ASSISTANT COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) & OTHERS v. SHELF DRILLING RON TAPPMEYER LTD. ETC

Citation: 2025 INSC 946, [2025] 8 S.C.R. 1574

Court: Supreme Court of India

Bench: B.V. Nagarathna and Satish Chandra Sharma, JJ.

Judgment text

SUPREME COURT OF INDIA (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. [2025] 8 S. C. R. 1574 : 2025 INSC 946 Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. (Civil Appeal No(s). 10586-10589 of 2025) 08 August 2025 [B. V. Nagarathna* and Satish Chandra Sharma,* JJ. ] Issue for Consideration The present matter raised important questions of law relating to interpretation and interplay between Section 144C and Section 153(3) of the Income Tax Act, 1961. The question for consideration was on the applicability of Section 153 to a proceeding under Section 144C namely, whether the period of eleven months as envisaged under Section 144C should be over and above the limitation period prescribed, particularly, under Section 153(1) or (3), as the case may be.

In other words, whether the time consumed for concluding the proceeding under Section 144C has to be subsumed within the limitation prescribed under Section 153(1) or (3) or as the case may be. Headnotes† Income Tax Act, 1961 - ss. 144C and 153(3) - Limitation periods and procedures prescribed in these two sections - Interpretation and interplay between s. 144C and s. 153(3) - Whether time consumed for concluding the proceeding u/s. 144C has to be subsumed within the limitation prescribed u/s. 153(1) or (3) or as the case may be. Held [Per Satish Chandra Sharma, J. ]: 1.

In interpreting the provisions that form the subject matter of the present controversy, a fine balance has to be maintained between ensuring that the revenue authorities have ample time and opportunity to assess income and ensure that those who attempt tax evasion, are prosecuted, and the income escaping taxation, is brought within the tax fold - At the same time, the rights of the Assessees, of not having their returns scrutinized after a substantial * Author Ed. Note: Hon'ble Mrs. Justice B. V. Nagarathna and Hon'ble Mr. Justice Satish Chandra Sharma pronounced separate judgments. Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

period of time, must also be balanced - If the entire procedure prescribed and contemplated in terms of Section 144C of the Income Tax Act must be subsumed within the overall time period prescribed under Section 153 of the Income Tax Act, it would result in a complete catastrophe for recovering lost tax - The time period within which the Assessing Officers would have to pass orders would be negligible - This would be totally unworkable - Section 153 in its operation does not distinguish between persons who are suffering assessment under Section 144C of the Income Tax Act or otherwise. [Paras 30, 31, 32, 33] 2.

The High Courts of Bombay and Madras have taken the view that the fact that no exception has been carved out for Section 144C of the Income Tax Act in any of the sub-sections of Section 153 of the Income Tax Act makes it clear that the time of Section 144C of the Income Tax Act proceedings must necessarily conclude within the time period prescribed under Section 153 of the Income Tax Act - This view can be agreed upon only to a limited extent, insofar as the timelines prescribed under Section 153 of the Income Tax Act must apply to proceedings under Section 144C of the Income Tax Act, but only insofar as they relate to the passing of the Draft Assessment Order contemplated under Sub-Section (1) of Section 144C of the Income Tax Act. [Para 35] 3.

Sub-Section (4) and Sub-Section (13) of Section 144C of the Income Tax Act provide clear and unequivocal non obstante clauses, which remove the application of Section 153 of the Income Tax Act and the timelines prescribed thereunder - No doubt Sub- Section (4) and Sub-Section (13) of Section 144C of the Income Tax Act prescribe very specific timelines for the Assessing Officer to complete and pass the Final Assessment Order, but these timelines are independent of the timelines contemplated in Section 153 of the Income Tax Act, and operate in addition to the timelines contemplated in Section 153 of the Income Tax Act. [Paras 36, 37] 4.

The requirements of Section 153 of the Income Tax Act in terms of timeline are strictly applicable to Section 144C (1) of the Income Tax Act, that is the stage at which the Draft Order has to be passed by the Assessing Officer - The non-obstante clauses contained in Sub-Section (4) and Sub-Section (13) of Section 144C of the Income Tax Act only extend the timeline for the passing of the final order and not that of the Draft Order - Sub-Section (4) operates and comes into existence only in cases in situations when an Assessee subjected to Section 144C of the Income Tax 1576 Act accepts the variations proposed in the Draft Assessment Order or if the period of filing objections before the Dispute Resolution Panel expires - The conjoint reading of Section 144C(1), Section 153, and Section 144C(4) of the Income Tax Act make it abundantly clear that the Assessing Officer is obliged to comply with the requirements of Section 153 of the Income Tax Act insofar as it relates to passing the Draft Assessment Order and that he must also necessarily pass the Final Assessment Order within an additional period of one month in case the variations are accepted or the period of limitation for filing objections expires - Similarly, in the event objections were filed, Section 144C(12) of the Income Tax Act states that such objections have to be decided and directions have to be issued within a period of 9 months - Sub-Section (13) makes it clear that regardless of how long it takes the Dispute Resolution Panel to pass its directions, the Assessing Officer will only have an additional period of one month to pass the Final Assessment Order - This means that if the Dispute Resolution Panel disposes of the objections and issues directions within a period of one month from the date of filing of objections, the Final Assessment Order must be passed within one month from such date which will be practically impossible.

[Paras 39, 40, 41] 5. The non-obstante clauses in Section 144C must be harmoniously construed - The timelines prescribed under Section 153 will be applicable upto the stage of passing the draft assessment order under Section 144C(1) - Once the procedure under Section 144C(1) gets triggered, the time available with the Dispute Resolution Panel to carry out the process conceived under Section 144C(5) to Section 144C(12) and the time available with the assessing officer under Section 144C(13), will be over and above the timelines prescribed under Section 153 - This interpretation would ensure a smooth functioning of Section 153 and Section 144C. [Para 46] 6.

Section 153 is not the only provision for prescribing time limits for assessments and reassessments - Had Section 153 subsumed the timelines prescribed under Section 144C, there was no occasion for the Parliament to specifically mention Section 144C in Section 92CD(5) which too provided alternate timelines, contrary to the timelines prescribed under Section 153 - This too is an indication of the intention of the Parliament to operate the timelines under Section 144C over and above Section 153. [Paras 47, 48] 7. The two situations contemplated under the Income Tax Act in terms of assessment under Section 144C of the Income Tax Act Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

are vastly different and will obviously take varying amounts of time depending on whether objections are filed before the Dispute Resolution Panel or not - This option is only exercised by the Assessee - If adequate opportunity or time is not granted to an Assessee or if the Dispute Resolution Panel is forced to decide the objections in a very quick manner inhibited by the timelines prescribed under Section 153 of the Income Tax Act, it would amount to a violation of the Principles of Natural Justice. [Para 56] 8.

