Supreme Court of India
ASSISTANT COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) & OTHERSversusSHELF DRILLING RON TAPPMEYER LTD. ETC.
- Citation
- 2025 INSC 946
- Decided
- 8 August 2025
- Bench
- B V NAGARATHNA
Holding
Section 153(3) limits only the draft assessment order under Section 144C(1); the additional periods in Section 144C(4) and (13) are independent and extend the overall timeline, so the 144C process does not have to be fully subsumed within the Section 153 limitation.
Summary
The Supreme Court examined the interplay between Section 144C, which provides a special dispute‑resolution procedure for eligible assessees, and Section 153(3) of the Income Tax Act, which prescribes a twelve‑month limitation for fresh assessments. The Court held that the limitation under Section 153 applies only to the drafting of the assessment order under Section 144C(1), while the additional time‑frames in Section 144C(4) and (13) for passing the final order operate independently and extend the overall period to a maximum of eleven months, which fits within the twelve‑month ceiling. Consequently, the High Court’s view that the entire 144C process must be subsumed within Section 153 was rejected, the revenue’s appeals were allowed, and the matter was remanded for fresh consideration before a larger bench. The decision emphasized a harmonious, purposive reading of the statutes and rejected an interpretation that would render the provisions unworkable.
Issues considered
- The applicability of Section 153(3) limitation period to the entire assessment process under Section 144C.
- Whether the non‑obstante clauses in Section 144C(4) and (13) override the timelines prescribed in Section 153.
- Whether the draft assessment order under Section 144C(1) must be passed within the period prescribed by Section 153.
- Whether the procedure and timelines under Section 144C constitute a separate code that operates in addition to Section 153.
- Effect of COVID‑19 extensions and the TOLA notification on the limitation period.
Legislation cited
- Arbitration and Conciliation Act, 1996
- Benami Property Transaction Act, 1988
- Central Goods and Services Tax Act, 2017
- Finance Act, 2016
- Finance Act 2017
- Finance Act, 2021
- Finance Act, 2022
- Income Tax Act, 1961s. 144C, s. 153, s. 153(1), s. 153(10), s. 153(11), s. 153(12), s. 153(13), s. 153(1A), s. 153(2), s. 153(3), s. 153(4), s. 153(5), s. 153(6), s. 153(7), s. 153(8), s. 153(9), s. 153A, s. 153B, s. 250, s. 254, s. 263, s. 264, s. 92CA
- Indian Stamp Act, 1899
- Taxation and other laws (Relaxation and Amendment of Certain Provisions) Act, 2020
Headnote
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 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
Subjects
Income TaxInterpretation of StatutePurposive interpretationLiteral interpretationPlain interpretationNon-obstante clauseSection 144CSection 153AssessmentRe‑assessmentDraft Assessment OrderAssessing OfficerFinal assessment orderDispute Resolution PanelTimelinesLimitation period
Judgment
[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.
[2025] 8 S.C.R. 1575
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 [2025] 8 S.C.R.
Supreme Court Reports
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
[2025] 8 S.C.R. 1577
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 [2025] 8 S.C.R.
Supreme Court Reports
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, sub-
section (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
[2025] 8 S.C.R. 1579
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 [2025] 8 S.C.R.
Supreme Court Reports
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]
[2025] 8 S.C.R. 1581
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 [2025] 8 S.C.R.
Supreme Court Reports
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
[2025] 8 S.C.R. 1583
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 [2025] 8 S.C.R.
Supreme Court Reports
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:
[2025] 8 S.C.R. 1585
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 [2025] 8 S.C.R.
Supreme Court Reports
(1) No order of assessment shall be made under Section
143 or Section 144 at any time after the expiry of twenty-
one 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
[2025] 8 S.C.R. 1587
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 [2025] 8 S.C.R.
Supreme Court Reports
[(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
[2025] 8 S.C.R. 1589
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 [2025] 8 S.C.R.
Supreme Court Reports
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
[2025] 8 S.C.R. 1591
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 [2025] 8 S.C.R.
Supreme Court Reports
(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
[2025] 8 S.C.R. 1593
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 [2025] 8 S.C.R.
Supreme Court Reports
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
[2025] 8 S.C.R. 1595
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 [2025] 8 S.C.R.
Supreme Court Reports
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
[2025] 8 S.C.R. 1597
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 [2025] 8 S.C.R.
Supreme Court Reports
(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
[2025] 8 S.C.R. 1599
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 [2025] 8 S.C.R.
Supreme Court Reports
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.]
[2025] 8 S.C.R. 1601
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 [2025] 8 S.C.R.
Supreme Court Reports
(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)
[2025] 8 S.C.R. 1603
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 [2025] 8 S.C.R.
Supreme Court Reports
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
[2025] 8 S.C.R. 1605
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 [2025] 8 S.C.R.
Supreme Court Reports
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
[2025] 8 S.C.R. 1607
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 [2025] 8 S.C.R.
Supreme Court Reports
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
[2025] 8 S.C.R. 1609
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 [2025] 8 S.C.R.
Supreme Court Reports
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 construction would
preserve the sanctity of the provision and would not result in any
absurd outcome.
44. If the procedure under Section 144C and its associated timelines
prescribed under sub-clause (4) and sub-clause (13) were to be
subsumed within the timelines prescribed under Section 153, it would
result in a scenario where every assessing officer in the country
would have to complete all assessments by working backwards
and would have to allow the period of nine months granted to the
Dispute Resolution Panel to issue directions under Section 144C(5)
r/w Section 144C(12). This would effectively mean that an assessing
officer would have to firstly foresee that an eligible assessee would
compulsorily file objections to the draft assessment order under
Section 144C(2)(b) and the Dispute Resolution Panel would require
the entire nine months period to issue any direction. The Parliament
while enacting Section 144C, could not have conceived such a
procedure to be followed by an assessing officer in the Country.
45. This can also be approached from another angle. If the contentions
of the Respondents were to be accepted, and assuming a scenario
where the assessing officer does not accommodate for the entire
nine-month period for the Dispute Resolution Panel to issue directions,
it would result in a scenario where an assessing officer would eat
into the time available for the Dispute Resolution Panel to issue
directions, which would effectively result in amending the Income
[2025] 8 S.C.R. 1611
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
Tax Act and the timeline of nine months available with the Dispute
Resolution Panel available under Section 144C(12).
46. The non-obstante clauses in Section 144C must therefore 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.
47. Section 153 is not the only provision for prescribing time limits for
assessments and reassessments. Even without a non-obstante
clause, the erstwhile Section 158BE provided for independent
timelines for block assessments. Timelines for assessment under
Section 153A is prescribed under Section 153B, which also operates
notwithstanding anything contained in Section 153.
48. Section 92CD of the Income Tax Act, 1961 pertains to advanced
pricing agreements. Section 92CD(5) operates notwithstanding
anything contained in Section 153, Section 153B or Section 144C.
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.
49. Ld. Senior Counsel for the Respondent contended that Explanation
1 to Section 153 provides for various time periods arising out of
certain circumstances which ought to be excluded while calculating
the period of limitation under Section 153 and further contended that
there is no reference to Section 144C or to the time-period available
to the Dispute Resolution Panel, to be excluded for calculating the
limitation under Section 153.
50. This contention too cannot be accepted. Once a draft assessment
order is issued under Section 144C, the assessing officer is
incapacitated to conduct further independent enquiries or raise any
1612 [2025] 8 S.C.R.
Supreme Court Reports
fresh issue in the final assessment order that was not part of the draft
assessment order. On an examination of Section 144C, it becomes
clear that the assessing officer simply has to pass an assessment
order in conformity with the directions issued by the Dispute Resolution
Panel if objections are filed by the assessees or simply reiterate the
draft assessment order as a final assessment order if no objections
are filed. The assessing officer acts in an executory role once the
draft assessment order is issued under section 144C(1).
51. In this context, if Explanation 1 to Section 153 is examined, it deals
with situations where the Assessing Officer’s Quasi-Judicial Role
is eclipsed for a certain period and he is re-vested with the Quasi-
Judicial power. The Explanation merely excludes the period of eclipse
while computing the limitation under Section 153. The Explanation
to Section 153 merely serves this purpose. Since the assessing
officer performs an executory role under Section 144C after the draft
assessment order is issued, Explanation 1 to Section 153 has no
relevance in the context of Section 144C.
52. Even otherwise, since when Section 144C operates not withstanding
Section 153, and since the timelines under Section 144C are over
and above the timelines under Section 153, Explanation 1 to Section
153 has no relevance.
53. It is settled law that 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. The Supreme
Court of India in the case of Commissioner of Income Tax v.
Hindustan Bulk Carriers, (2003) 3 SCC 57, has held as under:-
“14. A construction which reduces the statute to a futility
has to be avoided. A statute or any enacting provision
therein must be so construed as to make it effective and
operative on the principle expressed in the maxim ut res
magis valeat quam pereat i.e. a liberal construction should
be put upon written instruments, so as to uphold them, if
possible, and carry into effect the intention of the parties.
[See Broom’s Legal Maxims (10th Edn.), p. 361, Craies
on Statutes (7th Edn.), p. 95 and Maxwell on Statutes
(11th Edn.), p. 221.]
[2025] 8 S.C.R. 1613
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
15. A statute is designed to be workable and the
interpretation thereof by a court should be to secure that
object unless crucial omission or clear direction makes
that end unattainable. (See Whitney v. IRC [1926 AC 37 :
10 Tax Cas 88 : 95 LJKB 165 : 134 LT 98 (HL)] , AC at p.
52 referred to in CIT v. S. Teja Singh [AIR 1959 SC 352 :
(1959) 35 ITR 408] and Gursahai Saigal v. CIT [AIR 1963
SC 1062 : (1963) 48 ITR 1] .)
16. The courts will have to reject that construction which
will defeat the plain intention of the legislature even though
there may be some inexactitude in the language used.
(See Salmon v. Duncombe [(1886) 11 AC 627 : 55 LJPC
69 : 55 LT 446 (PC)] AC at p. 634, Curtis v. Stovin [(1889)
22 QBD 513 : 58 LJQB 174 : 60 LT 772 (CA)] referred
to in S. Teja Singh case [AIR 1959 SC 352 : (1959) 35
ITR 408] .)
17. If the choice is between two interpretations, the
narrower of which would fail to achieve the manifest
purpose of the legislation, we should avoid a construction
which would reduce the legislation to futility, and should
rather accept the bolder construction, based on the view
that Parliament would legislate only for the purpose of
bringing about an effective result. (See Nokes v. Doncaster
Amalgamated Collieries [(1940) 3 All ER 549 : 1940 AC
1014 : 109 LJKB 865 : 163 LT 343 (HL)] referred to in
Pye v. Minister for Lands for NSW [(1954) 3 All ER 514
: (1954) 1 WLR 1410 (PC)] .) The principles indicated in
the said cases were reiterated by this Court in Mohan
Kumar Singhania v. Union of India [1992 Supp (1) SCC
594 : 1992 SCC (L&S) 455 : (1992) 19 ATC 881 : AIR
1992 SC 1].
18. The statute 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 a consistent
enactment of the whole statute.”
54. The Constitution Bench in the case of Franklin Templeton Trustee
Services Private Limited & Anr. v. Amruta Garg & Ors., (2021) 6
SCC 736, has held as under:-
1614 [2025] 8 S.C.R.
Supreme Court Reports
“17. The concept of “absurdity” in the context of interpretation
of statutes is construed to include any result which is
unworkable, impracticable, illogical, futile or pointless,
artificial, or productive of a disproportionate counter-
mischief [ See Bennion on Statutory Interpretation, 5th Edn.,
p. 969.]. Logic referred to herein is not formal or syllogistic
logic, but acceptance that enacted law would not set a
standard which is palpably unjust, unfair, unreasonable
or does not make any sense. [Bennion on Statutory
Interpretation, 5th Edn., p. 986.] When an interpretation is
beset with practical difficulties, the courts have not shied
from turning sides to accept an interpretation that offers
a pragmatic solution that will serve the needs of society
[Id, p. 971, quoting Griffiths, L.J.]. Therefore, when there
is choice between two interpretations, we would avoid a
“construction” which would reduce the legislation to futility,
and should rather accept the “construction” based on the
view that draftsmen would legislate only for the purpose of
bringing about an effective result. We must strive as far as
possible to give meaningful life to enactment or rule and
avoid cadaveric consequences [ See Principles of Statutory
Interpretation by Justice G.P. Singh, 14th Edn., p. 50.] .”
55. The Constitution Bench in the case of Vivek Narayan Sharma &
Ors. (Demonetisation Case-5J.) v. Union of India & Ors., (2023)
3 SCC 1, has held as under:-
“134. Legislation has an aim, it seeks to obviate some
mischief, to supply an inadequacy, to effect a change
of policy, to formulate a plan of government. That aim,
that policy is not drawn, like nitrogen, out of the air; it is
evidenced in the language of the statute, as read in the
light of other external manifestations of purpose [“Some
Reflections on the Reading of Statutes” [(1947) 47
Columbia LR 527] , Columbia LR at p. 538]. This is how
Justice Frankfurter succinctly propounds the principle of
purposive interpretation.
xxx
137. A statute must be construed having regard to the
legislative intent. It has to be meaningful. A construction
[2025] 8 S.C.R. 1615
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
which leads to manifest absurdity must not be preferred
to a construction which would fulfil the object and purport
of the legislative intent.
xxx
148. It is thus clear that it is a settled principle that the
modern approach of interpretation is a pragmatic one, and
not pedantic. An interpretation which advances the purpose
of the Act and which ensures its smooth and harmonious
working must be chosen and the other which leads to
absurdity, or confusion, or friction, or contradiction and
conflict between its various provisions, or undermines, or
tends to defeat or destroy the basic scheme and purpose
of the enactment must be eschewed. The primary and
foremost task of the Court in interpreting a statute is to
gather the intention of the legislature, actual or imputed.
Having ascertained the intention, it is the duty of the
Court to strive to so interpret the statute as to promote
or advance the object and purpose of the enactment.
For this purpose, where necessary, the Court may even
depart from the rule that plain words should be interpreted
according to their plain meaning. There need be no meek
and mute submission to the plainness of the language. To
avoid patent injustice, anomaly or absurdity or to avoid
invalidation of a law, the court would be justified in departing
from the so-called golden rule of construction so as to
give effect to the object and purpose of the enactment.
Ascertainment of legislative intent is the basic rule of
statutory construction.”
56. Obviously, the two situations contemplated under the Income Tax
Act in terms of assessment under Section 144C of the Income Tax
Act are vastly different and will obviously take varying amounts
of time depending on whether objections are filed before the
Dispute Resolution Panel or not. At the cost of repetition, it must
be remembered that this option is only exercised by the Assessee.
It is also relevant to mention that 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
1616 [2025] 8 S.C.R.
Supreme Court Reports
Act, it would amount to a violation of the Principles of Natural
Justice.
57. It is therefore not possible for this Court to accept the view of the
High Courts in this matter.
58. Since I have been informed that this question of law and issue has
arisen in a large number of appeals pending in various forums across
the country, it is appropriate to clarify and specify the meaning of
Section 144C of the Income Tax Act and its applicability alongside
Section 153(3) of the Income Tax Act, including situations where
Section 92C of the Income Tax Act is invoked.
