LexASSISTANT COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) & OTHERS versus SHELF DRILLING RON TAPPMEYER LTD. ETC.
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[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
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