In cases of assessment proceedings under Section 144C, Section 153 of the Income Tax Act and all its sub-sections are fully applicable, and the timelines prescribed therein apply to the Draft Assessment Order, which is to be passed under Sub- Section (1) of Section 144C of the Income Tax Act - If proceedings under Section 92C are also invoked, the time period in view of Section 153(4) of the Income Tax Act would be extended by a period of 12 months - The fixed time periods prescribed under Section 144C of the Income Tax Act must be adhered to, and a final assessment order must be passed either within one month of the Draft Assessment Order if the situation contemplated under Sub-Section (4) takes place, or within a period of 11 months from the passing of the Draft Assessment Order if the Assessee opts to file objections before the Dispute Resolution Panel. [Paras 59, 60] Held [Per B. V. Nagarathna, J. ] (Dissenting): 1. Sub-section (3) of S.

153 which prescribes the limitation period does not make any distinction between an eligible assessee and any other assessee - The non-obstante clause in sub-section (1) of S. 144C implies that it overrides all sections of the Act contrary to the procedure contemplated under S. 144C inasmuch as it contemplates a special procedure insofar as eligible assessees are concerned - This means that insofar as the eligible assessees are concerned, their assessment is subject to a distinct procedure under S. 144C, wherein a draft assessment order has to be made in the first instance - The non-obstante clause in sub-section (1) of S.

144C has been invoked by the Parliament in order to make a distinction between eligible assessees and other category of assessees in the matter of assessment/re-assessment where a draft assessment order has to be made by the Assessing Officer in the first instance leading to DRP directions being issued to the 1578 Assessing Officer in case there is a reference to the DRP, which is not so in the case of other assesses - Thus, the non-obstante clause in sub-section (1) of S. 144C is not related to the overall limitation period prescribed under S. 153 but with the aspect of there being a distinct procedure which has been envisaged in the case of only eligible assessees - If the non-obstante clause under sub-section (1) of S. 144C is to be construed only in the context of the limitation period under S. 153 inasmuch as the procedure contemplated under S. 144C would be a time frame to be considered over and above what is contemplated under S.

153(3), it would lead to an absurd result - That is why, the non-obstante clause in sub-section (1) of S. 144C cannot be held to be with reference to S. 153(3) at all - The scope and ambit of the two provisions are distinct inasmuch as S. 153 deals with limitation period with respect to completion of assessments and reassessments while S. 144C deals with a procedure to be complied with for making an assessment order only in the case of eligible assesses - There is no contradiction between S. 144C and S. 153 - Therefore, subsection (1) of S. 144C has to be read as prescribing a unique procedure insofar as eligible assessees are concerned inasmuch as notwithstanding anything contrary contained in the Act vis-à-vis various categories of assesses - S. 144C is applicable only in the case of eligible assessees and not to any other category of assessee. [Paras 12. 12, 12. 13 and 12. 14] 2. If S.

144C applies to an eligible assessee, then the maximum period that is contemplated for passing the final assessment order is eleven months from the date of receipt of the draft order by the eligible assesses; the shortest period would be two months, when the draft order is accepted by the eligible assessee, for passing the final order - Also, nine months is the maximum period for the DRP to issue directions to the Assessing Officer in case objections are received to a draft assessment order from an eligible assessee. [Para 12. 18] 3. In cases where S. 144C applies, the maximum period stipulated for completion of a final assessment order being eleven months would still be within the limitation period of twelve months prescribed under the proviso to S. 153(3) - This would mean that a draft assessment order has to be forwarded by the Assessing Officer to the eligible assessees within one month from the end of the financial year in which the order under S.

254 is received by the Principal Chief Commissioner, Chief Commissioner etc. , as the Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. case may be - Then, one month's time is the shortest period of time to prepare the draft assessment order under S. 144C by the concerned Assessing Officer. [Para 12. 19] 4. As soon as the papers are received by the Principal Chief Commissioner or Chief Commissioner etc. , pursuant to an order passed under S. 254, the same has to be forwarded and ultimately the final assessment order has to be made within twelve months from the end of the financial year in which the order under S. 254 was received by the Principal Chief Commissioner or Chief Commissioner etc.

, as the case may be - In which event, this would imply that a copy of the same would also have to be simultaneously sent to the Assessing Officer concerned and the minimum period that the Assessing Officer would have for making the draft order would be thirty days, depending on when the order is received by the Principal Chief Commissioner or Chief Commissioner, etc. , as the case may be. [Para 12. 20] 5. The expression "the assessing officer shall, in conformity with the directions, complete notwithstanding anything to the contrary contained in s. 153 or 153(B), the assessment... within one month from the end of the month in which such direction is received" in sub-section (13) of S. 144C has to be harmoniously read with sub-section (3) of S. 153 - It would inevitably mean that the procedure contemplated under S. 144C applicable to an eligible assessee has to be concluded within a period of twelve months as stipulated in proviso to sub-section (3) of S. 153. [Para 14. 3] 6.

Even when the Assessing Officer has to follow the procedure prescribed under S. 144C, the same has to be commenced and concluded in terms of sub-section (3) of S. 153 - The said provision is applicable to an eligible assessee inasmuch as when the procedure under S. 144(C)(1) has to be followed - Consequently, the rest of the provisions of S. 144C would become applicable - This is only when the Assessing Officer intends to make any variation which is prejudicial to the interest of the eligible assessee - Then a draft order has to be made in the first instance - Even in such a case, the assessment has to be concluded within twelve months as stipulated in S. 153(3) where there has been remand by the Tribunal to the Assessing Officer under S. 254 - Within the period of twelve months prescribed under S. 153(3), the Assessing Officer has to ensure that the entire procedure under S. 144C is completed (as and when it is applicable) and pass a final assessment order. [Para 15] 1580 7.

The Assessing Officer has to be prompt, attentive and conscious of passing an order envisaged under S. 144C(1) and not be reminded about doing so - Therefore, even when S. 144C applies to a case, the twelve month period stipulated under S. 153(3) has to be applied - Thus, the procedure under S. 144C has to be concluded within the time frame envisaged under S. 153(3) or S. 153(1) as the case may be [Para 15. 1] 8.

An assessment order or an order of assessment encompasses the entire process of assessment commencing from the stage of filing of a return till the making of an assessment of the total income and also the determination of the taxes which is contemplated under Section 153 of the Act in so far as the limitation period for the said procedure is concerned - That is not exactly the exercise that is carried out under sub-section (1) of Section 144C as the said assessment order is not a final assessment order but only a draft assessment order - This is unlike assessment orders made under sub-section (3) of Section 143 or sub-section (13) of Section 144C of the Act which are final assessment orders - Therefore, the expressions "assessment" used in Section 143 of the Act and "make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment", and the expression "the assessment" in sub-section (13) of Section 144C as well as the expression "assessment order" in sub-section (4) of Section 144C have to be given an identical meaning under Section 153 of the Act, i.

e. , final assessment order although, the assessment orders are made in a distinct manner and under a different procedure as they apply to different categories of assesses - The period under Section 144C of the Act is to be subsumed within the time prescribed under Section 153(1) of the Act. [Paras 15. 3(iv) and (v)] Interpretation of Statutes - Absurdity - Courts must avoid absurd interpretation - Discussed: Held [Per Satish Chandra Sharma, J. ]: While interpreting statutes, the Court must avoid an absurd interpretation and must always strive to interpret the provisions to ensure that the Legislation is not reduced to a futility, and the interpretation must ordinarily be such that it brings about an effective result which was intended by the Legislature. [Paras 53, 54, 55] Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. Interpretation of Statutes - Purposive Interpretation - Discussed: Held [Per B. V. Nagarathna, J.

