessment order beyond time limit invalid
- no discretion to extend time