59. 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.
60. 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.
61. In view of the above, the Judgment and Order of the High Court of
Bombay dt. 04.08.2023 passed in Writ Petition Nos. 2340, 2661,
3059 and 3060 of 2021 is set aside. Consequently, the appeals are
allowed. The Revenue Authorities shall be free to pass appropriate
orders in accordance with law. In case the assessee is aggrieved
by the orders passed by the revenue authorities, the assessee shall
also be free to take recourse to the remedies available under the
applicable laws.
62. Civil Appeal No. _________/2025 (arising out of Special Leave
Petition No.25798 of 2024) is disposed of in terms of the liberty
granted to the parties in terms of Paragraph 20 of the Judgment and
Order dated 13.08.2024 passed by the High Court of Judicature at
Bombay in Writ Petition (L) No. 30944 of 2023.
[2025] 8 S.C.R. 1617
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
Judgment
INDEX*
1. Factual Background: ............................................................. 3
2. Submissions: ......................................................................... 8
3. Opinion of Learned Satish Chandra Sharma J.: ................ 18
4. Relevant Provisions: ............................................................. 24
5. Material relied upon by the Respondents in support of
their Submissions: ................................................................ 41
6. Principles of Statutory Interpretation: ................................. 55
7. Non-Obstante Clause: ........................................................... 61
8. Analysis of the Provisions: .................................................. 71
9. Scheme of Section 144C: ...................................................... 78
10. Relevant Case Law: ............................................................... 98
11. Meaning of Assessment Order: ............................................ 103
12. Summary of Conclusions: .................................................... 107
Nagarathna, J.
Leave granted in SLP (Civil) Nos.20569-20572 of 2023.
2. I have perused the judgment authored by my learned Brother Satish
Chandra Sharma, J. I am unable to persuade myself to concur with the
reasoning adopted by my learned Brother, hence my separate opinion.
2.1 In the present cases, the respondents in the first batch of
cases being non-resident assessees engaged in the business
of exploration in terms of Section 44BB of the Income Tax Act,
1961 (for short, “the Act”), are eligible assessees within the
meaning of Section 144C.
2.2 Briefly stated the issue which arises in these appeals is the
interpretation to be given to Section 144C in light of Section
153 of the Act. The question which falls for consideration is on
the applicability of Section 153 to a proceeding under Section
* Ed. Note: Pagination as per the original Judgment.
1618 [2025] 8 S.C.R.
Supreme Court Reports
144C of the Act namely, whether the period of eleven months
as envisaged under Section 144C of the Act 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. It is worth noting that the
question is one of statutory interpretation i.e. the interplay between
Sections 153 and 144C and not one of normatively assessing
the adequacy of time available to the Revenue or an assessee,
under any scenario. If this Court were to assign its own view to
the adequacy of statutory prescribed timelines, then it will amount
to ignoring the cardinal principles of interpreting fiscal statutes.
While my learned Brother has allowed the appeals filed by the
Revenue, I have decided to dismiss the same.
Factual Background:
3. Briefly stated, the respondents in Civil Appeal arising out of SLP(C)
No. 20569-20572/2023 are group companies incorporated overseas
and are engaged in the business of shallow water drilling for clients
engaged in the oil and gas industry. Respondents have been filing
their return of income under the Act. The four special leave petitions
filed before this Court arise from four writ petitions being W.P.
No.2340/2021, W.P. No.2661/2021, W.P. No.3059/2021 and W.P.
No.3060/2021 preferred by the respondents before the Bombay High
Court, which were allowed by the High Court vide common impugned
order dated 04.08.2023. Considering the material similarities in all
writ petitions, the common impugned order narrated and discussed
the facts in W.P. No.2661/2021 and we will narrate the same insofar
as concurrent with others which is from SLP(C) Nos.20570/2023.
SLP(C) Nos.20569-20570/2023 concern Assessment Year (A.Y.)
2014-15 and SLP(C) Nos.20571-20572/2023 concern A.Y. 2018-19.
3.1 The respondents in the above cases are non-resident
assessees, which are engaged, inter alia, in the business of
providing services or facilities in connection with prospecting
for or extraction or production of mineral oils, had the option
to compute their income on presumptive basis under Section
44BB of the Act; however, for A.Y. 2014-15, the respondents
opted out of the option to compute their income on presumptive
[2025] 8 S.C.R. 1619
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
basis and declared a total loss of Rs.120,18,44,672/- in their
Return of Income filed on 29.11.2014. Vide Notice issued
under Section 143(2) dated 28.08.2015, respondents’ Return
of Income was selected for scrutiny. Subsequently, the Draft
assessment order was issued on 26.12.2016 computing the
respondent’s total income at Rs.4,34,79,980/-. Undisputedly,
Respondents are eligible assessees as per Section 144C(15)
of the Act. In accordance with Section 144C, respondents filed
their objections before the Dispute Resolution Panel (for short,
‘DRP’) against the draft assessment order, which eventually did
not accept respondents’ case and by an order dated 28.09.2017
gave directions to the Assessing Officer. Upon receipt of the
directions of the DRP, the Assessing Officer passed the final
assessment order on 30.10.2017 under Section 143(3) read
with Section 144C(13) of the Act.
3.2 Aggrieved by the said Order dated 30.10.2017, the respondents
filed an appeal before the Income Tax Appellate Tribunal
(‘Tribunal’, for short) which by way of its order dated 04.10.2019
allowed the appeal and remanded the matter to the Assessing
Officer for fresh adjudication. Pursuant to such remand, on
05.02.2020, the respondent, informed the Assessing Officer
about the order and requested for an early disposal of the same.
More than a year thereafter, on 22.02.2021, the respondent
was called upon to produce certain contractual details and
supply reasons for incurring a loss during A.Y. 2014-15. Further
information was requested vide notice dated 10.09.2021 issued
under Section 142(1) of the Act. Subsequently, several notices
were issued under Section 142(1) of the Act calling upon
the respondent to provide documents and details. Finally, on
23.09.2021 at 09:42 AM, the respondent was issued a show
cause notice allowing it time to respond till 03:30 PM on the
next day i.e. 24.09.2021. As required, the respondent filed its
response on 24.09.2021. Thereafter, an assessment order came
to be passed in remand on 28.09.2021, which was clarified on
29.09.2021 to be a draft assessment order.
3.3 In compliance with Section 144C(2), the respondent filed its
objections before the DRP on 27.10.2021 and also filed the writ
petitions before the High Court impugning the draft assessment
order dated 28.09.2021 by contending that no final assessment
1620 [2025] 8 S.C.R.
Supreme Court Reports
order could be passed now as the period of limitation expired
on 30.09.2021 under Section 153(3) of the Act read with the
provisions of the Taxation and other laws (Relaxation and
Amendment of Certain Provisions) Act, 2020 (for short, ‘TOLA”)
and the Notification issued thereunder.
3.4 A perusal of the Memorandum of W.P. No.2340/2021 annexed
by Petitioners confirms that the facts and dates in SLP(C)
No.20569/2023 are congruent to those discussed above and
therefore, the same need not reiterated.
3.5 The facts of SLP(C) Nos.20571-20572/2023 (arising out of W.P.
Nos.3059-3060/2021) are slightly different although they call for
an answer to the same question of law. Unlike the two other
petitions which concern an order passed on remand, in these
Petitions the original orders of assessment were required to be
passed within the period of limitation set out in Section 153(1) of
the Act. On 30.11.2018, the respondents therein filed their Return
of Income declaring total loss for AY 2018-19. On 23.11.2020,
the first notices under Section 142(1) were issued to them, which
were replied to. Several other notices under Section 142(1) were
issued and replies given before, finally, on 23.09.2021 a Show
Cause Notice was issued in both cases and draft assessment
orders under Section 144C passed on 28.09.2021. As per Section
153(1) of the Act, the limitation for passing of final assessment
orders is eighteen months from the end of the Assessment Year.
Ordinarily, the original due date would have been 30.09.2020,
however, due to the operation of the TOLA and the Notifications
issued thereunder, the due date was extended to 30.09.2021.
Vide the Common Impugned Order, the High Court was of the
view that there is no difference in the legal principle falling for
consideration in all these petitions since, in these two petitions,
the draft order under Section 144C was passed on 28.09.2021
and no final assessment order could forthwith be passed due
to the expiry of due date on 30.09.2021.
Being aggrieved by the said reasoning, the revenue has
preferred these appeals.
3.6 The impugned order in SLP(C) No.25798 of 2024 is against an
interim order passed by the Bombay High Court and the Writ
Petition is pending adjudication.
[2025] 8 S.C.R. 1621
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
Submissions:
4. We have heard learned Additional Solicitor General (ASG) Sri N.
Venkataraman for the revenue and learned senior counsel Sri J.D.
Mistry for the respondents at length. We have also perused the
material on record.
4.1 Learned Additional Solicitor General contended that the method
of assessment which is contemplated for eligible assessees as
defined under Section 144C(15) of the Act is distinct from the
normal category of assessees as there is a departure in the
assessment procedure under Section 144C of the Act which
is a Code by itself. This is because under Section 144C(1) of
the Act, a draft order has to be made and communicated to the
eligible assessees who are defined under Section 144C(15) of
the Act. That a draft assessment order is not an enforceable
order but is made by the Assessing Officer prior to the making
of a final assessment order which is in the case of eligible
assessees only. The respondents herein fall within clause (b)
of Section 144C(15). That insofar as an ordinary assessment
is concerned, the time frame is as provided under Section
153 of the Act but if there is a variation arising in respect of
a proceeding before the Transfer Pricing Officer, then under
Section 92CA of the Act as there is an extension of the period
of twenty-one months contemplated under Section 153(1) of the
Act by a further period of twelve months, the total time period
is increased to thirty-three months for passing an assessment
order from the end of the relevant year. That, Section 144C has
its own timeline which is in addition to what is prescribed under
Section 153 of the Act as it is in the nature of an exception to
the latter provision.
4.2 It was submitted by Sri Venkataraman that under Section 144C
of the Act, non-obstante clauses have been used in three sub-
sections and the import of those clauses have to be clearly
interpreted. In this context, he submitted that the Court must
also bear in mind the difference between a non-obstante clause
and a “subject to” clause which are used as distinct legislative
devices for bringing forth the intent of the legislature, which is
the Parliament in the instant case. Having regard to the non-
obstante clause in sub-section (1) of Section 144C of the Act, it
1622 [2025] 8 S.C.R.
Supreme Court Reports
was submitted that there is no time frame envisaged for passing
of a draft order by the Assessing Officer when a matter is
remanded from the Tribunal under Section 254 of the Act. That
the non-obstante clause would indicate that the time frame of
twelve months mentioned in the proviso to sub-section (3) of
the Section 153 would not apply to the passing of a draft order
under sub-section (1) of Section 144C of the Act. However, the
non-obstante clauses in sub-sections (4) and (13) of Section
144C would indicate that the said clauses are referrable directly
to Section 153(3) of the Act. That, having regard to the use of
the non-obstante clauses under Section 144C of the Act, the
said Section would have to be interpreted in juxtaposition with
Section 153(3) of the Act which deals with the limitation for the
passing of an assessment order pursuant to a remand order
passed by the Tribunal.
4.3 Learned Additional Solicitor General further submitted that in
the impugned orders of the Bombay High Court which have
followed the judgment of the Madras High Court in the case of
Commissioner of Income Tax vs. Roca Bathroom Products
Pvt. Ltd., 2022 SCC Online Madras 8777 (“Roca Bathroom
Products”) are wholly incorrect inasmuch as the High Courts
have failed to appreciate the fact that Section 144C is a Code by
itself with regard to the making of an assessment order insofar
as the category of eligible assessees are concerned. Hence,
the said judgments require to be overruled. A similar view has
also been taken by the Delhi High Court which is also incorrect.
5. Per contra, learned senior counsel Sri Mistry at the outset submitted
that the Special Leave Petitions ought to be dismissed owing to “low
tax effect”. However, the said submission has not been acted upon
by us having regard to the important question of law which has been
raised in these appeals.
5.1 Learned senior counsel for the respondents commenced his
arguments by submitting that under the Act, there are only four
provisions which empower the Assessing Officer to make an
assessment order which are Sections 143(3), 144, 147 and
158. The exception to this is Section 172 of the Act under
which an assessment order is passed on the landing of a ship
on the Indian shores.
[2025] 8 S.C.R. 1623
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
5.2 Arguing on the merits of the case, Sri Mistry contended that
Section 153(1) of the Act prescribes the limitation period for
completion of assessment, reassessment or recomputation
which is twenty-one months subject to the provisos therein
when an assessment is made under Sections 143 or 144 of
the Act; that, in a case where Section 92C applies, sub-section
(4) of Section 153 may have expressly extended the limitation
period by twelve months which is by way of a recent amendment
and is not applicable to the respondents-assessees in the
present cases. Also, while calculating the period of limitation,
the Explanation to Section 153 expressly provides the specific
periods to be excluded. However, there is no reference to the time
consumed in a proceeding under Section 144C being excluded
and thereby extending the period of limitation as provided under
sub-section (3) of Section 153 of the Act which is applicable to
the present cases. Therefore, in all cases, pertaining to an eligible
assessee, the procedure contemplated under Section 144C has
to be within the time frame prescribed under Section 153(3) of
the Act. There is no additional limitation period contemplated
over and above what is prescribed in Section 153(3) of the Act
which deals with a de novo assessment being made on the
setting aside or cancellation of the assessment by the Tribunal
under Section 254 of the Act. That in the instant case, there
has been a breach of the limitation period while passing the
re-assessment order. Hence, the High Court held that the re-
assessment order was barred by limitation.
5.3 Elaborating on the said contention, it was argued that the
overall time frame for passing an assessment/reassessment
order is prescribed under Section 153(1) of the Act, which is
a period of twenty-one months subject to the provisos thereto
but when Section 153(3) applies, the procedure under Section
144C must be completed within the overall period of twelve
months prescribed under Section 153(3). That the expression
“an order of fresh assessment” means a final assessment order
and not to a draft order to be passed in twelve months. Hence,
an intermediary mechanism has been envisaged under Section
144C of the Act before the final order is passed under that
Section itself. Further, specific timelines have been indicated
under Section 144C for various stages to be completed, which
1624 [2025] 8 S.C.R.
Supreme Court Reports
must be strictly adhered to in order to comply with the limitation
period prescribed under Section 153(3) of the Act. In this regard,
the judgment of the Madras High Court in the case of Roca
Bathroom Products was relied upon.
5.4 Learned senior counsel submitted that the conundrum in this
case is regarding a harmonious interpretation of Section 153(3)
with Section 144C of the Act. In this regard, our attention was
drawn to the Explanation to Section 153 which specifically
excludes certain periods under certain circumstances while
calculating the limitation period of twelve months under the
proviso to Section 153(3) of the Act. It was submitted that if the
Parliament intended that the period consumed while carrying
out the procedure under Section 144C of the Act had to be
excluded from Section 153(3) of the Act then there would have
been an express provision to that effect. In the absence of such
a provision, the Court would have to strictly interpret Section
144C in light of Section 153(3) of the Act having regard to the
intention of the Parliament vis-à-vis eligible assessees.