]: A statute or any enacting provision therein must be so construed as to make it effective and operative - Courts should avoid a construction which would reduce a provision to a futility and rather accept a construction based on the view that Parliament or any Legislature would legislate only for the purpose of bringing about an effective result. [Para 9. 1] Interpretation of Statutes - Literal interpretation - Plain meaning rule - Discussed: Held [Per B. V. Nagarathna, J.

]: When the words of a statute are clear, plain or unambiguous, courts are bound to give effect to that meaning irrespective of consequences - The results of the construction are then not a matter for the court, even though they may be strange or surprising, unreasonable or unjust or oppressive - Hardship cannot be a ground for not giving effective and grammatical meaning to every word of the provisions of a statute if the language used therein is unequivocal - Plain meaning rule applies at the stage when the words have been construed in their context and the conclusion has been reached that they are susceptible to only one meaning. [Paras 9. 2-9. 5] Interpretation of Statutes - Statute must be read as whole - Harmonious interpretation - Discussed: Held [Per B. V. Nagarathna, J.

]: While interpreting a statute it must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make out a consistent enactment of the whole statutes - Such a construction has a merit of avoiding any inconsistency or repugnancy either within a Section or between a Section and other parts of the statutes - It is the duty of the courts to avoid a clash between two Sections of the same Act and "whenever it is possible to do so, to construe provisions which appear to conflict so that they harmonise"- The provisions of one Section of a statute cannot be used to defeat another section of the same statute - The same rule applies to a sub-section of a Section. [Para 9. 6] 1582 Interpretation of Statues - Non-Obstante Clause - Discussed: Held [Per B. V. Nagarathna, J.

]: A non-obstante clause is generally incorporated in a statute to give an overriding effect to a particular section or the statute as a whole - While interpreting a non-obstante clause, the court is required to find out the extent to which the legislature intended to do so and the context in which the non-obstante clause is used - The utility of non-obstante clause is where there is a conflict between what is stated in a provision and any other law for the time being in force, or anything else contained in the said enactment. [Paras 10-10. 6] Case Law Cited In the judgment of Satish Chandra Sharma, J. Commissioner of Income Tax v. Hindustan Bulk Carriers [2002] Supp. 5 SCR 387 : (2003) 3 SCC 57; Franklin Templeton Trustee Services Private Limited & Anr. v. Amruta Garg & Ors. [2021] 14 SCR 573 : (2021) 6 SCC 736; Vivek Narayan Sharma & Ors. (Demonetisation Case-5J. ) v. Union of India & Ors. [2023] 1 SCR 1 : (2023) 3 SCC 1 - referred to Commissioner of Income Tax v.

Roca Bathroom Products Pvt. Ltd. 2022 SCC Online Madras 8777 - not approved. In the judgment of B. V. Nagarathna, J. Central Bank of India v. State of Kerala [2009] 3 SCR 735 : (2009) 4 SCC 94; In Re: Interplay Between Arbitration Agreements under Arbitration, 1996 & Stamp Act, 1899 [2023] 15 SCR 1081 : (2024) 6 SCC 1; Shree Sajjan Mills Ltd. v. CIT [1985] Supp. 3 SCR 593 : (1985) 4 SCC 590; Kanailal Sur v. Paramnidhi Sadhu Khan [1958] 1 SCR 360 : AIR 1957 SC 907; CIT, Agri v. Keshab Chandra Mandal [1950] 1 SCR 435 : AIR 1950 SC 265; MV Joshi v. MU Shimpi [1961] 1 SCR 986 : AIR 1961 SC 1494; VO Tractoroexport v. Tarapore and Co. [1970] 3 SCR 53 : AIR 1971 SC 1; Venkataramana Devaru v. State of Mysore [1958] 1 SCR 895 : AIR 1958 SC 255; R. S. Raghunath v. State of Karnataka [1991] Supp. 1 SCR 387 : (1992) 1 SCC 335; A. G. Varadarajulu v. State of T. N. [1998] 2 SCR 390 : (1998) 4 SCC 231; ICICI Bank Ltd. v. Sidco Leathers Ltd. [2006] Supp.

1 SCR 528 : (2006) 10 SCC 452 : (2006) 131 Comp Cas 451; Municipal Corpn. , Indore v. Ratnaprabha [1977] 1 SCR 1017 : (1976) 4 SCC 622 : AIR 1977 Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. SC 308; Muhammad Abdul Samad v. State of Telangana [2024] 7 SCR 1236 : (2025) 2 SCC 49; Chief Commissioner of Central Goods and Service Tax v. Safari Retreats Private Limited [2024] 10 SCR 793 : (2025) 2 SCC 523; RBI v. Peerless General Finance and Investment Co. Ltd. [1987] 2 SCR 1 : (1987) 1 SCC 424; Central India Spg. , Wvg. & Mfg. Co. Ltd. v. Municipal Committee [1958] 1 SCR 1102 : 1957 SCC OnLine SC 18; CIT v. JK Commercial Corpn. Ltd. [1977] 1 SCR 512 : (1976) 4 SCC 517; Auto & Metal Engineers v. Union of India (1997) 7 SCC 734 - referred to. Kalyankumar Ray v. Commissioner of Income Tax, West Bengal (1991) 191 ITR 634 (SC); Commissioner of Income Tax v. Roca Bathroom Products Pvt. Ltd. , 2022 SCC Online Madras 8777; CIT v.

Shahzada Nand & Sons (1966) 60 ITR 392; CIT v. Jargaon Electric Supply Co. Ltd. (1960) 40 ITR 184; Pr. CIT v. Lionbridge Technologies Pvt. Ltd. (2019) 260 Taxman 273 (Bom. ); Nokia India P. Ltd. v. DCIT (2018) 407 ITR 20 (Delhi) (HC); CIT v. Purshottamdas T. Patel (1994) 209 ITR 52 (Guj) - referred to. Whitney v. Inland Revenue Commissioner (1926) A. C. 37; Cape Brandy Syndicate v. Inland Revenue Commissioner [(1921) 1 KB 64] - referred to. Books and Periodicals Cited In the judgment of B. V. Nagarathna, J. GP Singh - Principles of Statutory Interpretation, 15th Ed. LexisNexis - referred to. List of Acts Income Tax Act, 1961; Taxation and other laws (Relaxation and Amendment of Certain Provisions) Act, 2020; Finance Act, 2016; Finance Act 2017; Tamil Nadu Land Reforms (Fixation of Ceiling) Act, 1961; Stamp Act, 1899; Arbitration and Conciliation Act, 1996; Central Goods and Services Tax Act, 2017; Benami Property Transaction Act, 1988.

