The Income Tax Appellate Tribunal, Bangalore, has decisively clarified that the statutory limitation for passing a final assessment order under Section 144C(13) of the Income Tax Act commences from the date the Dispute Resolution Panel's directions are uploaded to the ITBA portal, not from the date of actual receipt by the Assessing Officer. This ruling quashes an assessment order passed beyond the prescribed timeline, reinforcing the primacy of statutory deadlines in faceless assessment proceedings.
Background & Facts
The Dispute
The appellant, Koch Business Solutions India Pvt. Ltd., is a wholly owned subsidiary of Koch Capabilities International Holdings, LLC. During the assessment year 2020-21, the company provided IT support services to entities within the Koch Group and was compensated on a cost-plus markup of 10%. The company filed its original return of income on 09.02.2021 declaring total income of Rs. 11,87,46,830. The case was selected for scrutiny under the Centralised Analysis and Selection System (CASS), leading to notices under Sections 143(2) and 142(1) of the Income Tax Act, 1961.
Key Facts
- The Transfer Pricing Officer (TPO) made a proposed adjustment of Rs. 36,15,02,027 under Section 92CA on 15.07.2023.
- The Assessing Officer (AO) issued a draft assessment order on 19.09.2023.
- The assessee filed objections before the Dispute Resolution Panel (DRP).
- The DRP-2, Bengaluru, issued directions under Section 144C(5) on 29.05.2024.
- The DRP directions were digitally signed, assigned a Document Identification Number (DIN), and uploaded to the Income Tax Business Application (ITBA) portal on 29.05.2024.
- The DRP also generated an intimation letter and DIN on the same date.
- The AO passed the final assessment order on 29.07.2024, making an addition of Rs. 30,42,02,212 and determining total income at Rs. 42,29,49,042.
Procedural History
- 09.02.2021: Original return filed for AY 2020-21.
- 15.07.2023: TPO issued proposed adjustment order.
- 19.09.2023: Draft assessment order issued by AO.
- 29.05.2024: DRP issued directions under Section 144C(5); uploaded to ITBA portal on same date.
- 29.05.2024: DIN generated and intimation letter issued by DRP.
- 29.07.2024: Final assessment order passed by AO.
- 27.01.2026: Hearing before ITAT.
- 30.03.2026: Judgment pronounced.
The Parties' Positions
Relief Sought
The assessee sought quashing of the final assessment order dated 29.07.2024 on the ground that it was barred by limitation under Section 144C(13), which mandates completion of assessment within one month from the end of the month in which the DRP directions are received.
The Legal Issue
The central question was whether the one-month limitation period under Section 144C(13) of the Income Tax Act begins on the date the DRP directions are uploaded to the ITBA portal, or only upon actual receipt by the Assessing Officer through internal departmental channels.
Arguments Presented
For the Appellant
The appellant’s authorized representative, CA Chavali Narayan, contended that the DRP directions were uploaded to the ITBA portal on 29.05.2024, along with generation of DIN and intimation. Relying on binding precedents from the Madras, Bombay, Delhi, and Telangana High Courts, as well as a coordinate bench of the ITAT in ARRIS Group India Pvt. Ltd. v. ACIT, the appellant argued that under the e-Assessment Scheme, 2019, and Section 13 of the Information Technology Act, 2000, the upload to the ITBA portal constitutes legal receipt by the AO. The final assessment order dated 29.07.2024 was therefore passed beyond the statutory deadline of 30.06.2024 and must be quashed.
For the Respondent
The Revenue, represented by Dr. Divya K.J., contended that the Faceless Assessing Officer (FAO) did not receive the DRP directions until 25.07.2024, as evidenced by a request letter from the FAO seeking confirmation of receipt. The Revenue argued that the limitation period should commence only upon actual receipt by the FAO, not upon portal upload, and that the order dated 29.07.2024 was therefore within time. The Revenue further relied on internal procedural delays and the absence of direct email notification to the FAO.
The Court's Analysis
The Tribunal undertook a comprehensive review of statutory provisions, judicial precedents, and the e-Assessment Scheme, 2019. It emphasized that Section 144C(13) mandates the AO to complete the assessment within one month from the end of the month in which the DRP directions are received, without further opportunity of hearing to the assessee. The provision is mandatory and not directory.
The Tribunal noted that the DRP directions were digitally signed, assigned a DIN, and uploaded to the ITBA portal on 29.05.2024 - the same day. The ITBA portal is a centralized system under the e-Assessment Scheme, and Section 4(2) of the Scheme explicitly states that all communications among assessment units must be routed through the National e-Assessment Centre. The Tribunal held that this makes the portal the official channel for receipt.
"The fundamental principle of interpretation is to assign words their natural, original and precise meaning, provided that the words are clear and take into account the purpose of the Statute."
The Tribunal relied on the Madras High Court’s decision in Commissioner of Income Tax v. Ramco Cements Ltd. (2025) 474 ITR 9, which held that limitation cannot depend on varying user functionalities or internal departmental processes. The Court further cited the Bombay High Court in Vodafone India Ltd. v. CPC (2023) 459 ITR 413, which affirmed that once the DRP directions are uploaded, they are automatically visible to the FAO via the 360-degree view on the ITBA portal, provided the assessment is pending.
The Tribunal rejected the Revenue’s argument that the FAO had not received the directions, noting that the JAO’s affidavit admitted the directions were visible on the ITBA portal and that no forwarding was required. The Tribunal observed that the FAO’s failure to access the portal does not extend the statutory deadline.
"Limitation cannot be reckoned in a manner so as to give rise to more than one interpretation where either party can take benefit of a later date."
The Tribunal also referenced National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383, affirming that where the facts are on record and the issue is purely legal, the Tribunal has discretion to admit additional grounds - which it did here.
The Tribunal concluded that the upload date of 29.05.2024 constituted legal receipt under Section 13 of the Information Technology Act, 2000, which defines receipt of an electronic record as the time it enters the addressee’s computer resource. The ITBA portal is the designated computer resource of the department. Therefore, the AO was required to complete the assessment by 30.06.2024. The order dated 29.07.2024 was clearly time-barred.
The Verdict
The appeal was allowed. The final assessment order dated 29.07.2024 was set aside as barred by limitation under Section 144C(13). The original return of income filed on 09.02.2021 declaring income of Rs. 11,87,46,830 stands accepted. The stay petition seeking stay of the demand of Rs. 10,14,59,904 was dismissed as infructuous. The Tribunal declined to adjudicate other grounds of appeal, leaving them open.
What This Means For Similar Cases
DRP Directions Are Deemed Received on Portal Upload
- Practitioners must now treat the date of upload to the ITBA portal as the definitive start of the limitation period under Section 144C(13), regardless of internal departmental delays.
- Any assessment order passed after one month from the end of the month of upload is void ab initio.
- The burden shifts to the Revenue to prove that the portal was inaccessible or malfunctioning - a near-impossible standard.
Faceless Assessment Regime Requires Procedural Rigor
- The e-Assessment Scheme, 2019, mandates centralized communication; reliance on manual forwarding or email delivery is legally irrelevant.
- AO’s failure to access the 360-degree view on ITBA portal does not excuse non-compliance with statutory timelines.
- Revenue’s internal procedural lapses cannot prejudice the assessee.
Strategic Implications for Tax Litigation
- In all transfer pricing cases, counsel must immediately verify the ITBA portal upload date of DRP directions upon issuance.
- If the final order is delayed beyond 30.06.2024 (in this case), file a ground of limitation as a primary challenge - even if other grounds are pending.
- Do not rely on the AO’s internal records; rely on the DIN and portal timestamp as conclusive evidence of receipt.