5.5 Applying the aforesaid submissions to the facts of the case,
learned senior counsel Sri Mistry submitted that in the instant
case, the order of the Tribunal is dated 04.10.2019 and in
terms of the proviso to Section 153(3) of the Act, a period
of twelve months is the maximum period in which a final
assessment order has to be made de novo by bearing in
mind the procedure envisaged under Section 144C of the Act
in which event, there would be a period of eighteen months
available from 04.10.2019 for passing such a de novo order
whereas twelve months is the minimum period available to
pass such an order if the order of the Tribunal is dated 31st
March of a particular year as the period of twelve months have
to be calculated from the end of the financial year in which
the order of the Tribunal is received by the concerned Income
Tax Commissioner. That Section 153(3) has been amended
in the year 2016 which is after the insertion of Section 144C
to the Act and the Parliament was well aware of the process
envisaged under Section 144C of the Act insofar as eligible
assessees are concerned with regard to making of a final
assessment order within the aforesaid time frame.
[2025] 8 S.C.R. 1625
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
5.6 In this regard, reliance was placed on the judgment of this
Court in Kalyankumar Ray vs. Commissioner of Income
Tax, West Bengal, (1991) 191 ITR 634 (SC) (“Kalyankumar
Ray”) to contend that assessment under the Act is an integrated
process involving not only the assessment of the total income
but also the determination of tax and the latter is as crucial for
the assessee as the former. This is because under Section
143(3) the Assessing Officer has to determine, by an order in
writing, not only the total income but also the net sum which
will be payable by the assessee for the assessment year in
question and the demand notice under Section 156 has to be
issued in consequence of such an order. The same principle
would squarely apply to Section 144C of the Act in the case
of eligible assessees also insofar as the limitation period is
concerned.
5.7 That an order passed under Section 144C of the Act is not
appealable before the Commissioner (Appeal) but directly
before the Tribunal vide Section 246A(1)(a). On the other
hand, an assessment order made pursuant to the directions
of the DRP is appealable under Section 253(1)(d) of the Act
before the Tribunal. Thus, an assessment order made under
Section 144C is also an assessment made within the meaning
of Section 143(3) but appealable before the Tribunal. Therefore,
the limitation period prescribed under Section 153(3) to an order
made under Section 144C of the Act is squarely applicable.
Even though, no limitation period has been prescribed to make
a draft assessment order pursuant to a remand made by the
Tribunal on setting aside or cancelling the assessment, the fact
remains that a final assessment order must be made under
Section 144C within the limitation prescribed under the proviso
to Section 153(3) of the Act.
5.8 It was emphatically submitted by learned senior counsel Sri
Mistry that the non-obstante clause in sub-section (1) of Section
144C of the Act is not with reference to the limitation period
prescribed under Section 153 of the Act. Since a draft order
has to be made prior to a final assessment order in the case
of eligible assessees unlike other categories of assessees, the
Parliament has envisaged a special procedure as opposed to the
procedure contemplated in the case of ordinary assessees. In
1626 [2025] 8 S.C.R.
Supreme Court Reports
this regard, reliance was placed on the judgments of this Court
in Central Bank of India vs. State of Kerala, (2009) 4 SCC 94
and In Re: Interplay Between Arbitration Agreements under
Arbitration, 1996 & Stamp Act, 1899, (2024) 6 SCC 1 in the
context of interpretation of a non-obstante clause.
Opinion of Learned Satish Chandra Sharma J.:
6. My learned Brother Satish Chandra Sharma, J. who has penned his
judgment is of the view that the learned Additional Solicitor General
is right in his submissions and therefore has allowed the Revenue’s
appeals while rejecting the contentions advanced on behalf of the
respondents-assessees. He has opined that judgments of the Madras
High Court in Roca Bathroom Products as well as the impugned
orders have to be set-aside.
6.1 Referring to Roca Bathroom Products, my learned brother
has stated that sub-section (4) of Section 153 of the Act applied
to the instant case, which providing for an additional period of
twelve months to complete the assessment and to pass a final
order when there is a reference to the Transfer Pricing Officer
in terms of Section 92CA of the Act. The Madras High Court on
the other hand, held that the proceedings before the DRP and
the passing of the Draft Assessment and thereafter the Final
Assessment Orders ought to take place within the period of
limitation of twelve months as prescribed under Section 153(3)
of the Act and not under an additional period of twelve months.
The above reasoning has not been accepted by my learned
Brother by observing that a fine balance has to be maintained
between ensuring that the revenue authorities must have ample
time and opportunity to assess the income and to ensure that
there is no evasion of tax or escapement of income while at the
same time, the rights of the assessees in having their return
scrutinised on a timely basis must be balanced.
6.2 In the above backdrop, it has been reasoned that if the entire
procedure contemplated in terms of Section 144C of the Act
has to be subsumed within the overall time period prescribed
under Section 153(3) of the Act, then it would result “in a
complete catastrophe for recovering lost tax”, as a narrower
period of time will pressurise the Assessing Officer and as a
[2025] 8 S.C.R. 1627
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
result, the system will become unworkable. However, under
Section 144C, specified timelines have been prescribed within
which the assessment order must be passed. That although
Section 153(3) does not distinguish between persons who are
to be assessed under Section 144C of the Act or otherwise,
in fact, those whose assessments/reassessments are made
under Section 143(3) are different from those under Section
144C of the Act. That under Section 144C of the Act, a totally
distinct procedure is contemplated and if a matter is referred
to the DRP, then the final assessment has to be made within
the period of eleven months from the date of forwarding of the
draft assessment order to the DRP.
6.3 According to my learned brother, the High Courts of Bombay
and Madras have erred in opining that no exception has been
carved out for Section 144C of the Act in any of the sub-
sections of Section 153 and therefore, the procedure under
Section 144C must necessarily conclude within the timeframe
prescribed under Section 153(3) of the Act. My learned Brother
has agreed with this view only to a limited extent, insofar as
the timeline prescribed under Section 153(3) is concerned in
as much as it must apply to the proceedings under Section
144C of the 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 Act. In other words, the view taken
by my learned Brother is that in addition to the timeframe
stipulated under Section 153(3) of the Act, i.e., twelve months
for making an assessment order, the timeframe that is taken
for completing the proceeding under Section 144C would also
have to be excluded from the aforesaid twelve months which
would automatically extend the limitation period beyond the
twelve months as contemplated under Section 153(3) of the Act.
This view is sought to be justified by holding that sub-sections
(4) and (13) of Section 144C of the Act which contain the non-
obstante clauses, exclude the application of Section 153(3) of
the Act and the timelines prescribed thereunder. However, the
High Courts of Madras and Bombay have taken the view that
the timeline under Section 144C further reduces the timeline
available to the Assessing Officer to pass an assessment order
under that provision and that it limits the timeline in order to
1628 [2025] 8 S.C.R.
Supreme Court Reports
achieve the mandate under Section 153(3) of the Act which
according to my learned Brother is an incorrect view.
6.4 That, after the directions are issued by the DRP under Section
144C, a period of one month is contemplated for passing the
final assessment order, which in any case has to be passed
within an overall twelve months period, under Section 153(3)
of the Act. But learned Brother Sharma, J. has opined that the
timelines in sub-sections (4) and (13) of Section 144C of the
Act are independent of the timeline contemplated under Section
153(3) of the Act and Section 144C operates in a timeline in
addition to the timeline contemplated under Section 153(3) of
the Act. Therefore, the Bombay and Madras High Courts were
not correct in their conclusions.
6.5 It is further reasoned by my learned Brother that Section 153(3)
of the Act which prescribes the period of twelve months is only
for the purpose of passing a draft order. The non-obstante
clause contained in sub-sections (4) and (13) of Section 144C
of the Act extend the timeline for passing a final order; that sub-
section (4) of Section 144C operates only when the variation
proposed in the draft assessment order is not accepted or
when the period of filing objections before DRP has expired,
which is subsequent to the passing of the draft assessment
order. Therefore, the Assessing Officer has to comply with
the requirements of Section 153(3) of the Act only insofar as
the passing of the draft assessment order is concerned and if
the variations made by him in the said order are accepted or
objections are not made within a period of thirty days, then the
period of one month is extended for passing the final assessment
order under Section 144C(4) of the Act.
6.6 Applying the said reasoning to the present case, it has been held
that the Tribunal passed the remand order on 04.09.2019 and
Assessing Officer ought to have passed the draft assessment
order before 30.09.2021 and if in case the acceptance was
received or no objection was filed before 30.10.2021 then the
final order had to be passed in a month’s time. But if objections
were received from the eligible assessee then sub-sections (12)
and (13) of Section 144C would apply and the Assessing Officer
would have an additional period of one month to pass the final
[2025] 8 S.C.R. 1629
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
assessment order. This means that if the DRP issues directions,
then within a period of one month, the final assessment order
has to be passed, which is practically impossible, and the
provision would be reduced to an absurdity. Therefore, the view
of the High Court of Madras and Bombay was not acceptable
to my learned Brother.
6.7 Thus, according to my learned Brother, Sharma, J. the timeline
mentioned under Section 153(3) would apply only to the passing
of the draft assessment order and if Section 92C applies, then
the period would automatically be extended by twelve months
under Section 153(4) of the Act.
6.8 Therefore, the impugned orders of the Bombay High Court have
been set-aside and the appeals have been allowed by directing
the revenue authorities to pass afresh an appropriate order in
accordance with law, reserving liberty to the assessees to take
recourse to remedies available under the law (by referring to
the liberty granted to the parties in terms of paragraph 20 of the
judgment and order dated 30.08.2021 passed by the Bombay
High Court in Writ Petition No.30944 of 2021).
Relevant Provisions:
7. Before proceeding further, it would be useful to extract the relevant
provisions of the Act as under:
“2. Definitions. – In this Act, unless the context otherwise
requires, -
xxx
(40) “regular assessment” means the assessment made
under sub-section (3) of section 143 or section 144;”
7.1 Section 44BB is a special provision for computing profits and
gains in connection with the business of exploration etc., of
mineral oils which provision is applicable to the respondent
assessees. The explanation in Section 44BB states that a
plant includes ships, aircrafts, vehicles, drilling units, scientific
apparatus and equipment, used for the purposes of such
business and the expression “minerals oil” includes petroleum
and natural gas.
1630 [2025] 8 S.C.R.
Supreme Court Reports
7.2 Section 139 speaks of filing of return of income. Section
143 deals with ‘assessment’ while Section 144 deals with
‘best judgment assessment’. Under Section 144A the Joint
Commissioner has the power to issue directions in certain
cases while under Section 144BA reference can be made to
the Principal Commissioner or Commissioner in certain cases.
Section 144C deals with reference to dispute resolution panel.
The time limit for completion of assessment, reassessment and
recomputation is prescribed under Section 153 of the Act. The
said Section prescribes the limitation period for the making
of, inter alia, assessment orders on the application of several
other provisions which is relevant for the purposes of this case.
Sections 144C and 153 are extracted as under:
“144C. 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).
[2025] 8 S.C.R. 1631
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
(4) The Assessing Officer shall, notwithstanding
anything contained in section 153 or section 153B,
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 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.
1632 [2025] 8 S.C.R.
Supreme Court Reports
(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.
(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 153B, 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.
[2025] 8 S.C.R. 1633
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
(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.
(14A) 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 144BA.
(14B) 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—
(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.
(14C) The Central Government may, for the purpose
of giving effect to the scheme made under sub-
section (14B), 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.
(14D) Every notification issued under sub-section
(14B) and sub-section (14C) 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,—
1634 [2025] 8 S.C.R.
Supreme Court Reports
(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 92CA; 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 158BA
or other person referred to in section 158BD.
(16) The provisions of this section shall not apply to
any proceedings under Chapter XIV-B.
xxx
153. Time limit for completion of assessment,
reassessment and recomputation. - (1) No order
of assessment shall be made under section 143 or
section 144 at any time after the expiry of twenty-
one 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) 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;
[2025] 8 S.C.R. 1635
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
(ii) 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.
(1A) Notwithstanding anything contained in sub-
section (1), where a return under sub-section (8A)
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.
(1B) Notwithstanding anything in sub-section (1),
where a return is furnished in consequence of an
order under 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
1636 [2025] 8 S.C.R.
Supreme Court Reports
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), (1A) and (2), an order of fresh
assessment or fresh order under section 92CA, 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 92CA, 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 Commissioner or
Commissioner 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 250
or 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 Chief Commissioner or
Chief Commissioner or Principal Commissioner or
Commissioner, as the case may be, 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.
(3A) Notwithstanding anything contained in sub-
sections (1), (1A), (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 132A, the period available for
completion of assessment or reassessment, as the
case may be, under the said sub-sections shall,—
[2025] 8 S.C.R. 1637
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
(a) in a case where such search is initiated under
section 132 or such requisition is made under
section 132A;
(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), (1A), (2), (3) and (3A), where a
reference under sub-section (1) of section 92CA 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),
(1A), (2), (3) and (3A), 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 92CA, 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 the
Principal Chief Commissioner or Chief Commissioner
or Principal Commissioner or Commissioner, as the
case may be:
1638 [2025] 8 S.C.R.
Supreme Court Reports
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 Chief Commissioner or Chief Commissioner
or Principal Commissioner or Commissioner, as the
case may be on receipt of such request in writing
from the Assessing Officer 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).
(5A) Where the Transfer Pricing Officer gives effect to
an order or direction under section 263 by an order
under section 92CA 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), (1A) 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 (5A),
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
[2025] 8 S.C.R. 1639
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
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 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 153A or sub-section (1) of section
153B or section 158BE, the order of assessment
or reassessment, relating to any assessment year,
which stands revived under sub-section (2) of section
153A or sub-section (5) of section 158BA, 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 153B or
section 158BE, whichever is later.
1640 [2025] 8 S.C.R.
Supreme Court Reports
(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 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 (22B) or clause (23A) or clause (23B),
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
[2025] 8 S.C.R. 1641
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
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 (2A) 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 valued 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
(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
142A 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 158A 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 245C and ending
with the date on which the order under sub-
section (1) of section 245D is received by the
Principal Commissioner or Commissioner under
sub-section (2) of that section; or
1642 [2025] 8 S.C.R.
Supreme Court Reports
(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 245Q 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 245R; 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 245Q 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 245R; 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 90A and ending with the
date on which the information requested 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
144BA 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 132A
[2025] 8 S.C.R. 1643
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
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 132A, 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 132A; 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 (23C) of
section 10 or clause (ii) or clause (iii) of sub-
section (4) of section 12AB, as the case may
be, is received by the Assessing Officer, shall
be excluded:
Provided that where immediately after the exclusion of
the aforesaid period, the period of limitation referred
to in sub-sections (1), (1A), (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:
1644 [2025] 8 S.C.R.
Supreme Court Reports
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
(3A) of section 92CA 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 245HA,
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 245HA, 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 158BE and for the purposes of
payment of interest under section 244A, 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 245M, 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 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 244A, the provisions of the fourth proviso
shall apply accordingly:
[2025] 8 S.C.R. 1645
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
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.”
