Oral Judgment: (K.R. Shriram, J.)
1. Petitioner is a Company and tax resident of the Netherland. Petitioner is impugning in this petition an order dated 27.09.2021 passed under Section 143(3) r/w Section 144-C(3) of the Income Tax Act, 1961 (hereinafter to be referred to as the ‘said Act’) and consequent penalty notice on the ground that assessment order was passed beyond the period of limitation provided u/s 144-C of the said Act.
2. Petitioner filed its original return of income for the relevant Assessment Year 2018-2019 on 29.10.2018 declaring total income of 19,96,290/-. Subsequently, return was revised to claim correct tax deducted at source, total income being the same. Return of income was picked up for scrutiny and notice dated 22.09.20219 u/s 143(2) of the said Act was issued to petitioner. Subsequent notices were also issued and petitioner responded to those notices. Respondent no.1 passed draft assessment order dated 19.4.2021 u/s 143(3) r/w Section 144-C of the said Act proposing to make addition amounting to Rs.38,97,58,539/- (hereinafter to be referred as ‘draft assessment order’).
3. This draft assessment order came to be passed as per the provisions of Sub-section 1 of Section 144-C of the said Act with variations proposed since the petitioner was eligible assessee as per provisions of Section 144- C(15)(b) of the said Act.
4. As per provisions of Sub-section 2 of Section 144-C of the said Act eligible assessee has a right to file objections to draft assessment order or convey his acceptance against proposed variations in draft assessment order within 30 days from the date of receipt of draft assessment order. If assessee conveys his acceptance to the draft assessment order or does not file objections with Dispute Resolution Panel (hereinafter to be referred to as ‘DRP’) within time limit prescribed in Section 144-C(2) of the said Act, then, as per Sub-section 4 of Section 144-C of the said Act, the Assessing Officer has to pass final assessment order on the basis of the draft order within 1 month from the end of the month in which acceptance is received or period of filing of objections under Sub-section 2 of Section 144-C of the said Act expires.
5. By letter dated 15.5.2021, forwarded to respondent no.1 by email on 17.5.2021, petitioner informed respondent no.1 that it would not be opting for DRP route and instead would pursue normal appellate channel, i.e., file an appeal with Commissioner of Income Tax (Appeals) against final assessment order. Petitioner, of course, also noted its objections to the additions proposed. In short, petitioner informed respondent no.1 to go ahead and pass final assessment order as per proposed draft without prejudice to petitioner’s right to raise all objections before Commissioner of Income Tax(Appeals). Receipt of this communication is admitted by respondent no.1.
6. Therefore, it is petitioner’s case that as per provisions of sub-section 4 of Section 144-C of said Act, respondent no.1 ought to have passed final assessment order u/s 143(3) r/w Section 144-C(3) of the said Act, within one month, from the end of the month in which acceptance of variations is received or period to file objections expires which, in the present case was 30.06.2021. According to the petitioner since the order impugned in this petition has been passed only on 27.9.2021, order is non-est, bad in law and requires to be quashed and set aside since it is passed beyond the period of limitation prescribed.
7. It is respondent’s case that order passed is within limitation because;
a) e-mail dated 17.5.2021 was not communicated through e- proceeding functionality on ITBA system
b) Pursuant to Circular no.8/2021 dated 30.4.2021, time limit to file objections by the tax payer to DRP u/s 144-C of the said Act was extended to be filed within time provided under that Section or by 31.5.2021 whichever is later.
c) As per notification no.74/S.O.2580(e) dated 25.6.2021 time limit for completion for assessment which were getting time barred on 30.6.2021 was extended to 30.9.2021 and the same has also been clarified by Press Release dated 20.6.2021 issued by CBDT by which time limit for passing assessment order was further extended to 30.9.2021.
8. Therefore, questions which arise that require answer from us are :
a) Whether the Circular and Notifications relied upon by respondents, cover petitioner’s case?
b) Whether time to complete assessment under Section 144-C (4) could be stated to have been extended till 30.9.2021?
9. Sub-section 1, 2, 3 and 4 of Section 144-C of the said Act reads as under :
144C.(1) The Assessing Officer, shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation which is prejudicial to the interest of such assessee.
(2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order-
(a) file his acceptance of the variations to the Assessing Officer; or
b) file his objections, if any, to such variation with -
i) the Dispute Resolution Panel and
ii) the Assessing Officer.
(3) The Assessing Officer shall complete the assessment on the basis of the draft order, if-
(a) the assessee intimates to the Assessing Officer the acceptance of the variation; or
(b) no objections are received within the period specified in sub-section (2).
(4) The Assessing Officer shall, notwitstanding anything contained in section 153 (or section 153B), pass the assessment order under sub-section (3) within one month from the end of the month in which –
(a) the acceptance is received; or
(b) the period of filing of objections under sub-section(2) expires.”
10. Circular No.8 of 2021 dated 30.4.2021, notification no.74/2021 dated 25.6.2021 and press release of CBDT dated 25.6.2021 are scanned and reproduced herein for ease of reference.
11. Section 144-C of said Act clearly provides two options to the assessee when the assessee receives draft assessment order which is prejudicial to the interest of such assessee. The two options are to be exercised within 30 days from receipt of draft assessment order, i.e.,
a) file his acceptance of variations to the Assessing Officer; or
b) file objections to any such variations with the Dispute Resolution Panel and the Assessing Officer.