List of Keywords Income Tax; Interpretation of Statute; Purposive interpretation; Literal interpretation; Plain interpretation; Non-obstante clause; Section 144C; Section 153; Assessment; Re-assessment; Draft Assessment Order; Assessing Officer; Final assessment order; Dispute resolution panel; Timelines; Limitation period. 1584 Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 10586-10589 of 2025 From the Judgment and Order dated 04. 08. 2023 of the High Court of Judicature at Bombay in WP Nos. 2340, 2661, 3059, and 3060 of 2021 With Special Leave Petition (Civil) No. 25798 of 2024 Appearances for Parties Advs. for the Petitioners: N Venkatraman, A. S. G. , Ms. Swarupama Chaturvedi, Sr. Adv. , Raj Bahadur Yadav, H R Rao, Udai Khanna, V Chandrashekhara Bharathi, Ashok Panigrahi, Sachin Sharma, Mrs. A Deepa. Advs. for the Respondents: Jehangir D. Mistry, Sr. Adv. , Ms. Rubal Bansal Maini, Prakhar Pandey, Satvik Sareen, Faisal Sherwani, Kunal Cheema.

Judgment / Order of the Supreme Court Judgment Satish Chandra Sharma, J. 1. Leave granted. 2. The present appeals challenge the judgment and order dated 04. 08. 2023 passed by the High Court of Bombay in Writ Petition 2340 of 2021 and other connected matters. 3. The present dispute raises important questions of law relating to the interpretation and interplay between Section 144C and Section 153(3) of the Income Tax Act, 1961. More specifically, what are the periods of limitations prescribed for the revenue authorities to take action against an Assessee and how the limitation periods and procedures prescribed in these two sections coexist. 4. The facts necessary for the adjudication of the present appeals are as follows: Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. 5. The Respondent/Shelf Drilling Ron Tappmeyer Ltd. exercised its option under Section 44BB of the Income Tax Act and declared a total loss of Rs.

120,18,44,672/- for the assessment year 2014-2015. On 28th August 2015, the Appellant issued a notice under Section 143(2) of the Income Tax Act. Pursuant to this, a Draft Assessment Order in terms of Section 144C of the Income Tax Act was passed on 26. 12. 2016, and rejected the books of Account furnished by the Respondent, and assessed its income at Rs. 4,34,79,980/-. The Dispute Resolution Panel, in terms of Section 144C of the Income Tax Act, gave its recommendations on 28th September 2017, and the final assessment order was passed on 30. 10. 2017. 6. Aggrieved by this order, the Respondent approached the Income Tax Appellate Tribunal, which remanded the matter back to the Assessing Officer on the ground that the revenue authorities were not justified in rejecting the books of account furnished by the Respondent and therefore directed them to carry out the assessment afresh. This order came to be passed on 04. 10. 2019. 7.

It is a matter of record that after the remand order passed by the Appellate Tribunal, a notice was issued on 23. 09. 2021, and a Draft Assessment Order was passed on 28. 09. 2021. This Draft Assessment Order was challenged before the High Court of Bombay on the ground that the maximum permissible time period as prescribed under Section 153(3) of the Income Tax Act had already expired and that, therefore, subsequent proceedings were vitiated and could not continue, and no final assessment order could be passed. 8. The writ petition filed by the Respondent was allowed by way of judgment and order dated 04. 08. 2023. The High Court took the view that the time period provided by Section 153(3) of the Income Tax Act is subsumed within the time contemplated in terms of Section 144C of the Income Tax Act.

This Court is therefore required to analyze and interpret the maximum permissible time periods prescribed as per the Income Tax Act in terms of proceedings under Section 144C read with Section 153(3) of the Income Tax Act. 9. It is therefore appropriate to refer to Section 153 of the Income Tax Act. "153. Time limit for completion of assessment, reassessment and recomputation.

-- 1586 (1) No order of assessment shall be made under Section 143 or Section 144 at any time after the expiry of twentyone months from the end of the assessment year in which the income was first assessable: [Provided that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April, 2018, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted: [Provided further that in respect of an order of assessment relating to the assessment year commencing on-- (i) the 1st day of April, 2019, the provisions of this sub- section shall have effect, as if for the words "twenty-one months", the words "twelve months" had been substituted; (ii) the 1st day of April, 2020, the provisions of this sub- section shall have effect, as if for the words "twenty- one months", the words "eighteen months" had been substituted : ]] [Provided also that in respect of an order of assessment relating to the assessment year commencing on [* * *] the 1st day of April, 2021, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "nine months" had been substituted : ] [Provided also that in respect of an order of assessment relating to the assessment year commencing on or after the 1st day of April, 2022, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "twelve months" had been substituted.

] [(1-A) Notwithstanding anything contained in sub-section (1), where a return under sub-section (8-A) of Section 139 is furnished, an order of assessment under Section 143 or Section 144 may be made at any time before the expiry of [twelve months] from the end of the financial year in which such return was furnished. ] [(1-B) Notwithstanding anything in sub-section (1), where a return is furnished in consequence of an order under Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. clause (b) of sub-section (2) of Section 119, an order of assessment under Section 143 or Section 144 may be made at any time before the expiry of twelve months from the end of the financial year in which such return was furnished.

] (2) No order of assessment, reassessment or recomputation shall be made under Section 147 after the expiry of nine months from the end of the financial year in which the notice under Section 148 was served: [Provided that where the notice under Section 148 is served on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted.

] (3) Notwithstanding anything contained in [sub-sections (1), (1-A) and (2)], an order of fresh assessment [or fresh order under Section 92-CA, as the case may be,] in pursuance of an [order under Section 250 or Section 254] or Section 263 or Section 264, setting aside or cancelling an assessment, [or an order under Section 92-CA, as the case may be] may be made at any time before the expiry of nine months from the end of the financial year in which the [order under Section 250 or Section 254] is received by the Principal Chief Commissioner or Chief Commissioner or [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be,] or, as the case may be, the order under Section 263 or Section 264 is passed by the [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be,]: [Provided that where the order under Section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under Section 263 or Section 264 is passed by the Principal Commissioner or Commissioner on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted.

] 1588 [(3-A) Notwithstanding anything contained in sub- sections (1), (1-A), (2) and (3), where an assessment or reassessment is pending on the date of initiation of search under Section 132 or making of requisition under Section 132-A, the period available for completion of assessment or reassessment, as the case may be, under the said sub-sections shall,-- (a) in a case where such search is initiated under Section 132 or such requisition is made under Section 132-A; (b) in the case of an assessee, to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to; (c) in the case of an assessee, to whom any books of account or documents seized or requisitioned pertains or pertain to, or any information contained therein, relates to, be extended by twelve months.

] (4) Notwithstanding anything contained in [sub-sections (1), (1-A), (2), (3) and (3-A)], where a reference under sub-section (1) of Section 92-CA is made during the course of the proceeding for the assessment or reassessment, the period available for completion of assessment or reassessment, as the case may be, under the said [sub- sections (1), (1-A), (2), (3) and (3-A)] shall be extended by twelve months.

(5) Where effect to an order under Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264 is to be given by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] wholly or partly, otherwise than by making a fresh assessment or reassessment [or fresh order under Section 92-CA, as the case may be,] such effect shall be given within a period of three months from the end of the month in which order under Section 250 or Section 254 or Section 260 or Section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under Section 263 or Section 264 is passed by 3407[the Principal Chief Commissioner Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be,]: Provided that where it is not possible for the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer, 3409[or the Transfer Pricing Officer, as the case may be,] if satisfied, may allow an additional period of six months to give effect to the order: [Provided further that where an order under Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264 shall be made within the time specified in sub-section (3).