7.3 Section 246A deals with appeals before the Commissioner
(Appeals) which is essentially with regard to an assessment
order passed under sub-section (3) of Section 143 or sub-
section (12) of Section 144BA or Section 144 made by the
Assessing Officer. However, any order passed in pursuance of
the directions of the DRP is not appealable to the Commissioner
(Appeals) as the same is excluded under the said provision.
On the other hand, under Section 253(1)(d), an order passed
by an Assessing Officer under sub-section (3) of Section 143
or Section 147 or Section 153A or Section 153C in pursuance
of the directions issued by the DRP, or an order passed under
Section 154 in respect of such order can be appealed directly
to the tribunal.
1646 [2025] 8 S.C.R.
Supreme Court Reports
Material relied upon by the Respondents in support of their
Submissions:
8. Learned senior counsel for the respondents relied upon the Budget
Speeches of the Finance Ministers of the relevant years in support
of their submission that it has been the intention of the Parliament to
reduce the time consumed in making an assessment order in the case
of eligible assessees. The relevant portions are extracted as under:
(i) Speech of Finance Minister on July 6, 2009
“96. In order to further improve the investment climate
in the country, we need to facilitate the resolution of tax
disputes faced by foreign companies within a reasonable
time frame. This is particularly relevant for such companies
in the Information Technology (IT) sector. I, therefore,
propose to create an alternative dispute resolution
mechanism within the Income Tax Department for the
resolution of transfer pricing disputes. To reduce the
impact of judgemental errors in determining transfer price
in international transactions, it is proposed to empower
the Central Board of Direct Taxes (CBDT) to formulate
‘safe harbour’ rules.
(underlining by me)
(ii) Memorandum Regarding Delegated Legislation
Clause 55
“Clause 55 of the Bill seeks to insert a new section 144C
relating to reference to Dispute Resolution Panel.
The proposed new section provides for a dispute resolution
mechanism for the purpose of speedy disposal of the
objections raised by the eligible assessee under this new
section.
Accordingly, it is proposed to empower the Board to make
rules for the efficient functioning of the Dispute Resolution
Panel for expeditious disposal of the objections filed by
the eligible assessee.”
xxx
[2025] 8 S.C.R. 1647
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
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
will facilitate expeditious resolution of disputes in a fast
track basis.
The salient features of the proposed alternate dispute
resolution mechanism are as under:—
(1) The Assessing Officer shall, forward a draft of the
proposed order of assessment (hereinafter 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 in the income or loss returned 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, pass the assessment order
1648 [2025] 8 S.C.R.
Supreme Court Reports
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
objections are received under sub-section (2), issue such
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.
[2025] 8 S.C.R. 1649
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, the assessment without
providing any further opportunity of being heard to the
assessee, within one month from the end of the month in
which the direction is received.
(14) The Board may make rules for the efficient functioning
of the Dispute Resolution Panel and expeditious disposal
of the objections filed, under sub-section(2), by the eligible
assessee.
(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 92CA; and
(ii) any foreign company.
1650 [2025] 8 S.C.R.
Supreme Court Reports
Further, it is proposed to make consequential amendments—
(i) in sub-section (1) of section 131 so as to provide
that “Dispute Resolution Panel” shall have the same
powers as are vested in a Court under the Code of
Civil Procedure, 1908 (5 of 1908);
(ii) in clause (a) of sub-section (1) of section 246 so as to
exclude the order of assessment passed under sub-
section (3) of section 143 in pursuance of directions
of “Dispute Resolution Panel” as an appealable order
and in clause (c) of sub-section (1) of section 246 so
as to exclude an order passed under section 154 of
such order as an appealable order;
(iii) in sub-section (1) of section 253 so as to include an
order of assessment passed under sub-section (3)
of section 143 in pursuance of directions of “Dispute
Resolution Panel” as an appealable order.
These amendments will take effect from 1st October, 2009.
[Clauses 49,55,71,72]”
(underlining by me)
(iii) Notes on Clauses
Clause 55 of the Bill seeks to insert a new section 144C
in the Income-tax Act relating to Dispute Resolution Panel.
The subjects of transfer pricing audit and the taxation of
foreign company are at nascent stage in India. Often the
Assessing Officers and Transfer Pricing Officers tend to
take a conservative view. The correction of such view
take very long time with the existing appellate structure.
With a view to provide speedy disposal, it is proposed to
amend the Income-tax Act so as to create an alternative
dispute resolution mechanism within the income-tax
department and accordingly, section 144C has been
proposed to be inserted so as to provide inter alia the
Dispute Resolution Panel as an alternative dispute
resolution mechanism.
This amendment will take effect from 1st October, 2009.
[2025] 8 S.C.R. 1651
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
(iv) Explanatory Notes to the Provisions of the Finance
Act, 2016 dated 20th January 2017
57. Rationalisation of time limit for assessment,
reassessment and recomputation.
57.1 The existing statutory time limit for completion of
assessment proceedings is two years from the end of the
assessment year in which the income was first assessable.
It is desirable that proceedings under the Act are finalised
more expeditiously as digitisation of processes within
the Department has enhanced its efficiency in handling
workload. In order to simplify the provisions of existing
section 153 of the Income-tax Act by retaining only those
provisions that are relevant to the current provisions of
the Income-tax Act, section 153 of the Income-tax Act has
been amended by substituting the existing section with the
following changes in time limit from the existing time limits:
(i) the period, for completion of assessment under
section 143 or section 144 has been changed from
existing two years to twenty-one months from the
end of the assessment year in which the income
was first assessable;
(ii) the period for completion of assessment under section
147 has been changed from existing one year to nine
months from the end of the financial year in which
the notice under section 148 was served;
(iii) the period for completion of fresh assessment in
pursuance of an order under section 254 or section
263 or section 264, setting aside or cancelling an
assessment has been changed from existing one year
to nine months from the end of the financial year in
which the order under section 254 is received by the
Principal Chief Commissioner or Chief Commissioner
or Principal Commissioner or Commissioner, or the
order under section 263 or section 264 is passed by
the Principal Commissioner or Commissioner
57.2 It is further provided that the period for giving effect to
an order, under sections 250 or 254 or 260 or 262 or 263
1652 [2025] 8 S.C.R.
Supreme Court Reports
or 264 of the Income-tax Act or an order of the Settlement
Commission under sub-section (4) of section 245D of
the Income-tax Act, where effect can be given wholly or
partly otherwise than by making a fresh assessment or
reassessment shall be three months from the end of the
month in which order is received or passed, as the case
may be, by the Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner or Commissioner.
It is also provided that in a case where it is not possible
for the Assessing Officer to give effect to such order within
the aforesaid period, for reasons beyond his control, the
Principal Commissioner or Commissioner on receipt of such
reasons in writing from the Assessing Officer, if satisfied,
may allow additional time of six months to give effect to
the said order. However, in respect of cases pending as
on 1st June 2016, the time limit for passing such order
has been extended to 31.3.2017.
57.3 It is also provided that 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,
254, 260, 262, 263, or section 264 of the Income-tax Act
or in an order of any court in a proceeding otherwise than
by way of appeal or reference under the Income-tax Act,
then such assessment, reassessment or recomputation
shall be made on or before the expiry of twelve months
from the end of the month in which such order is received
by the Principal Commissioner or Commissioner. However,
for cases pending as on 1.6.2016, the time limit for taking
requisite action is 31.3.2017 or twelve months from the end
of the month in which such order is received, whichever
is later.
57.4 Where an assessment is made on a partner of the
firm in consequence of an assessment made on the firm
under section 147 of the Income-tax Act, such assessment
shall be made 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. However, for cases
pending as on 1.6.2016, the time limit for taking requisite
[2025] 8 S.C.R. 1653
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
action shall be 31.3.2017 or twelve months from the end
of the month in which order in case of firm is passed,
whichever is later.
57.5 Similarly, consequential changes in time limit for
completion of assessment or reassessment by the
Assessing Officer have been made in accordance with
the extension of time limit provided to the Transfer Pricing
Officer in certain cases by amendment in subsection (3A)
to section 92CA of the Income-tax Act.
57.6 The provisions of section 153 of the Income-tax
Act as they stood immediately before their amendment
by the Act shall apply to and in relation to any order of
assessment, reassessment or recomputation made before
the 1st of June, 2016.
57.7 Applicability: These amendments take effect
retrospectively from 1st of June, 2016
(underlining by me)
(v) Explanatory Notes to the Provisions of the Finance
Act, 2017 dated 15th February 2018
60. Rationalisation of time limits for completion of
assessment, reassessment and re-computation and
reducing the time for filing revised return.
60.1 The provisions of section 153 of the Income-tax
Act specify the time limit for completion of assessment,
reassessment and re-computation of cases mentioned
therein.
60.2 In an effort to minimise human interface and move
towards technology, massive computerisation has been
carried out in the Department, which has translated
into overall enhanced efficiency in the functioning of the
Department. In view of the same, sub-section (1) of section
153 of the Income-tax Act has been amended to provide that
for the assessment year 2018-19, the time limit for making
an assessment order under sections 143 or 144 of the
Income-tax Act shall be reduced from twenty-one months
1654 [2025] 8 S.C.R.
Supreme Court Reports
to eighteen months from the end of the assessment year,
and for the assessment year 2019-20 and onwards, the
said time limit shall be twelve months from the end of the
assessment year in which the income was first assessable.
60.3 Sub-section (2) of section 153 of the Income-tax
Act has further been amended to provide that the time
limit for making an order of assessment, reassessment
or recomputation under section 147 of the Income-tax
Act, in respect of notices served under section 148 of
the Income-tax Act on or after the 1st day of April, 2019
shall be twelve months from the end of the financial year
in which notice under section 148 is served.
60.4 Sub-section (3) of section 153 of the Income-tax Act
has also been amended to provide that the time limit for
making an order of fresh assessment in pursuance of an
order passed or received in the financial year 2019-20
and onwards under sections 254 or 263 or 264 of the
Income-tax Act shall be twelve months from the end of
the financial year in which order under section 254 is
received or order under section 263 or 264 is passed by
the authority referred to therein.
(underlining by me)
(vi) Memorandum Explaining the provisions in the Finance
Bill 2021
Reduction of time limit for completing assessment
Section 153 of the Act contains provisions in respect of
time-limit for completion of assessment, reassessment
and re-computation under the Act. The sub-section (1) of
the said section provides that the time-limit for passing
an assessment order under section 143 or 144 of the Act
shall be 21 months from the end of the assessment year
in which the income was first assessable. However, this
time limit had earlier been curtailed in order to improve the
efficacy and efficiency of the Department to give effect to
computerization of processes under the Act. As a result,
the time limit for completion of assessment proceedings
[2025] 8 S.C.R. 1655
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
under sections 143 or 144 of the Act was reduced to 18
months for A.Y. 2018-19 and 12 months for A.Y. 2019-20
and subsequent assessment years vide the Finance Act,
2017.
Since then, the assessment procedure has been
completely overhauled by the introduction of the Faceless
Assessment Scheme, 2019. The assessment procedure is
now conducted in a completely faceless and jurisdiction-
less way where all internal and external communication
is made electronically and different aspects of the
assessment procedure like verification, scrutiny of books
of accounts etc. are carried on by different units. The
person-to-person interface between the taxpayer and
the Department has been eliminated. This team-based
approach for assessment with a dynamic jurisdiction is
technologically driven and very efficient. Thus, the time
required for completion of assessment procedure needs
to be further reduced.
The benefits of shorter time period for scrutiny proceedings
are manifold. On the one hand, it reduces the compliance
burden on the taxpayers who find it easier to explain
matters pertaining to a recent previous year which also
improve the ease of doing business. On the other hand,
it enhances the ability of the Department to detect and
bring to tax any leakages of revenue as the instances of
tax evasion come to the notice of the Department within
a shorter span of time.
Hence, it has been proposed that the time limit for
completion of assessment proceedings may be reduced
further by three months. Thus the time for completing
of assessment is proposed to be nine months from the
end of the assessment year in which the income was
first assessable, for the assessment year 2021-22 and
subsequent assessment years.
This amendment will take effect from 1st April, 2021
[Clause 41]”
(underlining by me)
1656 [2025] 8 S.C.R.
Supreme Court Reports
(vii) Memorandum Explaining the provisions in the Finance
Bill 2022
2. As part of this process of making the tax administration
transparent and efficient, provisions for notifying faceless
schemes under sections 92CA, 144C, 253 and 264A were
introduced in the Act through Taxation and Other Laws
(Relaxation and Amendment of Certain Provisions) Act,
2020 with effect from 01.11.2020 and under section 255,
was inserted through Finance Act, 2021 with effect from
01.04.2021:
S. Section Scheme Date of
No. Limitation
1. 92CA Faceless 31st day of
determination of March, 2022
arm’s length price
2. 144C Faceless Dispute 31st day of
Resolution Panel March, 2022
3. 253 Faceless appeal to 31st day of
Appellate Tribunal March, 2022
4. 255 Faceless 31st day of
procedure of March, 2023
Appellate Tribunal
3. Section 92CA and section 144C are principally
related to the transfer pricing functions and international
taxation which are presently out of the regime of faceless
assessment. New schemes for these two functions are
a part of the assessment function and should follow
the faceless assessment procedure, wherein certain
modifications are proposed which will have an impact
on the information technology structure. Therefore,
notification at this time shall result in delay in stabilization
of the systems.
4. As for notification of scheme under section 255, the
Appellate Tribunal is deemed to be a civil court for all the
purposes of section 195 of the Act and Chapter XXXV
of the Code of Criminal Procedure, 1898. Therefore, a
scheme governing the procedures to be followed by such
[2025] 8 S.C.R. 1657
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
a body needs to be formulated after due consultations with
Ministry of Law & Justice. Similarly, the scheme under
section 253 have to follow the scheme under section 255.
5. In light of the above limitations it is proposed to extend
the date for issuing directions for the purposes of these
sections 92CA, 144C, 253 and 255 till 31st March, 2024.
(underlining by me)
8.1 A perusal of the speech of the Finance Minister dated 06.07.2009
in support of the Finance (No.2) Bill, 2009 (for short, ‘the 2009
Bill’) makes it apparent that the intent of the Parliament behind
Section 144C is to expedite the final disposal of tax disputes
pertaining to an eligible assessee. It should be recalled that a
three-Judge Bench of this Court in Shree Sajjan Mills Ltd. vs.
CIT, (1985) 4 SCC 590 observed that the principle that a
taxing statute should be strictly construed does not exclude a
reasonable construction which gives effect to the purpose or
intention of a provision as apparent from the scheme of the Act.
It goes without saying that such reasonable construction is to be
achieved only with the assistance of the internal and external
aids permissible under the law and not by drawing reliance on
any superlative or equitable considerations or, even, the goal
of “recovering lost tax”.
8.2 Supporting legislative intent is also clear from the Memorandum
to the 2009 Bill which vide clause (55) introduced Section 144C
in the Act. The Memorandum specifically noted that the 2009
Bill amended the Act, inter alia, with a view to ‘encouraging
the growth of foreign investment in India by providing for
a speedy dispute resolution mechanism.’ It was cautiously
noted that flow of foreign investment is extremely sensitive to
prolonged uncertainty in tax matters and the alternate dispute
mechanism was being brought in precisely to usher in a regime
of expeditious resolution of tax disputes. The note on clause
(55) exhibits a similar intent. It is noted that the ‘subjects of
transfer pricing audit and the taxation of foreign company are
at nascent stage in India. Often the Assessing Officers and
Transfer Pricing Officers tend to take a conservative view.’ The
same note further explained that course correction from such
1658 [2025] 8 S.C.R.
