The Bombay High Court has held that upholds Section 153 limitation under Income Tax Act as binding, contrary to Section 144C “Complete Code”.
In a significant development, the Bombay High Court has dismissed the Revenue Department’s argument that the Madras High Court’s ruling in the Roca Bathroom case should be considered per incuriam. The Revenue Department contended that Section 153 of the Income Tax Act supersedes and encompasses the time limits set forth in Section 144C. However, the Bombay High Court disagreed with this interpretation.
While acknowledging that Section 144C provides a complete framework for the special procedure of conducting assessments, the court observed that this should not be interpreted as negating the overall time limits prescribed in the legislation. The court accepted the argument put forth by the Assessee that whenever the legislature intended to allow extra time, it explicitly provided for it in Section 153. For instance, Section 153 permits the passing of a fresh order under Section 92CA following a remand order from the Income Tax Appellate Tribunal (ITAT).
The Revenue Department put forth a submission claiming that in cases where the ITAT has issued a remand order for fresh adjudication, the assessing officer (AO) is not bound by any time limits as none are prescribed under Section 144C(1). However, the court observed that accepting the Revenue’s submission would run counter to the intended objectives of Section 144C. The court pointed out that as the provisions of Section 144C lay down time limits at every stage, it would be unreasonable to allow proceedings on remand to the AO to be conducted without any time constraints.
After conducting a comprehensive analysis of Sections 144C and 153, the Bombay High Court held that the provisions of Section 153 are not excluded by the operation of Section 144C. Furthermore, the court highlighted instances where time limits are extended under different sub-sections and Explanation 1 of Section 153.
The court also clarified that the time limits outlined in Section 144C(4)/(13), which contain a non-obstante clause, serve the specific purpose of ensuring that the AO takes the stipulated action within 30 days, irrespective of the longer duration available under Section 153.
The court emphasized the need to interpret the section and its sub-sections as a whole, alongside connected provisions, to ascertain their meaning and intentions.
The court held that no final assessment order can be passed in the present case as the same is time barred, thus, the return of income as filed by the Assessees has to be accepted but this would not preclude the Revenue from taking any other steps in accordance with law
Case Title:
HC: Sec.153 limitation binding despite Sec.144C ‘complete code’; Follows Madras HC’s Roca Bathroom
Case Title: Shelf Drilling Ron Tappmeyer Limited Versus ACIT
Citation: WRIT PETITION NO.2340 OF 2021