] [(5-A) Where the Transfer Pricing Officer gives effect to an order or direction under Section 263 by an order under Section 92-CA and forwards such order to the Assessing Officer, the Assessing Officer shall proceed to modify the order of assessment or reassessment or recomputation, in conformity with such order of the Transfer Pricing Officer, within two months from the end of the month in which such order of the Transfer Pricing Officer is received by him.

] (6) Nothing contained in [sub-sections (1), (1-A) and (2)] shall apply to the following classes of assessments, reassessments and recomputation which may, subject to the provisions of [sub-sections (3), (5) and (5-A)], be completed-- (i) where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under Section 250, Section 254, Section 260, Section 262, Section 263, or Section 264 or in an order of any court in a proceeding otherwise than by way of appeal or 1590 reference under this Act, on or before the expiry of twelve months from the end of the month in which such order is received or passed by the [Principal Chief Commissioner or Chief Commissioner or] Principal Commissioner or Commissioner, as the case may be; or (ii) where, in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm under Section 147, on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed.

(7) Where effect to any order, finding or direction referred to in sub-section (5) or sub-section (6) is to be given by the Assessing Officer, within the time specified in the said sub-sections, and such order has been received or passed, as the case may be, by the income-tax authority specified therein before the 1st day of June, 2016, the Assessing Officer shall give effect to such order, finding or direction, or assess, reassess or recompute the income of the assessee, on or before the 31st day of March, 2017.

(8) Notwithstanding anything contained in the foregoing provisions of this section, sub-section (2) of Section 153-A or sub-section (1) of [Section 153-B or Section 158-BE], the order of assessment or reassessment, relating to any assessment year, which stands [revived under sub-section (2) of Section 153-A or sub-section (5) of Section 158-BA], shall be made within a period of one year from the end of the month of such revival or within the period specified in this section or sub-section (1) of [Section 153-B or Section 158-BE], whichever is later.

(9) The provisions of this section as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment, reassessment or recomputation made before the 1st day of June, 2016: [Provided that where a notice under sub-section (1) of Section 142 or sub-section (2) of Section 143 or Section 148 has been issued prior to the 1st day of June, 2016 Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. and the assessment or reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of this section as it stood immediately before its substitution by the Finance Act, 2016 (28 of 2016). ] Explanation 1.

-- For the purposes of this section, in computing the period of limitation-- (i) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proviso to Section 129; or [(ii) the period commencing on the date on which stay on the assessment proceeding was granted by an order or injunction of any court and ending on the date on which certified copy of the order vacating the stay was received by the jurisdictional Principal Commissioner or Commissioner; or] (iii) the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of clause (21) or clause (22-B) or clause (23-A) or clause (23-B) [, under clause (i) of the first proviso] to sub-section (3) of Section 143 and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, as the case may be, under those clauses is received by the Assessing Officer; or (iv) the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited [or inventory valued] under sub-section (2-A) of Section 142 and-- (a) ending with the last date on which the assessee is required to furnish a report of such audit [or inventory valuation] under that sub-section; or (b) where such direction is challenged before a court, ending with the date on which the order setting aside such direction is received by the Principal Commissioner or Commissioner; or 1592 (v) the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under sub-section (1) of Section 142-A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer; or (vi) the period (not exceeding sixty days) commencing from the date on which the Assessing Officer received the declaration under sub-section (1) of Section 158-A and ending with the date on which the order under sub-section (3) of that section is made by him; or (vii) in a case where an application made before the Income-tax Settlement Commission is rejected by it or is not allowed to be proceeded with by it, the period commencing from the date on which an application is made before the Settlement Commission under Section 245-C and ending with the date on which the order under sub-section (1) of Section 245-D is received by the Principal Commissioner or Commissioner under sub-section (2) of that section; or (viii) the period commencing from the date on which an application is made before the [Authority for Advance Rulings or before the Board for Advance Rulings] under sub-section (1) of Section 245-Q and ending with the date on which the order rejecting the application is received by the Principal Commissioner or Commissioner under sub-section (3) of Section 245-R; or (ix) the period commencing from the date on which an application is made before the [Authority for Advance Rulings or before the Board for Advance Rulings] under sub-section (1) of Section 245-Q and ending with the date on which the advance ruling pronounced by it is received by the Principal Commissioner or Commissioner under sub-section (7) of Section 245-R; or (x) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in Section 90 or Section 90-A and ending with the date on which the information requested Assistant Commissioner of Income Tax (International Taxation) & Others v.

Shelf Drilling Ron Tappmeyer Ltd. Etc.

is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or (xi) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub- section (1) of Section 144-BA and ending on the date on which a direction under sub-section (3) or sub-section (6) or an order under sub-section (5) of the said section is received by the [Assessing Officer; or (xii) the period (not exceeding one hundred and eighty days) commencing from the date on which a search is initiated under Section 132 or a requisition is made under Section 132-A and ending on the date on which the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing seized under Section 132 or requisitioned under Section 132-A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee,-- (a) in whose case such search is initiated under Section 132 or such requisition is made under Section 132-A; or (b) to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to; or (c) to whom any books of account or documents seized or requisitioned pertains or pertains to, or any information contained therein, relates to; or] [(xiii) the period commencing from the date on which the Assessing Officer makes a reference to the Principal Commissioner or Commissioner under the second proviso to sub-section (3) of Section 143 and ending with the date on which the copy of the order under clause (ii) or clause (iii) of the fifteenth proviso to clause (23-C) of Section 10 or clause (ii) or clause (iii) of sub-section (4) of Section 12-AB, as the case may be, is received by the Assessing Officer,] shall be excluded: 1594 Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in [sub-sections (1), (1-A), (2)], (3) and sub-section (8) available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly: Provided further that where the period available to the Transfer Pricing Officer is extended to sixty days in accordance with the proviso to sub-section (3-A) of Section 92-CA and the period of limitation available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly: Provided also that where a proceeding before the Settlement Commission abates under Section 245-HA, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub-section (4) of Section 245-HA, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year; and for the purposes of determining the period of limitation under Sections 149, [* * *] 154, 155 and 158-BE and for the purposes of payment of interest under Section 244-A, this proviso shall also apply accordingly: [Provided also that where the assessee exercises the option to withdraw the application under sub-section (1) of Section 245-M, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub-section (5) of the said section, be not less than one year; and where such period of limitation Assistant Commissioner of Income Tax (International Taxation) & Others v.

Shelf Drilling Ron Tappmeyer Ltd. Etc. is less than one year, it shall be deemed to have been extended to one year: Provided also that for the purposes of determining the period of limitation under Sections 149, 154 and 155, and for the purposes of payment of interest under Section 244-A, the provisions of the fourth proviso shall apply accordingly:] [Provided also that where after exclusion of the period referred to in clause (xii), the period of limitation for making an order of assessment, reassessment or recomputation, as the case may be, ends before the end of the month, such period shall be extended to the end of such month. ] Explanation 2.

-- For the purposes of this section, where, by an order referred to in clause (i) of sub-section (6),-- (a) any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of Section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order; or (b) any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of Section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, if such other person was given an opportunity of being heard before the said order was passed. ]" 10.