Supreme Court Reports
a view took a very long time within the then existing appellate
structure, and therefore Section 144C was inserted to ensure
speedy disposal by the creation of the DRP as an ‘alternative
dispute resolution mechanism within the income-tax department’.
In my view, these notes reinforce the evident parliamentary
intent. In particular, it is useful to emphasise that DRP was
envisioned as an alternative dispute resolution mechanism
‘within the income-tax department’. This informs us that the
procedure under Section 144C envisions the procedure to be
completed between the Revenue and the assessee and within
such procedure, the compartmentalised limitations for the DRP
and Assessing Officer are outlined in the relevant sub-sections.
The import of this conspectus approach is a stricter interpretation
of the timelines of Section 144C. To read it otherwise, would
only inflate the timelines for completion of assessment order
of an eligible assessee which would be doing violence to the
intent implicit from the text.
8.3 Bearing the above object of the Parliament as adumbrated by
the Budget speeches of the Finance Ministers for the respective
years the provision under consideration would have to be
interpreted on the basis of the settled rules and principles of
interpretation of statutes which I shall now discuss.
Principles of Statutory Interpretation:
9. Before proceeding further, it would be useful to discuss the relevant
principles of statutory interpretation from authoritative sources.
9.1 A statute or any enacting provision therein must be so
construed as to make it effective and operative. Thus, courts
should lean against construction which reduces a provision
to a futility. It has been observed by Lord Dunedin of the
House of Lords that “A statute is designed to be workable,
and the interpretation thereof by a court should be to secure
that object, unless crucial omission or clear direction makes
that end unattainable.” vide Whitney vs. Inland Revenue
Commissioner, (1926) A.C. 37 (“Whitney”). Therefore, any
construction which would defeat the plain intention of the
Legislature must be rejected by the courts. Hence, courts
should avoid a construction which would reduce the provision
[2025] 8 S.C.R. 1659
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
to 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. It is in that context
that purposive construction by court is gaining acceptance
rather than holding that there is absurdity in the statute. The
doctrine of purposive interpretation may be taken recourse to
for the purpose of giving full effect to the statutory provisions
and the courts must state what meaning the statue should
bear rather than rendering the statute a nullity.
9.2 Another principle of statutory interpretation is that when the
words of a statute are clear, plain or unambiguous, i.e., they are
reasonably susceptible to only one meaning, 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. Gajendragadkar, J. in Kanailal Sur vs.
Paramnidhi Sadhu Khan , AIR 1957 SC 907 opined thus:
“If the words used are capable for one construction
only then it would not be open to the courts to adopt
any other hypothetical construction on the ground that
such hypothetical construction is more consistent with
the alleged object and policy of the Act.”
S.R. Das, J. in CIT, Agri vs. Keshab Chandra Mandal, AIR
1950 SC 265 observed thus:
“Hardship or inconvenience cannot alter the meaning
of the language employed by the Legislature if such
meaning is clear on the face of the statute or the rules.”
He further observed that:
“The spirit of the law may well be an elusive and
unsafe guide and the supposed spirit can certainly not
be given effect to in opposition to the plain language
of the sections of the Act”. Vide Rananjaya Singh vs.
Baijnath Singh, AIR 1954 SC 749.”
9.3 Similarly, Subba Rao, J. observed that in interpretation of a
statute, the primary test is – the language employed in the Act
and when the words are clear and plain, the court is bound
1660 [2025] 8 S.C.R.
Supreme Court Reports
to accept the expressed intention of the Legislature, vide MV
Joshi vs. MU Shimpi, AIR 1961 SC 1494.
9.4 This means that mere 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. Thus, an
unambiguous and plain statute must be given its full interpretation.
It has been observed that unambiguous means “unambiguous in
context”. The expression “context” in this connection is used in
a wide sense as including not only other enacting provisions of
the same statute, but its preamble, the existing state of the law,
other statutes in pari materia and the mischief which by those
and other legitimate means can be discerned that the statute was
intended to remedy. In this context, it would be useful to recall
the words of Grover, J. in VO Tractoroexport vs. Tarapore and
Co., AIR 1971 SC 1, which are as follows:-
“We are aware of no rule of interpretation by which
rank ambiguity can be first introduced by giving
certain expressions a particular meaning and
then an attempt can be made to emerge out of
semantic confusion and obscurity by having resort to
presumed intention of the Legislature to give effect
to international obligations.”
9.5 On the other hand, 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. In that event, the meaning so derived is to be
given effect to irrespective of consequences.
9.6 Further, 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”. While doing so the edges
have to be ironed out so as to read the provisions of an Act
[2025] 8 S.C.R. 1661
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
in consonance with the object of the Act. Thus, 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. In Venkataramana Devaru vs. State of
Mysore AIR 1958 SC 255, Venkatarama Aiyar, J. said that
“the rule of construction is well settled that when there are
in an enactment two provisions which cannot be reconciled
with each other, they should be so interpreted that, if possible,
effect should be given to both. This is what is known as the
rule of harmonious construction.”
9.7 Therefore, effect should be given to both provisions. Thus, a
construction which reduces one of the provisions to a “useless
lumber” or ‘dead letter’ is to be avoided. One of the ways in
dealing with such a situation is to find out which of the two
apparently conflicting provisions is more general and which is
more specific and to construe the same accordingly. However, if a
specific provision has to be read within the mandate of a general
provision then the same has to be accordingly construed so as
to give effect to the mandate of the general provision. However,
if a situation arises where two Sections of the Act cannot be
reconciled, as there is an absolute contradiction between them,
it is often said that the latter must prevail. Another way of looking
at such a situation is to ascertain which is the leading provision
and which is the subordinate provision and which must give
way to the other, but only if a harmonious construction of two
apparently contradictory provisions is possible which will not
lead to any absurdity or give rise to practical inconvenience or
make well-established provision of existing law nugatory, then
the same should be resorted to. In other words, an interpretation
which would dilute the intention of the Parliament or give rise
to an absurdity or lead to any provision of law being rendered
nugatory has to be eschewed.
(Source: GP Singh – Principles of Statutory Interpretation,
15th Ed. LexisNexis).
Non-Obstante Clause:
10. 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.
1662 [2025] 8 S.C.R.
Supreme Court Reports
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. This rule of
interpretation has been applied in several decisions.
10.1 In R.S. Raghunath vs. State of Karnataka, (1992) 1 SCC
335, a three-Judge Bench of this Court referred to the earlier
judgments and observed as under:
“11. … the non obstante clause is appended to a
provision with a view to give the enacting part of the
provision an overriding effect in case of a conflict.
But the non obstante clause need not necessarily
and always be coextensive with the operative part so
as to have the effect of cutting down the clear terms
of an enactment and if the words of the enactment
are clear and are capable of a clear interpretation
on a plain and grammatical construction of the
words the non obstante clause cannot cut down the
construction and restrict the scope of its operation.
In such cases the non obstante clause has to be
read as clarifying the whole position and must
be understood to have been incorporated in the
enactment by the legislature by way of abundant
caution and not by way of limiting the ambit and
scope of the Special Rules.”
10.2 In A.G. Varadarajulu vs. State of T.N., (1998) 4 SCC 231
(“A.G. Varadarajulu “) this Court relied on the judgment in
Aswini Kumar Ghose vs. Arabinda Bose, (1952) 2 SCC
237. This Court while interpreting the non-obstante clause
contained in Section 21-A of the Tamil Nadu Land Reforms
(Fixation of Ceiling on Land) Act, 1961 held:
“16. It is well settled that while dealing with a non
obstante clause under which the legislature wants
to give overriding effect to a section, the court must
try to find out the extent to which the legislature had
intended to give one provision overriding effect over
another provision. Such intention of the legislature in
this behalf is to be gathered from the enacting part
of the section. In Aswini Kumar Ghose v. Arabinda
[2025] 8 S.C.R. 1663
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
Bose [(1952) 2 SCC 237 : AIR 1952 SC 369] Patanjali
Sastri, J. observed: (AIR p. 377, para 27)
‘27. … The enacting part of a statute must,
where it is clear, be taken to control the
non obstante clause where both cannot
be read harmoniously’;’”
10.3 In Interplay Between Arbitration Agreements under
A&C Act, 1996 and Stamp Act, 1899, (2024) 6 SCC 1,
a sevenJudge bench of this Court observed in Paragraphs
83-84 as under:
“83. …. A clause beginning with the expression
‘notwithstanding anything contained in this Act or
in some particular provision in the Act or in some
particular Act or in any law for the time being in force,
or in any contract’ is more often than not appended
to a section in the beginning with a view to give the
enacting part of the section in case of conflict an
overriding effect over the provision of the Act or the
contract mentioned in the non obstante clause. It is
equivalent to saying that in spite of the provision of
the Act or any other Act mentioned in the non obstante
clause or any contract or document mentioned the
enactment following it will have its full operation or
that the provisions embraced in the non obstante
clause would not be an impediment for an operation
of the enactment.’ [As observed in Chandavarkar Sita
Ratna Rao v. Ashalata S. Guram, (1986) 4 SCC 447,
at pp. 477-78, para 67.]
84. Although a non obstante clause must be allowed
to operate with full vigour, its effect is limited to the
extent intended by the legislature. In Icici Bank
Ltd. v. Sidco Leathers Ltd. [Icici Bank Ltd. v. Sidco
Leathers Ltd., (2006) 10 SCC 452] a two-Judge
Bench of this Court held that a non obstante clause
must be interpreted by confining it to the legislative
policy. Thus, even if a non obstante clause has wide
amplitude, the extent of its impact has to be measured
in view of the legislative intention and legislative policy.
1664 [2025] 8 S.C.R.
Supreme Court Reports
[JIK Industries Ltd. v. Amarlal V. Jumani, (2012) 3
SCC 255 : (2012) 2 SCC (Civ) 82 : (2012) 2 SCC
(Cri) 125] In view of this settled legal position, the
issue that arises for our consideration is the scope
of the non obstante clause contained in Section 5 of
the Arbitration Act.”
The seven-Judge Bench was considering the non-obstante
clause in Section 5 of the Arbitration Act, which for immediate
reference, is extracted as under:
“Section 5. Extent of judicial intervention.—
Notwithstanding in any other law for the time being
in force, in matters governed by this part, no judicial
authority shall intervene except where so provided
in this part.”
10.4 It was further observed in reference to ICICI Bank Ltd. vs.
Sidco Leathers Ltd., (2006) 10 SCC 452 : (2006) 131 Comp
Cas 451, that even if a non-obstante clause has wide amplitude,
the extent of its impact has to be measured in view of the
legislative intention and legislative policy.
Further, 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. As already noted, only in the case
of a conflict, the object is to give the enacting or operative
portion of the section an overriding effect, not otherwise. In
other words, only in a case of a conflict, a provision in an
enactment containing a non-obstante clause, would be given
its full operation and what is stated in the non-obstante clause
will not be an impediment for the operation of the particular
provision in the enactment. This would mean that what is stated
in the non-obstante clause would not take away the effect of
any provision of the Act which follows the same.
10.5 In Aswini Kumar Ghose vs. Arabinda Bose, (1952) 2
SCC 237 : AIR 1952 SC 369, this Court speaking through
Patanjali Sastri, C.J. observed that only when there is any
inconsistency between what is contained in a provision of an
enactment and a non-obstante clause would make the latter
[2025] 8 S.C.R. 1665
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
in what is to yield to what is stated in the provision following
the same. In other words, it is only when the enacting part of
the statute cannot be read harmoniously with what is stated in
the non-obstante clause, would the non-obstante clause result
in yielding to what is stated in the enacting part. Similarly, in
Municipal Corpn., Indore vs. Ratnaprabha, (1976) 4 SCC
622 : AIR 1977 SC 308, it was observed that there should be
a clear inconsistency between a special enactment or rules
and a general enactment.
10.6 In the matter of interpretation of a non-obstante clause,
paragraphs 82 and 83, in the judgment authored by me in
Muhammad Abdul Samad vs. State of Telangana, (2025)
2 SCC 49 can be usefully extracted as under:
“82. A non obstante clause is usually appended to
a section in the beginning with a view to give the
enacting part of the section, in case of a conflict,
an overriding effect over the provision or the Act
mentioned in the non obstante clause. In other
words, in spite of the provision or the Act mentioned
in the non obstante clause, the enactment following
it will have its full operation or that the provisions
embraced in the non obstante clause will not be
an impediment for the operation of the enactment.
Thus, a non obstante clause is a legislative device
used by a Parliament or legislature sometimes to
give an overriding effect to what has been specified
in the enacting part of a section in case of a conflict
with what is contained in the non obstante clause
as stated above.
83. Further, a non obstante clause has to be
distinguished from the expression “subject to” where
the latter would convey the idea of a provision yielding
place to another provision or other provisions to
which it is made subject to. Also, the expression
“notwithstanding anything in any other law” in a
section of an Act has to be contrasted with the use
of the expression “notwithstanding anything contained
in this Act”, which has to be construed to take away
1666 [2025] 8 S.C.R.
Supreme Court Reports
the effect of any provision of that particular Act in
which the section occurs but it cannot take away
the effect of any other law. [Source : Principles of
Statutory Interpretation by Justice G.P. Singh, 15th
Edn., Chapter 5.4, p. 284.]”
In the above case, this Court was considering the non-obstante
clause in Section 3 of the Muslim Women (Protection of Rights
of Divorce), Act 1986 vis-à-vis Section 125 of the Code of
Criminal Procedure, 1973 in the matter of the entitlement of
a divorced Muslim woman to maintenance.
10.7 Recently, a two-Judge Bench of this Court speaking through
Oka, J. in Chief Commissioner of Central Goods and Service
Tax vs. Safari Retreats Private Limited, (2025) 2 SCC 523
dealt on rules regarding the interpretation of taxing statutes in
paragraph 27 which can be usefully extracted as under:
“27. Regarding the interpretation of taxation statutes,
the parties have relied on several decisions. The law
laid down on this aspect is fairly well settled. The
principles governing the interpretation of the taxation
statutes can be summarised as follows:
27.1. A taxing statute must be read as it is with no
additions and no subtractions on the grounds of
legislative intendment or otherwise;
27.2. If the language of a taxing provision is plain, the
consequence of giving effect to it may lead to some
absurd result is not a factor to be considered when
interpreting the provisions. It is for the legislature to
step in and remove the absurdity;
27.3. While dealing with a taxing provision, the
principle of strict interpretation should be applied;
27.4. If two interpretations of a statutory provision
are possible, the Court ordinarily would interpret
the provision in favour of a taxpayer and against
the Revenue;
27.5. In interpreting a taxing statute, equitable
considerations are entirely out of place;
[2025] 8 S.C.R. 1667
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
27.6. A taxing provision cannot be interpreted on any
presumption or assumption;
27.7. A taxing statute has to be interpreted in the
light of what is clearly expressed. The Court cannot
imply anything which is not expressed. Moreover,
the Court cannot import provisions in the statute to
supply any deficiency;
27.8. There is nothing unjust in the taxpayer escaping
if the letter of the law fails to catch him on account
of the legislature’s failure to express itself clearly;
27.9. If literal interpretation is manifestly unjust,
which produces a result not intended by the
legislature, only in such a case can the Court modify
the language;
27.10. Equity and taxation are strangers. But if
construction results in equity rather than injustice,
such construction should be preferred;
27.11. It is not a function of the Court in the fiscal
arena to compel Parliament to go further and do more;
27.12. When a word used in a taxing statute is to
be construed and has not been specifically defined,
it should not be interpreted in accordance with its
definition in another statute that does not deal with
a cognate subject. It should be understood in its
commercial sense. Unless defined in the statute itself,
the words and expressions in a taxing statute have
to be construed in the sense in which the persons
dealing with them understand, that is, as per the trade
understanding, commercial and technical practice
and usage.”
