ITAT rejects Revenue’s plea to defer limitation issue

Background

The Delhi Bench ‘H’ of the Income Tax Appellate Tribunal has allowed a batch of appeals filed by Baxter India Pvt. Ltd. for AYs 2013–14, 2017–18, 2018–19 and 2020–21, holding that the final assessment orders passed under Section 143(3) read with Section 144C were barred by limitation under Section 153 of the Income-tax Act, 1961.

The Revenue argued that the issue concerning the interplay between Sections 144C and 153 is unsettled and pending before the Supreme Court in ACIT v. Shelf Drilling Ron Tappmeyer Ltd., and therefore sought deferral of adjudication. Rejecting this contention, the Tribunal relied on a coordinate bench ruling in Teva Pharmaceutical & Chemical Industries India Pvt. Ltd., holding that mere pendency before the Supreme Court does not prevent the Tribunal from deciding the issue, particularly when binding High Court precedent exists. The Bench also noted that Section 158AB provides a statutory mechanism for the Revenue where identical questions of law are pending before higher courts.

Final assessment orders held time-barred; liberty to revive granted

On merits, the Tribunal followed the judgment of the Madras High Court in CIT v. Roca Bathroom Products (P.) Ltd., which held that Sections 144C and 153 are mutually inclusive and that the non-obstante clause in Section 144C(13) does not exclude the outer limitation prescribed under Section 153. Applying this ratio, the Tribunal found that the final assessment orders for AYs 2020–21 and 2021–22 were passed well beyond the statutory time limits and were therefore void ab initio.

Accordingly, the impugned final assessment orders were quashed as barred by limitation. However, considering that the issue is pending before a larger bench of the Supreme Court, the Tribunal granted liberty to both parties to seek revival of the appeals if the eventual ruling of the apex court necessitates modification. All other issues on merits were kept open.