If, the Assessing Officer receives acceptance of variations from the assessee or does not receive any objections within 30 days of receipt of acceptance by the assessee of draft order, the Assessing Officer shall complete the assessment on the basis of draft order. Sub-section 4 of Section 144-C prescribes for time within which such assessment order has to be passed, whether the Assessing Officer has received acceptance of variation or has not received any objections to variations and that period prescribed is within 1 month from the end of the month in which acceptance is received or the period of filing of objections under Subsection 2 of Section 144-C of the said Act expires. In this case, communication has been received by respondent no.1 on 17.5.2021 and therefore, time limit under sub-section 4 of Section 144-C of the said Act would expire on 30.06.2021. Even if we accept respondent no.1’s grievance that e-mail dated 17.5.2021 was not uploaded in ITBA system and if at all we say that the email has to be ignored, still, draft order having been received by petitioner on 19.4.2021, thirty day period provided under sub-section 2 of Section 144-C of the said Act would have expired on 18.05.2021 which would mean time limit under Sub-section 4 of the said Act would still expire on 30.6.2021. Admittedly, in this case, order has been passed on 27.09.2021.
12. Let us consider whether we could accept respondent’s contention that order was within time. Mr. Suresh Kumar submitted under the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 r/w notification received and relied in the affidavit-of-reply, time has been extended. Mr. Suresh Kumar submitted that notification under Relaxation Act issued by the Government of India for mitigating pains of the tax payers due to general lockdown and restrictions due to COVID pandemic. Same yard-stick apply to the Government officials who were also prevented from working in normal conditions. Government tried its best to save citizens including tax payers and Officers of Government department and hence, provision should be given purposive interpretation. Mr. Suresh Kumar submitted that time limit to file objections by the tax payers to DRP was extended by CBDT Circular No. 8 of 2021 dated 30.4.2021 and as per said Circular last date for filing of objections before DRP which was due on 1.4.2021 or thereafter was extended upto 31.5.2021. Thus, in view of the said Circular, petitioner could have filed objections to draft order dated 19.4.2021 by 31.5.2021. Therefore, as per sub-section 4 of Section 144-C of the Act, the Assessing Officer was required to complete assessment by 30.6.2021, i.e., within one month from the end of the month in which period of filing objections had expired. Subsequently, Notification No.74/2021, S.O.2580(E) dated 25.6.2021 was issued by Central Board of Direct Taxes and as per notification, time limit for completion of assessment which were getting time barred on 30.6.2021 was extended to 30.9.2021. Mr. Suresh Kumar submitted that this was clarified by CBDT in its press release dated 25.6.2021.
13. In our view, neither Circular no.8/2021 nor notification no.74/2021 dated 25.6.2021 or press release dated 25.6.2021 would help respondent no.1.
In Circular No. 8/2021 dated 30.4.2021, sub-clause (b) of Clause 1 only provides for objections to Dispute Resolution Panel u/s 144-C of the said Act for which, last date of filing under that Section is 1.4.2021 or thereafter may be filed within the time provided under that Section or by 31.5.2021 whichever is later. Therefore, it only provides for extension of time for filing of objections. It does not extend time for passing order under sub-section 4 of Section 144-C of the Act. In any case, even if, we proceed on the basis that, it would extend time to pass orders, still, as admitted in affidavit in reply itself, time to pass such order would have expired on 30.6.2021.
14. Now coming to the notification no.74/2021 dated 25.6.2021 relied upon by respondent no.1, in our view that notification does not apply to assessment u/s 144-C of the Act. We say this, because, by the said notification no.74/2021 the Government of India, relying on the provisions of Relaxation Act are only partially modifying notifications already issued under Relaxation Act which are referred to in the said notification. Circular no.8/2021 has not been modified because it is not referred to in the said notification. Moreover, Clause A(i) of the said Notification only provides for assessment or re-assessment under the said Act and the time limitation for completion of such action u/s 153 or 153-B thereof expires on 30.06.2021, due to its extension by the said notifications, such time limit shall further stand extended to 30.9.2021. First of all, it does not refer to Section 144-C of the said Act. Sub-section 4 of Section 144-C of the said Act also says that the Assessing Officer shall, notwithstanding anything contained in Section 153 or 153-B shall pass assessment order under sub- section (3) within time prescribed therein. Thirdly, it also says “… due to which extension by said notifications …...” and the said notifications are defined in the said notification itself and none of those notifications apply to the provisions of Section 144-C of the said Act. We would add, it is not even the case of respondent that, any of these noti
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fications will apply to Section 144-C(4) of the said Act. If that was the case, we would have expected him to say so in the affidavit-in-reply. For this reason certainly press release relied upon dated 25.6.2021 will also be not applicable. In fact press release clarifies “Extension of Timelines-….. provided through notification nos.74/2021 and 75/2021 dated 25.06.2021 …..”. None of the notifications referred in the press release pertains to any timeline prescribed u/s 144-C of the said Act. 15. In the circumstances, we will have to agree with petitioner’s case that the assessment order dated 27.09.2021 has been passed beyond prescribed time limit. 16. Therefore, we allow petition in terms of prayer clause (a) of the petition, which reads as under; “(a) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other appropriate writ, order, or direction in the nature of certiorari under Article 226 of the Constitution of India calling for all papers and proceedings of the petitioner’s case pertaining to Assessment Year 2018-2019, and after examining the validity, legality and propriety thereof, and quash and set aside final Assessment order and consequential penalty notice made by respondent no.1, as non-est, being barred by limitation”. 17. Petition disposed with no order as to costs.