(underlining by me)
That was a case concerning interpretation of the expression
“plant and machinery” and “plant or machinery” in Sections
17(5)(c) and 17(5)(d) of the Central Goods and Services Tax
Act, 2017.
1668 [2025] 8 S.C.R.
Supreme Court Reports
Paragraph 36 of the said judgment also observed on the use
of non-obstante clause as under:
“36…..A non obstante clause is a device used by
the legislature that is usually employed to give an
overriding effect to certain provisions over some
contrary provisions that may be found in the same
or some other enactments. Such a clause is used to
indicate that the said provision should prevail despite
anything to the contrary in the provisions mentioned
in the non obstante clause. ...”
10.8 Further, in RBI vs. Peerless General Finance and Investment
Co. Ltd., (1987) 1 SCC 424, this Court observed, that
interpretation is best which makes the textual interpretation
match the contextual. Chinnappa Reddy, J. speaking for
the Bench stressed on the importance of rule of contextual
interpretation and observed as under:
“33. Interpretation must depend on the text and the
context. They are the bases of interpretation. One
may well say if the text is the texture, context is what
gives the colour. Neither can be ignored. Both are
important. That interpretation is best which makes
the textual interpretation match the contextual. A
statute is best interpreted when we know why it was
enacted. With this knowledge, the statute must be
read, first as a whole and then section by section,
clause by clause, phrase by phrase and word by
word. If a statute is looked at, in the context of its
enactment, with the glasses of the statute-maker,
provided by such context, its scheme, the sections,
clauses, phrases and words may take colour and
appear different than when the statute is looked at
without the glasses provided by the context. With
these glasses we must look at the Act as a whole
and discover what each section, each clause, each
phrase and each word is meant and designed to
say as to fit into the scheme of the entire Act. No
part of a statute and no word of a statute can be
construed in isolation. Statutes have to be construed
[2025] 8 S.C.R. 1669
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
so that every word has a place and everything is in
its place. It is by looking at the definition as a whole
in the setting of the entire Act and by reference to
what preceded the enactment and the reasons for
it that the court construed the expression ‘prize chit’
in Srinivasa [Srinivasa Enterprises v. Union of India,
(1980) 4 SCC 507] and we find no reason to depart
from the court’s construction.”
(underlining by me)
The above approach is useful while interpreting a non-obstante
clause in a statute.
10.9 This Court has in a number of cases relied on the following
words of Rowlatt, J. in Cape Brandy Syndicate vs. Inland
Revenue Commissioner [(1921) 1 KB 64] :
“In a taxing Act one has to look merely at what is clearly
said. There is no room for any intendment. There is no
equity about a tax. There is no presumption as to a
tax. Nothing is to be read in, nothing is to be implied.
One can only look fairly at the language used.”
10.10 In Central India Spg., Wvg. & Mfg. Co. Ltd. vs. Municipal
Committee, 1957 SCC OnLine SC 18, it was observed that
in construing the words of the statute if there are two possible
interpretations then effect is to be given to the one that favours
the citizen and not the one that imposes a burden on him. In
CIT vs. Shahzada Nand & Sons, (1966) 60 ITR 392, this
Court reiterated the applicability of the aforesaid principle in
context of fiscal statute. In CIT vs. Jargaon Electric Supply
Co. Ltd., (1960) 40 ITR 184, this Court speaking through
Hidayatullah, J. repelled the contention of the Revenue that
it would be unjust to allow escapement of tax in the facts
therein by observing that there is no question of unjustness
involved if the income tax law is deficient due to the legislature
failure’s to express itself clearly.
Bearing in mind the above principles of interpretation of
statutes, I shall proceed to analyse the relevant provisions
of the Act having a bearing on the controversy.
1670 [2025] 8 S.C.R.
Supreme Court Reports
Analysis of the Provisions:
11. Section 143 of the Act deals with assessment, while Section 144
thereof speaks of Best Judgment Assessment. Section 143 of the
Act speaks of an assessment made when a return has been filed
under Section 139 or in response to a notice under sub-section (1)
of Section 142 and the return is processed leading to an assessment
order being passed by the Assessing Officer. However when any
person fails to make the return required under sub-section (1) of
Section 139 and has not made a return or a revised return of that
section or fails to comply with all the terms of a notice issued under
Section 142 or having made a return fails to comply with all the
terms of a notice issued under sub-section (2) of Section 143, then
the Assessing Officer, after taking into account all relevant material
which the Assessing Officer has gathered, shall, after giving the
assessee an opportunity of being heard, make an assessment of
the total income or loss to the best of his judgment and determine
the sum payable by the assessee on the basis of such assessment.
It is not necessary to go into the other aspects of Section 143 or
Section 144 of the Act.
11.1 The other relevant provisions which could be referred to are
Section 144A which deals with power of Joint Commissioner
to issue directions in certain cases; Section 144B which
speaks of faceless assessment and Section 144C discusses
a reference to a DRP with which we are concerned in the
present cases.
11.2 The time limit for completion of an assessment, re-assessment
and re-computation is delineated in Section 153 of the Act.
The said Section has been substituted by the Finance Act,
2016 w.e.f. 01.06.2016. Sub-section (1) of Section 153 refers
to an assessment being made under Section 143 or Section
144, while sub-section (1A) has a non-obstante clause to
sub-section (1) of Section 153, so also sub-section (1B) has
a non-obstante clause with reference to sub-section (1) of
Section 153. Sub-section (2) of Section 153 deals with an
assessment, re-assessment or re-computation made under
Section 147 wherein the limitation period has been prescribed.
This is in the case of income escaping assessment which is
dealt with under Section 147 of the Act.
[2025] 8 S.C.R. 1671
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
11.3 Sub-section (1) to Section 153 prescribes the limitation period
for making of an order of assessment under Section 143 or
Section 144 which is twenty-one months. However, various
provisos to the said sub-section prescribe reduced limitation
periods having regard to the commencement of the respective
assessment years. In certain cases, the period of limitation is
reduced from twenty-one months to eighteen months while
in other cases to twelve months and as also nine months.
Having regard to the facts of the present two cases, the
period of limitation under first proviso to sub-section (1) of
Section 153 is 18 months as the applicable assessment year
is 2018-2019.
Sub-section (3) of Section 153 is relevant for the purposes of
this case. It states that notwithstanding anything contained in
sub-sections (1), (1A), and 2, an order of fresh assessment
or fresh order under Section 92CA, as the case may be, in
pursuance of an order under Section 250 or Section 254
(relevant to the present cases) or Section 263 or Section
264, setting aside or cancelling an assessment or an order
under Section 92CA, as the case may be, shall 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 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.
11.4 However, the proviso to sub-section (3) of Section 153 states
that where the order under Section 250 or 254 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 the Principal Commissioner or Commissioner on or after
the 1st day of April, 2019, the provisions of this sub-section
should have been, as if for the words “nine months”, the words
“twelve months” have been substituted.
1672 [2025] 8 S.C.R.
Supreme Court Reports
11.5 Sub-section (3A) of Section 153 also begins with a non-
obstante clause with reference to sub-sections (1), (1A), (2)
and (3). Sub-section (4) states that notwithstanding anything
contained in sub-sections (1), (1A), (2), (3) and (3A), where
a reference under sub-section (1) of Section 92C A is made
during the course of the proceedings for the assessment or re-
assessment, the period available for completion of assessment
or re-assessment, as the case may be, under the said sub-
sections (1), (1A), (2), (3) and (3A) shall be extended by twelve
months. This sub-section was added by an amendment with
effect from 01.04.2023. However, the same is not applicable
to the facts of the case. Section 92CA deals with a reference
to the Transfer Pricing Officer. Sub-section (3A) of Section
92CA, inter alia, refers to Section 153 of the Act, which deals
with the period of limitation for the purpose of Section 92CA.
11.6 Explanation (1) to Section 153 deals with certain situations
in reference to which certain periods shall be excluded while
computing the period of limitation prescribed under the said
Section. For instance, under clause (2) to Explanation (1), the
period during which the assessment proceeding is stayed by
an order of injunction of any court has to be excluded while
calculating the period of limitation under Section 153.
11.7 For the purposes of this case, Section 254 and sub-section
(3) of Section 153 including the proviso thereto are relevant.
This is because where an assessment order has been set
aside and the matter has been remanded under Section 254
by the Tribunal (as in the present case), then, in terms of the
proviso to sub-section (3) of Section 153, a fresh assessment
order shall have to be made at any time before the expiry of
twelve months from the end of the financial year in which the
order under Section 254 is received by the Principal Chief
Commissioner or Chief Commissioner etc. as the case may be.
11.8 Thus, on a reading of the proviso to sub-section (3) of Section
153, along with the main provision, it becomes clear that the
period of twelve months has to be calculated from the end
of the financial year in which the order is received by the
Principal Chief Commissioner or Chief Commissioner etc.,
as the case may be. Therefore, what is of significance is the
[2025] 8 S.C.R. 1673
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
date of the commencement of the limitation period of twelve
months which commences from the end of the financial year
in which the order passed under Section 254 by the Tribunal,
setting aside or cancelling an assessment is received by
the Principal Chief Commissioner or Chief Commissioner
etc. For example, if the order is passed by the Tribunal on
01.02.2021 and it is received by the concerned commissioner
on 01.03.2021, then the limitation period of twelve months
would be from the end of the financial year in which the
order under Section 254 was received, i.e., twelve months
from 31.03.2021, which would be 31.03.2022, within which
the fresh assessment order would have to be made. This
would effectively mean thirteen months in total from the date
of receipt of the order.
11.9 However, in a case where Section 144C applies, i.e., where
a reference to the DRP applies, then in such a case the time
frame has been given for the conclusion of the proceedings
initiated under the said provision which is totally only eleven
months from the date of passing the draft order. The procedure
contemplated under Section 144C applies to only two
categories of assesses, who are called as eligible assessees
under clause (b) of sub-section 15 to Section 144C. The first
category of eligible assessee is any person in whose case
the variation referred to in sub-section (1) of Section 144C
arises as a consequence of the order of the Transfer Pricing
Officer passed under sub-section (3) of Section 92CA and
the second category is in the case of any non-resident not
being a company or any foreign company. The proviso thereto
states that such eligible assessee shall not include persons
referred to in sub-section (1) of Section 158BA or other persons
referred to in Section 158BD. Therefore, in the case of only the
aforesaid two categories of eligible assesses, the procedure
contemplated under Section 144C applies.
11.10 When Section 92CA applies to any eligible assessee, then
sub-section (4) of Section 153 states that the period available
for completion of an assessment or re-assessment, as the
case may be, under sub-sections (1), (1A), (2), (3) and (3A)
of Section 153 shall be extended by twelve months. This
sub-section is applicable with effect from 01.04.2023 and not
1674 [2025] 8 S.C.R.
Supreme Court Reports
for the period prior thereto. Further, in the case of any other
eligible assessee, who is a non-resident, there is no such
extension of the period of limitation.
11.11 The question then is, how the limitation period prescribed
under Section 153(3) of the Act can be reconciled with the
procedure as well as the period contemplated under Section
144C of the Act in a case where Section 254 of the Act applies.
Scheme of Section 144C:
12. Before answering the above question, it is necessary to dilate on
the scheme of Section 144C of the Act. Sub-section (1) of Section
144C contains a non-obstante clause. It states that the Assessing
Officer shall, notwithstanding anything to the contrary contained in
the Act, in the first instance, forward a draft of the proposed order
of assessment (draft order) to the eligible assessee, if he proposes
to make, on or after 01.10.2009 any variation which is prejudicial to
the interest of such assessee. It must be noted that this non-obstante
clause is notwithstanding anything to the contrary contained in the
Act and not with reference to only Section 153 which deals with only
the limitation period for making an assessment or re-assessment. As
already extracted above, sub-section (1) of Section 144C prescribes
that the Assessing Officer shall forward a “draft” of the proposed
“order of assessment”. The careful drafting by the legislature must
be given heed to. The provision for forwarding of a draft of the
proposed order of assessment speaks plainly that this sub-section
is only concerned with a “draft order” and cannot be a final order of
assessment. Therefore, any provisions that would relate to an order
of assessment have no bearing on any interpretation to be given to
such a draft order.
12.1 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 variation to the Assessing Officer;
or (b) file his objections, if any, to such variation with—(i) the
DRP and (ii) the Assessing Officer, [vide Section 144C(2)].
Therefore, the eligible assessee has thirty days’ time from the
date of receipt of the draft order to either file his acceptance
or his objections. If no objections are received within the
aforesaid period of thirty days or the assessee intimates to
[2025] 8 S.C.R. 1675
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
the Assessing Officer the acceptance of the variation, then in
terms of sub-section (3) of Section 144C, the Assessing Officer
shall complete the assessment on the basis of the draft order
within the prescribed period of limitation as per sub-section
(4) of Section 144C.
12.2 Sub-section (4) is significant inasmuch as it contemplates a
limitation period within which the Assessing Officer has to pass
an assessment order in terms of sub-section (3) of Section
144C. This sub-section again contains a non-obstante clause.
This non-obstante clause is however notwithstanding anything
contained in Section 153 or Section 153B. The Assessing
Officer shall, notwithstanding the aforesaid provisions, 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 objections under sub-
section (2) expires. Thus, the stipulation of period of one month
in sub-section (4) is for the Assessing Officer to complete the
assessment order having regard to either clauses (a) or (b) of
sub-section (2) of Section 144C, as the case may be, although
under the proviso to sub-section (3) of Section 153 the period
of limitation prescribed to make a fresh assessment order is
twelve months.
12.3 What would be the next step when objections are received
under sub-section (2) of Section 144C? In a case where
objections are received under sub-section (2), the DRP
shall issue directions as it thinks fit for the guidance of the
Assessing Officer to enable him to complete the assessment.
The directions to be issued by the DRP under sub-section (5)
of Section 144C shall be having regard to certain material
which are enumerated in sub-section (6) of Section 144C. The
procedure to be followed by the DRP is contemplated under
sub-section (7) of Section 144C and the nature of the order
to be passed by the DRP is as per sub-section (8) of Section
144C. The Explanation to sub-section (8) of Section 144C is
for the purpose of removal of doubts.
