Supreme Court COVID Extension Of Limitation Period Is Not

Supreme Court COVID Extension Of Limitation Period Is Not Applicable To Departmental Assessment Proceedings

Issue

Whether the extension of the limitation period granted by the Supreme Court during the COVID-19 pandemic applies to administrative assessment proceedings conducted by the Income Tax Department, and whether the Tribunal’s refusal to apply this extension constitutes a “mistake apparent from the record” under Section 254(2).

Facts

The Dispute Resolution Panel (DRP) issued its directions to the Assessing Officer (AO) on 21.09.2021.
Under the statutory timelines of the Act, the AO was mandated to pass the final assessment order on or before 31.10.2021; however, the AO passed the final order late, on 18.11.2021.
The assessee challenged this delay before the Income Tax Appellate Tribunal (ITAT), which quashed the assessment order on 04.07.2025 as being completely barred by limitation.
The Revenue filed a Miscellaneous Application under Section 254(2) seeking to recall the order, arguing that the Supreme Court’s suo motu order in In re: Cognizance for Extension of Limitation excluded the period from 15.03.2020 to 28.02.2022, making the assessment order timely.

Decision

Held, yes: The statutory time limits for framing tax assessments are strictly governed by the Act. The Supreme Court’s COVID-19 relaxation order was intended for litigants in judicial/quasi-judicial proceedings and does not extend the time available to the Income Tax Department to complete assessments.
Held, yes: Because the legal position on this limitation is clear, there was no mistake apparent from the record in the Tribunal’s original order. The Revenue’s Miscellaneous Application was consequently dismissed.

Key Takeaways

Litigant Relief vs. Executive Timelines: The Supreme Court’s pandemic-era limitation extensions were designed to protect the rights of litigants facing access-to-justice hurdles. They cannot be weaponized by executive authorities to justify administrative delays or defaults in completing assessments.
Strict Construction of Assessment Windows: The time limits prescribed under Section 153 for framing assessment orders are absolute and rigid, barring any specific extensions explicitly built into the tax statute itself.
Narrow Scope of Section 254(2): A Miscellaneous Application to recall an ITAT order is only maintainable if there is an obvious, patent, and glaring mistake of fact or law on the face of the record. Debatable legal issues or incorrect strategic positions taken by the Revenue do not qualify.

IN THE ITAT DELHI BENCH ‘H’

ACIT

Rolls Royce India (P.) Ltd.

Raj Kumar Chauhan, Judicial Member
and Ramit Kochar, Accountant Member

MA No.452 (Delhi) of 2025^†
[Assessment year 2017-18]

JUNE 8, 2026

Chodhary N.C., Sr. DR for the Appellant. Nikhil Tiwari, CA for the Respondent.

ORDER

Ramit Kochar, Accountant Member. – This Miscellaneous Applications (“MA” in short) is filed by the Revenue. The main grievance of Revenue in this MA is that the ITAT vide order dated 04.07.2025 in Rolls Royce India (P.) Ltd. v. Dy. CIT [2025] (Delhi – Trib.)/ITA No. 252/Del/2022 in the case of this assessee has allowed the appeal of the assessee , and quashed the assessment order dated 18.11.2021 being barred by limitation , wherein the Tribunal at para 13.1 has held as under:

“13.1 As per section 144C(13), there is clear mandate that upon receipt of the directions issued u/s 144C(5), the Ld. AO shall supposed to complete the assessment inconformity with the directions of the Learned DRP without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such directions was received and in the present case, it is factually established that the Ld. DRP, issued directions on 21.09.2021 and u/s 144C(13), the Ld. AO was supposed to complete the assessment on or before 31.10.2021 but Ld. AO passed the impugned final assessment order on 18.11.2021, which is expressly time barred and as per judicial precedents mentioned hereinbefore, where the time barred final assessment passed, consequently assessment order itself reduced to be null and void and lost it’s legal value.

14. On the basis of foregoing fact situation and by following the principles of law laid down in the above cited judicial precedents, we find that final assessment order dated 18.11.2021 has been framed beyond the prescribed time limit u/s 144C(13) of the Act and, so, it is time barred, and accordingly, the impugned final assessment order is quashed being void ab initio. Consequently, the ground no. 2 is hereby deserves to be allowed.