At this stage, it is relevant to note that Section 153 of the Income Tax Act has been a part of the Income Tax Act for a significantly longer period of time, whereas Section 144C of the Income Tax Act is a relatively new provision, introduced in 2009. Both these provisions have a common salutary objective in mind, which aims to restrict or regulate the powers of revenue authorities to take appropriate steps against assessees. 11. Section 153 of the Income Tax Act prescribes various time limits within which assessment, reassessment, and recomputation of income of 1596 Assessees has to take place by the revenue authorities. Section 153(3) of the Income Tax Act specifically deals with orders of fresh assessments passed as a result of setting aside or cancelling an assessment. This is an event likely to happen when an appellate authority such as the Income Tax Appellate Tribunal or the High Court sets aside any order of an assessing officer, and asks for fresh computation.

Section 153(3) of the Income Tax Act provides that a fresh order must be passed before the expiry of 9 months from the end of the financial year in which the order is received by the Commissioner. The proviso to this sub-section also provides that in case the order is received on or after the first day of April 2019, the 9 month period shall be 12 months. 12. In the facts of the present case, it is clear that the Income Tax Appellate Tribunal passed an order of remand on 04. 10. 2019. The end of the financial year insofar as this order is concerned would be 31. 03. 2020, as a result of which, in the facts of the present case, if Section 153(3) of the Income Tax Act is to be strictly construed, it would mean that the fresh assessment order had to be passed by or before 31. 03. 2021. In the facts of the present case, it is also relevant to note that the financial year ended on 31. 03.

2020 at a time when the entire world was in lockdown as a result of the spread of the coronavirus pandemic. 13. In view of the delays and disruptions caused by the coronavirus pandemic, the Central Board of Direct Taxes issued Notification being S. O. 966(E) dated 27. 02. 2021, in which the time limit for the completion of assessments, reassessments, and recomputation under Section 153 or Section 153B was extended till 30th day of September 2021. "MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION S. O. 966(E). --In exercise of the powers conferred by sub-section (1) of Section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020) (hereinafter referred to as the said Act), and in partial modification of the notification of the Government of India in the Ministry of Finance, (Department Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

of Revenue) No. 93/2020 dated the 31st December, 2020, published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (ii), vide number S. O.

4805(E), dated the 31st December, 2020 (hereinafter referred to as the said notification), the Central Government hereby specifies, for the purpose of sub-section (1) of Section 3 of the said Act, that,-- (A) where the specified Act is the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the Income-tax Act) and the completion of any action, as referred to in clause (a) of sub-section (1) of Section 3 of the said Act, relates to passing of any order-- (a) for imposition of penalty under Chapter XXI of the Income-tax Act, -- (i) the 29th day of June, 2021 shall be the end date of the period during which the time limit specified in or prescribed or notified under the Income-tax Act falls, for the completion of such action; and (ii) the 30th day of June, 2021 shall be the end date to which the time limit for completion of such action shall stand extended; (b) for assessment or reassessment under the Income-tax Act, and the time limit for completion of such action under Section 153 or Section 153-B thereof, -- (i) expires on the 31st day of March, 2021 due to its extension by the said notification, such time limit shall stand extended to the 30th day of April, 2021; (ii) is not covered under (i) and expires on 31st day of March, 2021, such time limit shall stand extended to the 30th day of September, 2021; (B) where the specified Act is the Prohibition of Benami Property Transaction Act, 1988, (45 of 1988) (hereinafter referred to as the Benami Act) and the completion of any action, as referred to in clause (a) of sub-section (1) of Section 3 of the said Act, relates to issue of notice under sub-section (1) or passing of any order under sub-section 1598 (3) of Section 26 of the Benami Act,-- (i) the 30th day of June, 2021 shall be the end date of the period during which the time limit specified in or prescribed or notified under the Benami Act falls, for the completion of such action; and (ii) the 30th day of September, 2021 shall be the end date to which the time limit for completion of such action shall stand extended.

[Notification No. 10/2021/F. No. 370142/35/2020-TPL] SHEFALI SINGH, Under Secy. , Tax Policy & Legislation Division" 14. It is the case of the Respondent that the revenue authorities were required to pass the Draft Assessment Order by or before the date prescribed under Section 153(3) of the Income Tax Act, failing which such order could no longer be passed because of the time limit constraint prescribed under Section 153(3) of the Income Tax Act. 15. The Appellant, on the other hand, contends that Section 144C of the Income Tax Act is a complete code in itself which posts various timelines within which the assessing authorities are required to take certain steps failing which their actions will be time-barred. 16. It is therefore relevant to examine the scope, object, and purpose behind the introduction of Section 144C of the Income Tax Act and the ambit within which this section seeks to operate. The memorandum and explanatory notes of Finance Act No.

2 of 2009 explained the reasons for introducing Section 144C of the Income Tax Act, which reads as under:- " Provision for constitution of alternate dispute resolution mechanism The dispute resolution mechanism presently in place is time consuming and finality in high demand cases is attained only after a long drawn litigation till Supreme Court. Flow of foreign investment is extremely sensitive to prolonged uncertainty in tax related matter. Therefore, it is proposed to amend the Income-tax Act to provide for an alternate dispute resolution mechanism which Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. will facilitate expeditious resolution of disputes in a fast track basis. " 17. Section 144C of the Income Tax Act, 1961 reads as under:- "[144-C. Reference to Dispute Resolution Panel.

--(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, notwithstanding anything contained [in Section 153 or Section 153-B], 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. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such 1600 directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment.

(6) The Dispute Resolution Panel shall issue the directions referred to in sub-section (5), after considering the following, namely:-- (a) draft order; (b) objections filed by the assessee; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),-- (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income tax authority and report the result of the same to it.

(8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. [Explanation. --For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee. ] Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members.

(10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub- section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained [in Section 153 or Section 153-B], the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.

(14) The Board may make rules for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub- section (2) by the eligible assessee. [(14-A) 3363[* * *]] [(14-A) The provisions of this section shall not apply to any assessment or reassessment order passed by the Assessing Officer with the prior approval of the [Principal Commissioner or Commissioner] as provided in sub-section (12) of Section 144-BA.

] [(14-B) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of issuance of directions by the dispute resolution panel, so as to impart greater efficiency, transparency and accountability by-- 1602 (a) eliminating the interface between the dispute resolution panel and the eligible assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a mechanism with dynamic jurisdiction for issuance of directions by dispute resolution panel.

(14-C) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (14- B), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: [* * *] (14-D) Every notification issued under sub-section (14-B) and sub-section (14-C) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.

] (15) For the purposes of this section,-- (a) "Dispute Resolution Panel" means a collegium comprising of three Commissioners of Income tax constituted by the Board for this purpose; (b) "eligible assessee" means,-- (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of Section 92-CA; and [(ii) any non-resident not being a company, or any foreign company:] [Provided that such eligible assessee shall not include person referred to in sub-section (1) of Section 158-BA or other person referred to in Section 158-BD. ] [(16) The provisions of this section shall not apply to any proceedings under Chapter XIV-B. ]" (emphasis supplied) Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. 18.