12.4 The following paragraph from the Manual of Office Procedure,
2019 of the Income Tax Department throws useful light on the
nature of a draft order forwarded by the Assessing Officer to
1676 [2025] 8 S.C.R.
Supreme Court Reports
the Assessee under Section 144C(1) and the proceedings
before the DRP inasmuch as it clarifies that the DRP:
“5.7 It needs to be emphasized that the proceeding
before the DRP is not an appeal proceeding but a
correcting mechanism through which the proposed
assessment order is reviewed by a Panel of higher
Income-tax Authorities. It is a continuation of the
Assessment proceedings till such time a final order
of assessment which is appealable is passed by the
Assessing Officer. This also finds support from Section
144C(6) which enables the DRP to collect evidence
or cause any enquiry to be made before giving
directions to the Assessing Officer under Section
144C(5). The DRP procedure can only be initiated by
an assessee objecting to the draft assessment order.
This would enable correction in the proposed order
(draft assessment order) before a final assessment
order is passed.”
12.5 Sub-section (10) of Section 144C states that every direction
issued by the DRP shall be binding on the Assessing Officer.
Sub-section (11) of Section 144C contemplates that 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
before passing any such direction.
12.6 Sub-section (12) of Section 144C is significant inasmuch as it
states that 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. Therefore the DRP
is rendered functus officio on completion of the period of nine
months as stipulated. Thus, this period of limitation is to be
strictly complied with by the DRP.
12.7 As already noted, a draft order is forwarded to the eligible
assessee under sub-section (1) of Section 144C and thirty
days’ time is granted to pass a final order, if no objections are
received or if there is an acceptance of the variation of the
draft order by the assessee in a month’s time. Thus, in the
above circumstances the period of limitation is thirty days from
[2025] 8 S.C.R. 1677
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
date of forwarding the draft orders to an eligible assessee.
This is as opposed to sub-section (3) of Section 153 and
the proviso thereto where the period of limitation is twelve
months to make a final order. Hence, the non-obstante clause
under sub-section (4) of Section 144C of the Act. However,
if there are objections, which have to be made within thirty
days from the date of receipt of the draft order, then within
nine months from the end of the month in which the draft
order is forwarded to the eligible assessee, the DRP has to
issue directions. If directions are issued by the DRP to the
Assessing Officer within a period of nine months, on receipt
of the said directions issued under sub-section (5) of Section
144C, the Assessing Officer shall in conformity with the said
directions, complete 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 directions are
received. However, there is again a non-obstante clause in
sub-section (13) of Section 144C i.e., the completion of the
assessment order shall be notwithstanding anything contrary
contained in Section 153 or Section 153B.
12.8 What emerges on a conjoint reading of the aforesaid provisions
is that the Assessing Officer has only thirty days’ time to pass
a final assessment order, irrespective of whether the draft
assessment order is accepted or in the face of objections
raised by the eligible assessee, the DRP issues directions to
the Assessing Officer. The submission of learned senior counsel
for the respondents is that in the instant case, the Assessing
Officer passed the assessment order within a period of twenty
days from the date of receipt of the directions from the DRP
but nevertheless breached the limitation period prescribed
under sub-section (3) of Section 153 of the Act and hence,
the High Court granted relief to the assessee.
12.9 Thus, it is noted that there are three non-obstante clauses
in Section 144C. Sub-section (1) is notwithstanding anything
to the contrary contained in the Act, while sub-section (4)
and (13) are notwithstanding anything contained in Section
153 or 153B of the Act. The object and purpose of having
the non-obstante clause in the aforesaid manner has to be
ascertained inasmuch as the interpretation to sub-section (3)
1678 [2025] 8 S.C.R.
Supreme Court Reports
of Section 153 in light of Section 144C has to be made in
the present cases in order to answer the rival contentions
advanced at the Bar.
12.10 As already noted, Section 144C applies to an eligible
assessee. The respondents in these cases are eligible
assessees and there is no dispute about the said fact. When
an order is passed under Section 254 by the Tribunal setting
aside or cancelling an assessment, then a re-assessment has
to be made within twelve months as stipulated in the proviso
to sub-section (3) of Section 153 which delineates the time
frame for completion of assessment or a re-assessment etc.
As already noted, the period of twelve months commences
from the end of the financial year in which the order under
Section 254 is received by the Principal Chief Commissioner or
Chief Commissioner etc. On receipt of such an order from the
Tribunal, when a re-assessment has to be made and Section
144C is applicable, then a fresh draft assessment order has
to be forwarded to the assessee as per sub-section (1) of
Section 144C of the Act.
12.11 There is no time limit stipulated under sub-section (1) of Section
144C for forwarding a draft order to the eligible assessee
after receipt of the order from the Tribunal under Section
254 of the Act. The question that would arise is, whether, the
Assessing Officer can forward the draft order at any point of
time or take his own sweet time to do so, since sub-section (1)
of Section 144C contains a non-obstante clause which is
notwithstanding anything contained under the Act or, on the
contrary, the Assessing Officer is bound to follow a timeline
for forwarding a draft order to the eligible assessee.
12.12 No doubt, sub-section (3) of Section 153 which prescribes
the limitation period does not make any distinction between
an eligible assessee and any other assessee. The limitation
period of twelve months prescribed under Section 254 applies
to all categories of assessees without any distinction being
made between any particular category of assessee as per the
proviso thereto. Then, within what time the Assessing Officer
has to forward a draft order to the eligible assessee while
acting under sub-section (1) of Section 144C pursuant to an
[2025] 8 S.C.R. 1679
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
order under Section 254 of the Act. Although sub-section (1) of
Section 144C states “notwithstanding anything to the contrary
contained in this Act” does the said expression refer to Section
153 which prescribes the limitation period for completion of
assessment or re-assessment or, whether the non-obstante
clause has been used in sub-section (1) of Section 144C
in order to emphasize on a distinct and different procedure
contemplated under the Act in the case of only eligible
assessees as opposed to other categories of assessees.
In my view, the non-obstante clause in sub-section (1) of
Section 144C implies that it overrides all sections of the Act
contrary to the procedure contemplated under Section 144C
of the Act 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 Section
144C, wherein a draft assessment order has to be made
in the first instance. This is opposed to the case of other
assessees, wherein such a procedure of making a draft
order is not envisaged and only a final assessment order is
passed by the Assessing Officer. Therefore, the requirement
of a non-obstante clause vis-à-vis eligible assessees has
been met by the Parliament under Section 144C of the Act
as a legislative device. This is because the procedure and
process of assessment/re-assessment in the case of eligible
assesses is different from that of other categories of assessees
inasmuch as a draft order has to be made and communicated
to an eligible assessee under sub-section (1) of Section 144C
of the Act in the first instance, which is not so in the case of
other category of assessees. That is the precise object for
insertion of a non-obstante clause under sub-section (1) of
Section 144C of the Act.
12.13 To reiterate, the non-obstante clause in sub-section (1) of
Section 144C of the Act 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 Assessing Officer in case
1680 [2025] 8 S.C.R.
Supreme Court Reports
there is a reference to the DRP, which is not so in the case
of other assessees. The discussion in this regard has been
made above and hence would not call for a repetition. Thus,
the non-obstante clause in sub-section (1) of Section 144C
is not related to the overall limitation period prescribed under
Section 153 of the Act but with the aspect of there being a
distinct procedure which has been envisaged in the case of
only eligible assessees.
12.14 On the other hand, if the non-obstante clause under sub-
section (1) of Section 144C is to be construed only in the
context of the limitation period under Section 153 inasmuch
as the procedure contemplated under Section 144C would
be a time frame to be considered over and above what is
contemplated under Section 153(3), it would lead to an absurd
result. That is why, the non-obstante clause in sub-section (1)
of Section 144C cannot be held to be with reference to Section
153(3) at all. This is because a non-obstante clause is with
regard to anything contrary contained in the Act vis-à-vis sub-
section (1) of Section 144C and Section 153 is not contrary
to Section 144C. The scope and ambit of the two provisions
are distinct inasmuch as Section 153 deals with limitation
period with respect to completion of assessments and re-
assessments while Section 144C deals with a procedure to
be complied with for making an assessment order only in the
case of eligible assessees. There is no contradiction between
Section 144C and Section 153 of the Act. Therefore, sub-
section (1) of Section 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 assessees, Section
144C is applicable only in the case of eligible assessees and
not to any other category of assessee.
12.15 This intention of the Parliament to make a distinction between
eligible assessees and other category of assessees under
Section 144C(1) has to be borne in mind. This aspect would
become clearer when the two other non-obstante clauses
in sub-section (4) and sub-section (13) of Section 144C are
compared with sub-section (1) thereof. In the aforesaid two
sub-sections, the non-obstante clause is with specific reference
[2025] 8 S.C.R. 1681
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
to Section 153 or Section 153B only and in relation to any other
Section of the Act. This is because under sub-section (4) of
Section 144C, the period within which the assessment order
is to be made is stipulated i.e. within thirty days from the date
of receipt of the draft order by the assessees in terms of sub-
section (1) of Section 144C when there is an acceptance of
the draft order made by the Assessing Officer or no objections
are filed. This is notwithstanding anything contained in Section
153 or Section 153B. This period stipulated is as opposed
to twelve months being available to an Assessing Officer to
make an assessment order under sub-section (3) of Section
153 of the Act.
12.16 Similarly, under sub-section (13) of Section 144C the
assessment has to be completed within one month from
the end of the month in which the direction is received from
the DRP under sub-section (5) of Section 144C. This is
notwithstanding anything contained to the contrary in Section
153 or Section 153B.
12.17 Therefore, on a comparison of the expressions of the non-
obstante clause in sub-section (1) of Section 144C with
sub-section (4) and sub-section (13) thereof, it is clear that
the Parliament has applied the legislative device of the
non-obstante clause in different ways to bring out distinct
legislative intents. Therefore, sub-section (1) of Section 144C
is not relatable to Section 153 i.e., the limitation period at all.
It deals with a totally distinct procedure to be adopted in the
case of an eligible assessees as compared to other category
of assessees in terms of the procedure contemplated under
the said Section by initially making a draft assessment order,
whereas sub-section (4) and sub-section (13) of Section
144C directly refer to and have a bearing on Sections 153
or 153B, which deal with limitation period. This is because
narrower limitation periods are prescribed to do certain things
as contemplated under the said sub-sections. The object
and purpose of prescribing narrower limitation periods (one
month) in sub-section (4) of Section 144C and one month in
sub-section (13) of Section 144C is to ensure that the proviso
to sub-section (3) of Section 153 is ultimately complied with
as it prescribes the overall limitation period of twelve months
1682 [2025] 8 S.C.R.
Supreme Court Reports
for completion of an assessment or re-assessment, inter alia,
when Section 254 of the Act applies.
12.18 If Section 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.
12.19 In cases where Section 144C applies, the maximum period
stipulated for completion of a final assessment order under
the said provision being eleven months would still be within
the limitation period of twelve months prescribed under the
proviso to Section 153(3) of the Act. 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 Section 254
of the Act is received by the Principal Chief Commissioner,
Chief Commissioner etc., as the case may be. Then, one
month’s time is the shortest period of time to prepare the
draft assessment order under Section 144C of the Act by the
concerned Assessing Officer.
12.20 Therefore, there has to be a system put in place, if not already
in place, under which the order of the Tribunal passed under
Section 254 of the Act is communicated to the concerned
Assessing Officer of a particular eligible assessee. As soon as
the papers are received by the Principal Chief Commissioner
or Chief Commissioner etc., pursuant to an order passed under
Section 254 of the Act, 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 Section 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
[2025] 8 S.C.R. 1683
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
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.
12.21 In this context, it is relevant to note the non-obstante clause in
sub-section (4) of Section 153 of the Act which applies when
a reference under sub-section (1) of Section 92CA is made
during the course of the proceeding for the assessment or
re-assessment, then the period available for completion of
assessment or re-assessment, as the case may be, under sub-
section (3) of Section 153 shall be extended by twelve months.
This provision applies with effect from 01.04.2023. However,
such a provision is wholly conspicuous by its absence in the
case of an eligible assessee who falls under the category of
any non-resident not being a company, or a foreign company.
Therefore, what follows is that in the case of any non-resident
not being a company, or a foreign company, there is no extension
of the period of limitation beyond twelve months as stipulated
under the proviso to sub-section (3) of Section 153.
12.22 To reiterate, whether or not the Assessing Officer has adequate
or negligible time to deliver on the statutory obligations under
Section 144C, or otherwise, cannot have a bearing on our
interpretation of the Act. It is a well settled principle that the
legislature is assumed to have the wisdom and knowledge
behind promulgating any provision. As it is concluded that the
procedure under Section 144C is subsumed within the time
limits prescribed under Section 153, it is not for this Court
to sit on whether the applicable period of time is adequate
or not. A statute cannot be held to be unworkable, or an
interpretation said to give rise to absurdity, only because of
some asymmetry in time available to the Assessing Officer for
passing a draft order in case of an eligible assessee under
Section 144C as compared to final assessment order in case
of an ordinary assessee.
12.23 In the same context, where the statute gives a beneficial
option to an assessee, the exercise of such an option cannot
be a ground to justify leaving the assessee worse off. Merely
because an eligible assessee chooses to exercise their
1684 [2025] 8 S.C.R.
Supreme Court Reports
option to file objections before the DRP, that is no ground for
extension of the limitation period. At the cost of repetition, to
consider any of the aforementioned factors would tantamount
to inserting practicable considerations and questions of equity
in interpreting fiscal statutes.
12.24 Furthermore, it was contended on behalf of the Revenue that
accepting the arguments of the respondent-assessee would
defeat the working of the Act as the non-obstante clause in
Section 144C(1) would then be limited to the procedure of
passing a draft assessment order instead of final assessment
order under Section 143(3) without subsuming the associated
timelines under Section 153. There is no difficulty in rejecting
this submission because Section 144C(1) is not concerned
with the passing of a final assessment order in the first
place. That the draft order passed under Section 144C(1)
not be bound by Section 153 is no hindrance to giving effect
to the working of the Act, and in particular Section 144C.
I do not see any difficulty in a scenario where Assessing
Officers assessing a small set of eligible assessees would
have to work backwards and accommodate for the entire
timelines prescribed under Section 144C. Arguendo, that
the Parliament could not have conceived such a procedure
to be followed by Assessing Officers, it is not for a court
to import provisions in the statute to supply any assumed
deficiency, especially when the statute is otherwise workable.
In the present case, the Act is certainly workable if the
proceedings under Section 144C are subsumed within the
limitation prescribed under Section 153(1) or (3), or as the
case may be.
12.25 It was also argued that if the scheme of Section 144C is
interpreted such that the Assessing Officer has to work
backwards, then the failure of an Assessing Officer to stick
by the timeline would lead to absurdity and render the Act
unworkable. In my view, the failure of an Assessing Officer
to abide by the statutory timelines cannot be the basis for
assuming any absurdity in the statute. A provision in a taxing
statute which is ostensibly beneficial to the assessee must
be interpreted as it is and not by hypothetical scenarios.
[2025] 8 S.C.R. 1685
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
Relevant Case Law:
13. The judgments cited at the Bar on the provisions under consideration
could be discussed at this stage.
13.1 The judgment of the Madras High Court in Roca Bathroom
Products has been a subject matter of discussion and has
been referred to extensively during the course of hearing.
