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Tax Publishers
Limitation under section 153(3) does it encompass
Section 144C
Facts:
Assessee a non-resident entity in the operation of
vessels for oil/mineral exploration had offered their income under section
44BB(3) by reporting a loss of Rs. 120 crores. Revenue's rejected the loss
reported by the assessee and without rejecting the books and audited
information presumed income under section 44BB and held 10% as the
presumptively taxable income. This case travelled to the DRP who upheld the
views of the AO to which assessee further appealed to ITAT. ITAT
remanded the case to AO for fresh adjudication. Subsequently, revenue did
not action the case and after a gap of almost a year revenue sent notices and
made an urgent draft assessment order once again presumptively taxing the
assessee on 28-09-2021. Assessee was not even given adequate time to respond to
their various notices as revenue realized the time limit imposed by law viz 30-09-2021
in this case. The ground of the writ was that the overall limitation under
section 153(3) would prevail over Section 144C DRP proceedings as well and
since there was no final order passed before 30-09-2021 in this case the return
filed by the assessee itself ought to have been accepted to be correct.
Revenue's counter was that Section 144C is a self-contained code and both the Sections
144C and 153 start with a non-obstante clause thus the self-contained code
ought to take over the limit imposed under section 153(3).
Held in favour of the assessee that revenue cannot say that
the limit of 12 months extended in this case to 18 months until 30-09-2021 was
not circumscribing Section 144C as such a reading will whittle down the purpose
as to why limitations have been imposed by law. It is for the revenue to act
expeditiously and not at conveniences and whims.
Ed. Note: The
decision is path breaking as lower courts have held that Section 144C is a self
contained code and thus its limitations are separate. Revenue's time playing
antics did not find any room before the high court in this verdict. It is
imminent that revenue will go up in appeal on this point of law as much is at
stake for them if not a few thousand crores of taxes.
Case: Shelf
Drilling Ron Tappmeyer Ltd. v. Asstt. CIT & Ors. 2023 TaxPub(DT) 4732
(Bom-HC)
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