15. Since the entire assessment quashed as barred by limitation, there is no need to adjudicate the other grounds.”

2. It is the say of Revenue that Hon’ble Supreme Court vide order dated 10.01.2022 in Cognizance for Extension of Limitation, In re441 ITR 722 (SC)/Civil Misc. Application No.21 of 2022 in MA No.665 of 2021 in Suo Motu Writ Petition (C) No.3 of 2020 has held keeping in view Covid 19 pandemic that the period from 15^th March, 2020 to 28.02.2022 shall be excluded for the purpose of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. . Thus, it was submitted by Revenue that the final assessment order was passed by the AO on 18.11.2021 which is a period covered by exclusion for computing limitation as per aforesaid Hon’ble Supreme Court direction and, hence, that the final assessment order dated 18.11.2021 was not barred by limitation. It was submitted that the ITAT committed grave error in quashing assessment on limitation ground keeping in view limitation as provided under the Income-tax Act, 1961 but ignoring aforesaid order dated 10.01.2022 of Hon’ble Supreme Court. It was submitted that an mistake apparent from record has crept in the order dated 04.07.2025 of the ITAT , Delhi Bench which is covered u/s 254(2) of the 1961 Act. Prayers were made by Revenue to recall order in ITA No.252/Del/2022 dated 04.07.2025. The Ld. Sr. DR relied upon the aforesaid MA filed by the Revenue , and prayed before the Bench that the order dated 04.07.2025 passed by ITAT in ITA no. 252/Del/2022 be recalled.

2.1. On the other hand, the Ld. Counsel for the assessee submitted that there is no error in the order dated 04.07.2025 passed by ITAT, It was submitted that for completing the assessment proceedings, the Revenue is bound by the time granted by the statute i.e. Income-tax Act, 1961 . It was submitted that time limit was extended by TOLA for framing assessment , but the time limit under TOLA had already expired and the Revenue did not frame assessment order in time, and hence ITAT order dated 04.07.2025 in assessee’s own case in ITA no. 252/Del/2022 need not to be recalled. It was submitted that the ITAT has elaborately discussed in the order dated 04.07.2025 that the assessment order was not passed within limitation period as provided under the 1961 Act. It was submitted that the order of the Hon’ble Supreme Court extending the limitation during Covid 19 Period by excluding the period 15.03.2020 to 28.02.2022 vide aforesaid order dated 10.01.2022 was with respect to litigants filing petitions/ applications/suits/appeals /all other quasi proceedings before judicial and quasi judicial proceedings, wherein the period prescribed under the general law of limitation or under any special laws(both Central and/or State) due to outbreak of Covid-19 pandemic stood extended by way of exclusion of period 15.03.2020 to 28.02.2022. It was submitted that the aforesaid extension of limitation is not applicable to statutory acts to be performed by statutory bodies i.e. by Income Tax Department such as framing of assessment , issue of notices u/s 143(2), 148 etc. The Ld. Counsel for the assessee relied upon the following judgments:

“1.

Prathima Infrastructure Ltd v. Dy. CIT [IT Appeal No. 1089 to 1095 (Hyd) of 2025, dated 27-3-2026] (Relevant extracts)

Expressway Services (P) Ltd v. Dy. CIT [IT Appeal Nos. 484 to 486 (Hyd) of 2025, dated 27-3-2026].

EPAM Systems India (P) Ltd v. Dy. CIT & ACIT (Hyd-Trib)/ITA No. 83 & 498/Hyd./2022 dated 26 November 2025.

Repal Green Power (P) Ltd v. Dy. CIT [IT Appeal No.125 (Hyd) of 2022, dated 26-11-2025], TMEIC Industrial Systems India (P) Ltd v. Dy. CIT (Hyd-Trib)/IT Appeal No. 898 (Hyd) of 2024.

TMEIC Industrial Systems India (P) Ltd (Supra)“

3. We have considered the rival contentions and perused the material on record. We have observed that the Tribunal while passing order dated 04.07.2025 in ,ITA No. 252/Del/2022 in assessee’s case has considered the limitation for passing assessment order under the Income Tax Act , and came to conclusion that the assessment order dated 18.11.2021 was barred by limitation and, hence, the same was quashed. We are of the view that so far as framing of assessment is concerned, the Department has to frame assessment within time provided under the Income Tax Act, 1961. So far as Extension of limitation by way of exclusion of period from 15.03.2020 to 28.02.2022 owing to Covid-19 granted by Hon’ble Supreme Court is not applicable to the assessment proceedings. The Ld. Counsel for the assessee has rightly relied upon the decisions stated as above in this order, and the Tribunal has rightly quashed the assessment being framed by the AO vide assessment order dated 18.11.2021 beyond prescribed time limit under the 1961 Act. Thus, this M.A. lacks merit and is accordingly, dismissed.

4. In the result, the Miscellaneous Application filed by the Revenue is dismissed.