Sub-Section (1) of Section 144C of the Income Tax Act states that an Assessing Officer, notwithstanding anything to the contrary contained in the Income Tax Act, shall forward a draft of the proposed order of assessment to an Eligible Assessee. This expression "Eligible Assessee" has been defined in Sub-Section (15) to mean a person in whose case a variation arises as a consequence of an order of a Transfer Pricing Officer passed under Sub-Section (3) of Section 92CA of the Income Tax Act. It also includes any non-resident not being a company, or a foreign company. In the facts of the present case, Section 144C of the Income Tax Act is applicable to the Respondent as it is a foreign company. 19. Thus, insofar as eligible Assessees are concerned, the Assessing Officer, in terms of Section 144C of the Income Tax Act, is required to pass a Draft Assessment Order and give a copy of this order to the Assessee.

This Section provides the Assessee a period of 30 days to either accept the variations proposed by the Assessing Officer or to file its objections to this variation with the Dispute Resolution Panel and the Assessing Officer. If no objections are received within the 30-day time period, or an acceptance is received, Sub- (3) mandates that the Assessing Officer complete the assessment, and pass a final Assessment on the basis of the Draft Order. On the other hand, if objections are received by the Dispute Resolution Panel, it must, in terms of Sub-Sections (5) and (6), issue directions as it thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment. Sub-Section (8) also empowers the Dispute Resolution Panel to confirm, reduce, or enhance variations proposed in the Draft Order. Sub-Section (11) specifically provides that an opportunity of hearing must be given in case directions prejudicial to the revenue or the Assessee are being passed.

Sub-Section (12) also prescribes that no direction shall be issued after 9 months from the end of the month in which the Draft Order is forwarded to the eligible Assessee. Sub-Section (13) provides that the Assessing Officer, in conformity with the directions of the Dispute Resolution Panel, must complete the assessment within one month from the end of the month in which the direction is received, and that no further opportunity of being heard is to be provided to the Assessee at this stage. 20. These provisions make it abundantly clear that Section 144C of the Income Tax Act contemplates and prescribes a specific procedure and also prescribes very specific fixed timelines for the completion of 1604 assessment.

From the date of the Draft Assessment Order proposing variations, the entire procedure contemplated will result in an order being passed within an outer limit of roughly 11 months, depending on the date on which the directions, if any, are passed by the Dispute Resolution Panel. 21. The question which arises for the consideration of this court is whether this 11-month period contemplated in Section 144C of the Income Tax Act is subsumed within the outer limit of time to pass an Assessment Order as prescribed under Section 153 of the Income Tax Act or any of its Sub-Sections? 22. The learned Additional Solicitor General, Mr. N. Venkatraman, appearing on behalf of the Appellant, has contended that the Income Tax Act contemplates two different methods of assessment: one for eligible assessees as defined under Section 144C(15)(b) of the Income Tax Act and for other assessees who fall under the normal category.

He has submitted that ordinarily an assessment order must be made in terms of Section 153(1) of the Income Tax Act within a period of 21 months from the end of the assessment year in which the income was first assessable. If the variation arises as a result of a proceeding before the Transfer Pricing Officer under Section 92CA of the Income Tax Act, this period of 21 months is further extended by a period of 12 months, giving a total of 33 months to pass the assessment order from the end of the relevant assessment year. 23. He has further argued that because of the special provisions contained within Section 144C of the Income Tax Act, which is a self-contained code and as a procedure is prescribed under Section 144C of the Income Tax Act, its timelines will be in addition to the timelines prescribed in terms of Section 153 of the Income Tax Act.

According to the learned Additional Solicitor, the timelines prescribed in Section 153 of the Income Tax Act will apply to the Draft Assessment Order referred to in Section 144C(1) of the Income Tax Act, and that he will be required to ensure that the Draft Assessment Order is passed in terms of the timelines prescribed under Section 153 of the Income Tax Act. 24. It has also been mentioned before this Court that the total tax implication of the decision of the Bombay High Court, which is under challenge before this Court, can have a revenue impact of nearly 1. 3 lakh crores, as that is the quantum of dispute in various appeals Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. which are pending in the country which will otherwise be deemed to be time-barred if the interpretation of the High Court of Bombay by way of the impugned order is upheld. 25.

A preliminary objection has been taken by the learned Senior Counsel appearing on behalf of the Respondent that the present Special Leave Petition ought to be dismissed on account of the fact that there is a low tax effect. This submission need not detain me any further. Obviously, there is an extremely important question of law which has to be decided by this Court and has country-wide ramifications. The Court is not compelled to dismiss a petition merely because it has a low tax effect. 26. The learned Senior Counsel Mr. Mistry appearing on behalf of the Respondents has contended that Section 153 of the Income Tax Act provides various extended periods of limitations in certain actions. It has been contended that no exception has been carved out in Section 153 of the Income Tax Act in respect of the time taken by the revenue in terms of proceedings under Section 144C of the Income Tax Act.

Reliance has been placed on Section 153(4) of the Income Tax Act, where the period of limitation is extended by 12 months in case a reference has been made to the Transfer Pricing Officer under Section 92CA(1) of the Income Tax Act. Reliance has also been placed on Explanation 1 clauses (iv) to (xiii) 2, all of which have provided extended periods of time within which Assessment Order has to be passed. It has been contended that the Legislature has allowed an extended period of limitation, or excluded a period taken for the proceedings, wherever it intended to give the revenue authorities additional time. He submits that since no such exception has been made for the proceedings contemplated under Section 144C of the Income Tax Act, all the additional time including which is given under Section 144C shall be subsumed under Section 153 of the Income Tax Act, and therefore, the High Court has rightly held that the proceedings challenged before it were barred by limitation. 27.

Another ground urged by the Ld. Senior Counsel, is that if it is accepted that the entire procedure contemplated under Section 144C of the Income Tax Act must take place within the overall time period prescribed under Section 153 of the Income Tax Act, it would imply that an Assessing Officer who ordinarily gets a period of 12 months to pass an Assessment Order after an order of remand would now have to pass his Draft Assessment Order, and also provide for one 1606 month for the Assessee to file its objections, 9 months for the Dispute Resolution Panel, and thereafter pass his own final assessment order within this time period of 9 months. Reliance has been placed on the decision of the Madras High Court in Commissioner of Income Tax & Anr. v. Roca Bathroom Products Pvt. Ltd. , 2022 SCC OnLine Mad 8777. 28. Having heard the Ld.

Counsel for the parties, I am of the opinion that the Impugned Order is liable to be set aside, and the Judgement of the Madras High Court also deserves to be set aside, as this interpretation of the interplay between Section 153 and 144 C of the Income Tax Act seems wholly incorrect, and unworkable. 29. In the facts of Roca Bathroom Products Private Limited(supra), it is relevant to mention that the time period under Section 153(4) of the Income Tax Act was applicable, which provides for an additional period of 12 months to complete the assessment and pass the final order in case a reference has been made to the Transfer Pricing Officer in terms of Section 92CA of the Income Tax Act. The High Court took the view that in view of the additional time period of 12 months provided, the proceedings before the Dispute Resolution Panel, the passing of draft assessment and thereafter final assessment order ought to have taken place within this extended period of limitation.

