The Income Tax Appellate Tribunal, Delhi, has clarified that the Supreme Court's general extension of limitation periods during the Covid-19 pandemic does not apply to statutory timelines for the Income Tax Department to complete assessments under Section 144C(13) of the Income-tax Act, 1961. This ruling reinforces the principle that procedural deadlines imposed on statutory authorities are not subject to judicially granted relief meant for litigants.
Background & Facts
The Dispute
The dispute arose from the assessment proceedings for the assessment year 2017-18 against Rolls Royce India Private Limited. The Assessing Officer (AO) issued a draft assessment order, which was referred to the Dispute Resolution Panel (DRP) under Section 144C of the Income-tax Act. The DRP issued directions on 21.09.2021. Under Section 144C(13), the AO was mandated to complete the final assessment within one month from the end of the month in which the DRP directions were received, i.e., by 31.10.2021. However, the AO passed the final assessment order on 18.11.2021, which was 18 days beyond the statutory deadline.
Key Facts
- Assessment year: 2017-18
- DRP directions issued: 21.09.2021
- Statutory deadline for final assessment under Section 144C(13): 31.10.2021
- Final assessment order passed: 18.11.2021
- Assessee challenged the assessment before the ITAT on grounds of limitation
- ITAT, by order dated 04.07.2025, quashed the assessment order as time-barred
- Revenue filed Miscellaneous Application MA No.452/Del/2025 seeking recall of the ITAT order
Procedural History
- 21.09.2021: DRP issued directions under Section 144C(5)
- 18.11.2021: AO passed final assessment order, beyond statutory deadline
- 04.07.2025: ITAT allowed assessee’s appeal in ITA No.252/Del/2022, quashing assessment as barred by limitation
- 15.05.2026: Hearing held on Revenue’s Miscellaneous Application
- 08.06.2026: ITAT dismissed the Miscellaneous Application
The Parties' Positions
For the Revenue (Appellant):
- Argued that the Supreme Court’s order dated 10.01.2022 in Re: Cognizance for Extension of Limitation excluded the period from 15.03.2020 to 28.02.2022 for all judicial and quasi-judicial proceedings
- Contended that the assessment order dated 18.11.2021 fell within this excluded period and therefore was not time-barred
- Claimed an error apparent on record under Section 254(2) of the Income-tax Act
For the Assessee (Respondent):
- Argued that the Supreme Court’s order applied only to litigants filing suits, appeals, or applications, not to statutory duties of the Department
- Emphasized that Section 144C(13) imposes a mandatory, non-extendable deadline on the Department
- Relied on multiple Hyderabad Tribunal decisions holding that Covid-19 limitation extensions do not apply to statutory timelines for assessment framing
Relief Sought
The Revenue sought recall of the ITAT’s order dated 04.07.2025 under Section 254(2) of the Income-tax Act, 1961, and restoration of the assessment order dated 18.11.2021.
The Legal Issue
Whether the Supreme Court’s order excluding the period from 15.03.2020 to 28.02.2022 for computation of limitation applies to the statutory time limit for completing income tax assessments under Section 144C(13) of the Income-tax Act, 1961.
Arguments Presented
For the Appellant
The Revenue contended that the Supreme Court’s order in Re: Cognizance for Extension of Limitation was a blanket directive excluding the Covid-19 period from limitation computation for all judicial and quasi-judicial proceedings. It argued that since assessment proceedings are quasi-judicial in nature, the AO’s delay in passing the order fell within the excluded period. The Revenue relied on the broad language of the Supreme Court’s order and asserted that the ITAT erred in ignoring this binding precedent. It further claimed that the ITAT’s order contained an error apparent on record, justifying recall under Section 254(2).
For the Respondent
The assessee countered that the Supreme Court’s order was intended to protect litigants who were unable to file applications or appeals due to pandemic-related disruptions. It emphasized that the obligation under Section 144C(13) is a statutory duty imposed on the Department, not a right exercisable by a litigant. The assessee cited multiple decisions from the Hyderabad Tribunal (Prathima Infrastructure Limited, Expressway Services Pvt. Ltd., EPAM Systems, Repal Green Power, TMEIC Industrial Systems) holding that statutory timelines for assessment, notice issuance, or other departmental actions are not subject to judicially extended limitation periods. The assessee argued that the Department, as a statutory authority, must comply with its own statutory deadlines without invoking external relief.
The Court's Analysis
The Tribunal examined the nature of the limitation extension granted by the Supreme Court and its applicability to statutory obligations of the Income Tax Department. It noted that the Supreme Court’s order dated 10.01.2022 was issued in the context of litigants facing difficulties in accessing courts and tribunals during the pandemic. The order explicitly referred to "judicial or quasi-judicial proceedings" initiated by parties, not actions mandated by statute upon authorities.
"The extension of limitation is not applicable to statutory acts to be performed by statutory bodies i.e. by Income Tax Department such as framing of assessment, issue of notices u/s 143(2), 148 etc."
The Tribunal emphasized that Section 144C(13) imposes a mandatory, non-discretionary duty on the AO to complete the assessment within a fixed period. The provision is designed to ensure procedural certainty and prevent undue delay in tax administration. Unlike a litigant’s right to file an appeal, the Department’s obligation to complete an assessment is a public duty governed by statutory timelines.
The Tribunal further observed that the Hyderabad Tribunal decisions cited by the assessee were consistent with this interpretation and provided persuasive authority. It held that the ITAT’s conclusion - that the assessment order dated 18.11.2021 was time-barred - was legally sound and correctly applied the law. The Tribunal rejected the Revenue’s contention that an error apparent on record existed, noting that the ITAT had correctly distinguished between judicial relief for litigants and statutory obligations for authorities.
The Verdict
The Revenue’s Miscellaneous Application was dismissed. The ITAT upheld the order dated 04.07.2025 quashing the assessment order dated 18.11.2021 as void ab initio for being barred by limitation under Section 144C(13). No further assessment was directed, and the original assessment order stands set aside. The Department is barred from re-assessing the same year on the same basis unless a fresh notice is issued under a valid provision and within the applicable statutory time limit.
What This Means For Similar Cases
Statutory Deadlines for Tax Authorities Are Absolute
- Practitioners must argue that any delay by the Department in completing assessments under Sections 143(3), 144C, or 148 cannot be excused by invoking the Supreme Court’s Covid-19 limitation extension
- The burden is on the Department to comply with statutory timelines; failure renders the assessment void
- Appeals challenging assessments on limitation grounds must cite Section 144C(13) and the ITAT Delhi ruling as binding precedent
Covid-19 Extension Applies Only to Litigants, Not Authorities
- Filings by taxpayers (appeals, revisions, applications) may still benefit from the excluded period
- But actions initiated by the Department - assessment framing, notice issuance, scrutiny, reopening - are not protected
- This distinction must be raised at the CIT(A), ITAT, and High Court levels to prevent unjust re-assessments
Precedent from Hyderabad Tribunal Is Now Binding in Practice
- The ITAT Delhi has endorsed the reasoning of the Hyderabad Tribunal in multiple cases
- Practitioners should cite Prathima Infrastructure, TMEIC, and EPAM Systems as authoritative support when challenging time-barred assessments
- This creates a uniform national standard: statutory deadlines for the Department are not subject to judicially granted extensions