That was also a case which assailed a notice related to the
assessment year 2010-11 as being bereft of jurisdiction and
barred by limitation, by way of a writ petition filed before the
High Court. Another writ petition was filed by the assessee
therein seeking a writ of prohibition restraining the respondent
therein from continuing with proceedings for assessment for
the very same assessment year. The third and fourth writ
petitions were filed seeking quashing of the communication
dated 06.01.2020 with respect to the assessment year 2009-
10 and a direction for refund of the tax paid by the petitioner
therein along with interest in accordance with Section 244A
of the Act. In the fourth writ petition, a writ of prohibition
was also sought to restrain the respondents therein from
continuing or proceeding further in relation to the assessment
year 2009-10.
13.2 It would be useful to refer to the facts of the said case. The
petitioner therein filed return of income that was selected for
scrutiny and referred to the Transfer Pricing Officer (TPO)
and a transfer pricing order was passed on 23.01.2013 and
a draft order was passed on 30.03.2013 making various
adjustments to the income returned as well as incorporating
the adjustments proposed in the transfer pricing order. The
petitioner therein filed objections to the draft assessment which
was confirmed in terms of Section 144C of the Act. Thereafter,
a final assessment order was passed on 16.01.2014. Being
aggrieved by this, the petitioner therein filed an appeal. The
Appellate Tribunal vide its order dated 18.12.2015 remanded
the matter to respondent No.1 therein for fresh examination.
The contention of the petitioner therein was that as per the
provisions of Section 153(2A) [unamended] / 153(3) [post
amendment], an order of fresh assessment in pursuance of
an order under Section 254 setting aside or cancelling the
1686 [2025] 8 S.C.R.
Supreme Court Reports
assessment had to be made at any time before the expiry of
one year/nine months respectively from the end of the financial
year in which the order was issued under Section 254 was
received by the Principal Chief Commissioner/Commissioner.
That the notice was issued pursuant to the remand dated
06.01.2020 which was barred by limitation inasmuch as for
the assessment order year 2009-10, the limitation period
under Section 153(2A) had expired on 31.03.2017 and for
the assessment year 2010-11 the period had expired on
31.12.2017.
13.3 While discussing the procedure contemplated under Section
144C of the Act, the Madras High Court held that sub-
section (13) of Section 144C imposes a restriction on the
Assessing Officer and denies him the benefit of the more
extensive time limit available under Section 153 to pass the
final order of assessment as he has to do so within one month
from the end of the month when the directions of the DRP are
received by him and there is also no requirement for hearing
the assessee at that stage. That Section 144C(13) contains
a non-obstante clause which is to emphasize the urgency
contemplated as compared to Section 153.
13.4 Reliance was placed on the judgment of the Bombay High Court
in the case of Pr. CIT vs. Lionbridge Technologies Pvt. Ltd.
(2019) 260 Taxman 273 (Bom.), wherein it was held that the
final assessment could be made only if the draft assessment
had been forwarded by the Assessing Officer to the assessee
within the time limit prescribed under Section 153(2A) of the
Act. Nokia India P. Ltd. vs. DCIT, (2018) 407 ITR 20 (Delhi)
(HC) (“Nokia India P. Ltd.”)was also referred to wherein it
was observed that where the matter has been remanded to be
redone, it would hardly make a difference as to, whether, the
remand has been to the Transfer Pricing Officer or the DRP,
thus indicating that the provisions of Section 144C were also
covered by the limitation of time set out in Section 153(3) of
the Act. Although Civil Appeal was admitted before this Court
against the judgment of the Delhi High Court in Nokia India
P. Ltd., there had been no stay of the said judgment and the
Civil Appeal was finally disposed of due to low tax effect.
[2025] 8 S.C.R. 1687
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
13.5 The Madras High Court ultimately held in Roca Bathroom
Products that since the impugned notice issued by the DRP
was after a period of four years from the date of the order of
the Tribunal, it was barred by limitation under Section 153(2A)
of the Act. Consequently, the writ petitions were allowed.
The Revenue filed writ appeals before the Division Bench
of the Madras High Court against the aforesaid order. The
Division Bench of the Madras High Court speaking through
Mahadevan, J. while holding that the facts of the case were
not in dispute, by a detailed Judgment dismissed the appeals
filed by the Revenue. It would be useful to extract paragraph 27
of the said judgment.
“27. For the reasons set out herein before, we
conclude as under :
(a) The provisions of sections 144C and 153
are not mutually exclusive, but are rather
mutually inclusive. The period of limitation
prescribed under section 153(2A) or 153(3) is
applicable, when the matters are remanded back
irrespective of whether it is to the Assessing
Officer or Transfer Pricing Officer or the Dispute
Resolution Panel, the duty is on the Assessing
Officer to pass orders.
(b) Even in the case of remand, the Transfer
Pricing Officer or the Dispute Resolution Panel
have to follow the time limits as provided under
the Act. The entire proceedings including the
hearing and directions have to be issued by the
Dispute Resolution Panel within nine months
as contemplated under section 144C(12) of the
Income-tax Act.
(c) Irrespective of whether the Dispute Resolution
Panel concludes the proceedings and issues
directions or not, within nine months, the
Assessing Officer is to pass orders within the
stipulated time.
xxx
1688 [2025] 8 S.C.R.
Supreme Court Reports
(f) The non obstante clause would not exclude
the operation of section 153 as a whole. It only
implies that irrespective of availability of larger
time to conclude the proceedings, final orders
are to be passed within one month in line with
the scheme of the Act.
(g) When no period of limitation is prescribed,
orders are to be passed within a reasonable
time, which in any case cannot be beyond three
years. However, when the statute prescribes
a particular period within which orders are to
be passed, then such period, irrespective of
whether it is short or long, shall be applicable.”
Meaning of Assessment Order:
14. Sub-section (1) as well as sub-section (3) of Section 153 of the
Act use the expression “no order of assessment” and “an order
of fresh assessment” respectively. The word “assessment” is the
process of determining the total income of the assessee and the
sum payable by the assessee as income tax/surcharge/super tax
etc. vide CIT vs. JK Commercial Corpn. Ltd., (1976) 4 SCC 517.
In Auto & Metal Engineers vs. Union of India (1997) 7 SCC
734, the Supreme Court held that the expression “assessment
proceeding” occurring in Section 153 Explanation (1) means the
entire process of assessment starting from the stage of filing of
return under Section 139 or issuance of notice under section
142(1) till the making of an order of assessment. The word “order
of assessment” cannot be construed to mean assessment of total
income only. Those words would mean an order in writing whereby
the total income of the assessee is assessed and tax payable by
him is determined vide CIT vs. Purshottamdas T. Patel, (1994)
209 ITR 52 (Guj).
14.1 In Whitney, Lord Dunedin explained the imposition of tax by
the Revenue:
‘Now, there are three stages in the imposition of a
tax: there is the declaration of liability, that is, the
part of the statute which determines what persons
in respect of what property are liable. Next, there
[2025] 8 S.C.R. 1689
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
is the assessment. Liability does not depend on
assessment. That, ex hypothesi, has been already
fixed. But assessment particularises the exact sum
which a person liable has to pay. Lastly comes
the methods of recovery if the person taxed does
not voluntarily pay.”
14.2 In Kalyankumar Ray, this Court speaking through
Ranganathan, J. observed as under:
“‘Assessment’ is one integrated process involving
not only the assessment of the total income but
also the determination of the tax. The latter is as
crucial for the assessee as the former. Section 144,
which also describes the same process, makes no
distinction as suggested. It will not be therefore
correct to read the provision as leaving undefined
the process of determination of the net sum payable
by the assessee. In our opinion, therefore, learned
counsel for the petitioner is right in his submission
that the ITO has to determine, by an order in writing,
not only the total income but also the net sum which
will be payable by the assessee for the assessment
year in question and that the demand notice under
Section 156 has to be issued in consequence of
such an order.”
14.3 Thus, the expression “the assessing officer shall, in conformity
with the directions, complete notwithstanding anything to the
contrary contained in Section 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 section 144C has
to be harmoniously read with sub-section (3) of Section 153
wherein it is stated that “an order of fresh assessment” has
to be made within twelve months from the end of the financial
year in which the order under Section 254 is received by
the Principal Chief Commissioner or Chief Commissioner
etc,… as the case may be. When the aforesaid provisions
are harmoniously read, it would inevitably mean that the
procedure contemplated under Section 144C applicable to
an eligible assessee has to be concluded within a period of
1690 [2025] 8 S.C.R.
Supreme Court Reports
twelve months as stipulated in proviso to sub-section (3) of
Section 153 as interpreted by me above.
15. Having considered the language of Sections 144C and 153, the
High Court refused to accept that the provisions of Section 153 are
excluded to the operation of Section 144C. Even when the Assessing
Officer has to follow the procedure prescribed under Section 144C
of the Act, the same has to be commenced and concluded in terms
of sub-section (3) of Section 153 of the Act. The said provision is
applicable to an eligible assessee inasmuch as when the procedure
under Section 144(C)(1) has to be followed. Consequently, the rest
of the provisions of Section 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. In my view, even
in such a case, the assessment has to be concluded within twelve
months as stipulated in Section 153(3) of the Act where there
has been remand by the Tribunal to the Assessing Officer under
Section 254 of the Act. Therefore, within the period of twelve months
prescribed under Section 153(3), the Assessing Officer has to
ensure that the entire procedure under Section 144C is completed
(as and when it is applicable) and pass a final assessment o
rder.
15.1 The Assessing Officer has to be prompt, attentive and conscious
of passing an order envisaged under Section 144C(1) of the
Act and not be reminded about doing so. Therefore, even
when Section 144C applies to a case, the twelve month period
stipulated under Section 153(3) has to be applied. Thus, the
procedure under Section 144C has to be concluded within the
time frame envisaged under Section 153(3) or Section 153(1)
as the case may be. If the above interpretation is made, then,
there would be a harmonious interpretation of Sections 144C
and 153. Therefore, the non-obstante clauses in sub-sections
of Section 144C have been accordingly interpreted.
15.2 The object is to conclude the proceedings and make an
assessment as expeditiously as possible. If orders are not
made within the time stipulated under Section 153(3), then
there would be no final assessment order and the return of
income as filed by the assessee would have to be accepted.
[2025] 8 S.C.R. 1691
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
Summary of Conclusions:
15.3 The summary of the aforesaid discussion can be made as under:
(i) Section 143 of the Act states that when a return has been
filed under Section 139 or in response to a notice of sub-
section (1) of Section 142, and the same is processed, it
would lead to an assessment order being passed by the
Assessing Officer. Section 144 deals with ‘best judgment
assessment’. Sections 143 speaks of final assessment
order being made in the case of all category of assessees
except eligible assessees.
(ii) On the other hand, Section 144C discusses a reference
to a DRP in case when a draft order is made by an
Assessing Officer which is not accepted by an eligible
assessee. Thus, in so far as only an eligible assessee,
as defined under sub-section 15 of Section 144C of
the Act is concerned, notwithstanding anything to the
contrary contained in the Act, if the Assessing Officer
proposes to make, on or after 01.10.2009 any variation
in the return which is prejudicial to the interest of such
an assessee only a draft order has to be made and not
a final assessment order.
Therefore, the non-obstante clause in sub-section (1)
of Section 144C has to be juxtaposed with reference to
Section 143 of the Act and all other Sections which deal
with making of an assessment order. This is because both
Section 143 of the Act as well as Section 144C of the Act
deal with the passing of assessment orders depending
on the category to which the assessee belongs, as
already stated: if the assessee is an eligible assessee,
sub-section (1) of Section 144C would apply, if a variation
is to be made, and in all other cases sub-section (3) of
Section 143 of the Act would apply.
(iii) On the other hand, the non-obstante clauses in sub-
sections (4) and (13) of Section 144C are only with
reference to Section 153 of the Act. The time lines
provided under the aforesaid sub-sections 144C and
the time line provided under Section 153 of the Act deal
1692 [2025] 8 S.C.R.
Supreme Court Reports
with respective limitation periods and therefore, the
Parliament has used the expression “notwithstanding
anything contained in Section 153”.
Sub-sections (4) and (13) of Section 144C when
juxtaposed with Section 153 of the Act make it evident
that they both deal with only the period of limitation in
making an assessment order and not the manner of
passing an assessment order.
(iv) 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.
(v) 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 assessees as noted above.
In view of my aforesaid interpretation of Section 144C
vis-à-vis Section 153 of the Act, I arrive at the same
conclusion as in W.P. 3059-3060/2021 by the Bombay
High Court. In these cases, the question pertains not to
fresh assessment orders passed on remand but original
[2025] 8 S.C.R. 1693
Assistant Commissioner of Income Tax (International Taxation)
& Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.
assessment orders. On 30.11.2018, the petitioners therein
filed their Return of Income declaring total loss for AY
2018-19. According to the time limit in respect of A.Y.
2018-19 under first proviso to Section 153(1) of the Act,
any original order of assessment was required to be
passed within the period of eighteen months from the
end of the assessment year in which the income became
assessable. Therefore, the period of eighteen months
would have ordinarily expired on 30.09.2020. However,
as already noted, due to the operation of the TOLA and
the Notifications issued thereunder the due date was
extended to 30.09.2021. Finally, draft assessment orders
under Section 144C were passed only on 28.09.2021.
As we have already held that the period under Section
144C of the Act is to be subsumed within the time
prescribed under Section 153(1) of the Act, we find that
the High Court was correct in taking the view that since
the draft order under Section 144C was passed only on
28.09.2021, the proceedings had become time-barred
as no final assessment order in compliance with the
provisions of Section 144C could be passed due to the
impending expiry of the limitation period on 30.09.2021.
15.4 I therefore find that the High Court was right in allowing the
writ petitions filed by the respondents-assessees by holding
that no final assessment orders can be passed in these
cases as the same would be time barred and hence the
return of income filed by the respondents-assessees have
to be accepted. I reiterate the same and also state that this
would not preclude the Revenue from taking any other step
in accordance with law.
Consequently, I do not find any merit in these appeals filed
by the Revenue as the impugned order is correct.
15.5 In SLP(C) No.25798/2024, what is assailed by the Revenue is
an interim order passed in WP(L) No.30944/2023. By the said
order, the High Court has continued the interim order dated
28.06.2024. The main writ petition is pending before the High
Court. I do not propose to interfere with the said interim order
and hence, this Special Leave Petition stands dismissed.
1694 [2025] 8 S.C.R.
Supreme Court Reports
Order of the Court
Having regard to the divergent opinions expressed by us, we direct
the Registry to place these matters before Hon’ble the Chief Justice
of India for constituting an appropriate Bench to consider the issues
which arise in these matters afresh.
Result of the case: Matters to be placed before Hon’ble Chief
Justice of India for constituting appropriate
Bench@.
†
Headnotes prepared by: Bibhuti Bhushan Bose
@
Ed. Note: In view of divergent opinions of Hon’ble Mrs. Justice B.V. Nagarathna and Hon’ble Mr. Justice
Satish Chandra Sharma, who pronounced separate judgments, the matters were directed to be
placed before Hon’ble Chief Justice of India for constituting an appropriate Bench.
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