I am of the view that this interpretation is totally erroneous. 30. In interpreting the provisions that form the subject matter of the present controversy, this Court is alive to the fact that a fine balance has to be maintained between ensuring that the revenue authorities have ample time and opportunity to assess income and ensure that those who attempt tax evasion, are prosecuted, and the income escaping taxation, is brought within the tax fold. At the same time, the rights of the Assessees, of not having their returns scrutinized after a substantial period of time, must also be balanced. Uncertainty, and giving the revenue the opportunity to reopen the assessment of any taxation from many years ago, is never good for business or promoting foreign investment. At the same time, unscrupulous persons trying to avoid paying the legitimate tax dues must also be dealt with strictly and all taxes which they have sought to avoid must be recovered. 31.

If I take the view that the entire procedure prescribed and contemplated in terms of Section 144C of the Income Tax Act must be subsumed Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc. within the overall time period prescribed under Section 153 of the Income Tax Act, I am of the opinion that it would result in a complete catastrophe for recovering lost tax. The time period within which the Assessing Officers would have to pass orders would be negligible. 32. In my opinion, this would be totally unworkable. The total time prescribed for passing the assessment orders in the ordinary course is only 12 months from the end of the financial year in which the remand order has taken place from the tribunal. In most of the illustrations and situations dealt with in Section 153 and its many sub-sections, a specified timeline has been prescribed within which the assessment order must be passed. 33.

Section 153 in its operation does not distinguish between persons who are suffering assessment under Section 144C of the Income Tax Act or otherwise. This Court is mindful of the fact that the procedure adopted and the recourses available to an Assessee in case of proceedings or reassessment in terms of Section 143(3) of the Income Tax Act are very different from those under Section 144C of the Income Tax Act as already explained in detail above. 34. There is an entire procedure which contemplates giving an Assessee a period of one month to choose to file objections as well as provides an Assessee with an opportunity of hearing which may take up to 9 months before the Dispute Resolution Panel. It is important to note that proceedings before the Dispute Resolution Panel are initiated at the option of the Assessee.

It is always open for an Assessee to accept variations proposed by the Assessing Officer in its Draft Order, so therefore it cannot be said that an Assessee is prejudiced by proceedings before the Dispute Resolution Panel or the time that it takes because it is something that an Assessee will initiate and not something that he/she must mandatorily go through. 35. The High Courts of Bombay and Madras have taken the view that the fact that no exception has been carved out for Section 144C of the Income Tax Act in any of the sub-sections of Section 153 of the Income Tax Act makes it clear that the time of Section 144C of the Income Tax Act proceedings must necessarily conclude within the time period prescribed under Section 153 of the Income Tax Act.

I agree with this view only to a limited extent, insofar as the timelines prescribed under Section 153 of the Income Tax Act must apply to proceedings under Section 144C of the Income Tax Act, but only 1608 insofar as they relate to the passing of the Draft Assessment Order contemplated under Sub-Section (1) of Section 144C of the Income Tax Act. 36. My view in this regard stems from the fact that Sub-Section (4) and Sub-Section (13) of Section 144C of the Income Tax Act provide clear and unequivocal non obstante clauses, which remove the application of Section 153 of the Income Tax Act and the timelines prescribed thereunder. The High Courts of Madras and Bombay have taken the view that this timeline further reduces the time available to the Assessing Officer to pass an assessment order, and that it further limits it.

They have taken the view that the 12-month timeline goes out of the window and that the Assessing Officer has only been given a period of one month either after passing the Draft Assessment Order or after receiving the directions from the Dispute Resolution Panel, and at the same time, the Final Assessment Order also has to be passed within the overall 12 month time period. 37. I find this view difficult to accept. No doubt Sub-Section (4) and Sub-Section (13) of Section 144C of the Income Tax Act prescribe very specific timelines for the Assessing Officer to complete and pass the Final Assessment Order, but I am of the view that these timelines are independent of the timelines contemplated in Section 153 of the Income Tax Act, and operate in addition to the timelines contemplated in Section 153 of the Income Tax Act. 38.

The Bombay High Court and the Madras High Court have rightly taken the view that the non obstante clauses are only limited to the actual final passing of the order, but the conclusions drawn in my opinion are incorrect. 39. In my opinion, the requirements of Section 153 of the Income Tax Act in terms of timeline are strictly applicable to Section 144C (1) of the Income Tax Act, that is the stage at which the Draft Order has to be passed by the Assessing Officer. The non-obstante clauses contained in Sub-Section (4) and Sub-Section (13) of Section 144C of the Income Tax Act only extend the timeline for the passing of the final order and not that of the Draft Order. 40. Sub-Section (4) operates and comes into existence only in cases in situations when an Assessee subjected to Section 144C of the Income Tax Act accepts the variations proposed in the Draft Assessment Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

Order or if the period of filing objections before the Dispute Resolution Panel expires. In my opinion, the conjoint reading of Section 144C(1), Section 153, and Section 144C(4) of the Income Tax Act make it abundantly clear that the Assessing Officer is obliged to comply with the requirements of Section 153 of the Income Tax Act insofar as it relates to passing the Draft Assessment Order and that he must also necessarily pass the Final Assessment Order within an additional period of one month in case the variations are accepted or the period of limitation for filing objections expires. In my opinion, this would extend the time available to the Assessing Officer from 31st March of any year to 30th April of that year.

In the facts of the present case, this would mean that the Assessing Officer ought to have passed his Draft Assessment Order before 30th September 2021, and in case acceptance was received or no objections were filed, the final assessment order by or before 30th October 2021. 41. Similarly, in the event objections were filed, Section 144C(12) of the Income Tax Act states that such objections have to be decided and directions have to be issued within a period of 9 months. Sub- Section (13) makes it clear that regardless of how long it takes the Dispute Resolution Panel to pass its directions, the Assessing Officer will only have an additional period of one month to pass the Final Assessment Order. This means that if the Dispute Resolution Panel disposes of the objections and issues directions within a period of one month from the date of filing of objections, the Final Assessment Order must be passed within one month from such date which will be practically impossible. 42.

It is the contention of Ld. Senior Counsel for the Respondent that the non-obstante clause in Section 144C(1) is limited to provisions contrary to what is contained in elsewhere in the Act and submits that the only aspect contrary in Section 144C is passing of a draft assessment order instead of a final assessment order. It was submitted that the non-obstante clause in Section 144C(1) does not extend to the timelines prescribed under Section 153. 43. This submission cannot be accepted. When Section 153(1) is examined, though there is a reference to Section 143 and Section 144, there is no reference to Section 144C. It cannot therefore be held that the timelines under Section 153 also includes the process conceived under Section 144C. The non-obstante clause 1610 in Section 144C must be given a construction that would not defeat the working of the Income Tax Act, 1961.

Even if the non-obstante clause in Section 144C(1) is limited to passing a final assessment order under Section 143(3), principles of statutory construction would permit an interpretation which would allow the associated timelines for the Section 143(3) exercise prescribed under Section 153 to be covered within the scope of the non-obstante clause in Section 144C. If the Arguments of the Respondents were to be accepted, it would result in an interpretation where the non-obstante clause in Section 144C(1) is limited to a procedure of passing a draft assessment order instead of a final assessment order under Section 143(3) without subsuming the associated timelines attached to such Section 143(3) procedure. In other words, if Section 144C(1) operates notwithstanding the Section 143(3) procedure, it also operates notwithstanding the timelines prescribed under Section 153 for such Section 143(3) procedure. This