Has the Supreme Court settled whether the s.144C nine-month DRP process runs over and above the s.153 limitation?
A two-judge bench heard the Revenue's appeals against the Bombay High Court in Shelf Drilling and delivered a split verdict. One judge held the s.144C timelines operate independently of s.153(3); the other held the whole s.144C procedure must finish within the s.153(3) period. The matter was referred to the Chief Justice of India for an appropriate bench, so there is no binding ratio.
Decided by the Supreme Court on 2025-08-08, reported as 2025 INSC 946; Civil Appeals arising out of SLP (C) Nos. 20569-20572 of 2023 and SLP (C) No. 25798 of 2024. It bears on section 153, section 144C of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
Binding on every court and authority in India.
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The Revenue appealed against the Bombay High Court's ruling that the general limitation in s.153 continued to govern assessments routed through the Dispute Resolution Panel, and connected matters were tagged. The issue framed was whether the roughly eleven months contemplated by the s.144C machinery operate over and above the limitation prescribed by s.153(3), or within it. The bench comprised Nagarathna and Satish Chandra Sharma JJ. The judges wrote separately and did not agree.
No binding conclusion was reached. Satish Chandra Sharma J. took the view that the s.153(3) timeline governs only up to the draft assessment order and that the s.144C procedure operates independently beyond it. Nagarathna J. took the view that the entire s.144C procedure must be completed within the twelve-month limitation in s.153(3). Given the divergence, the Court directed the Registry to place the matters before the Chief Justice of India for constitution of an appropriate bench to consider the issues afresh.
The competing readings turn on the effect of the non obstante clauses in s.144C(1), (4) and (13). One view treats s.144C as a self-contained code for eligible assessees, so that the ordinary limitation cannot cut across the Panel's statutory nine months. The other treats s.153 as the outer boundary of every assessment proceeding, with s.144C only regulating the sequence of steps inside it. Because both readings are available on the text and the practical consequences for hundreds of pending assessments are large, the bench considered the question fit for authoritative resolution by a larger bench rather than a casting decision.
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.
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Handle my notice → Ask a CA on WhatsAppA two-judge bench heard the Revenue's appeals against the Bombay High Court in Shelf Drilling and delivered a split verdict. One judge held the s.144C timelines operate independently of s.153(3); the other held the whole s.144C procedure must finish within the s.153(3) period. The matter was referred to the Chief Justice of India for an appropriate bench, so there is no binding ratio. This was decided by the Supreme Court and bears on section 153, section 144C of the Income Tax Act 1961. It is reported as 2025 INSC 946; Civil Appeals arising out of SLP (C) Nos. 20569-20572 of 2023 and SLP (C) No. 25798 of 2024. If it applies to you, the first step is this: Do not cite this judgment for a proposition; cite it for the fact that the question is referred and unresolved.
The Revenue appealed against the Bombay High Court's ruling that the general limitation in s.153 continued to govern assessments routed through the Dispute Resolution Panel, and connected matters were tagged. The issue framed was whether the roughly eleven months contemplated by the s.144C machinery operate over and above the limitation prescribed by s.153(3), or within it. The bench comprised Nagarathna and Satish Chandra Sharma JJ. The judges wrote separately and did not agree. The matter was decided on 2025-08-08 by the Supreme Court. On those facts the Supreme Court held as follows. No binding conclusion was reached. Satish Chandra Sharma J. took the view that the s.153(3) timeline governs only up to the draft assessment order and that the s.144C procedure operates independently beyond it. Nagarathna J. took the view that the entire s.144C procedure must be completed within the twelve-month limitation in s.153(3). Given the divergence, the Court directed the Registry to place the matters before the Chief Justice of India for constitution of an appropriate bench to consider the issues afresh.
The competing readings turn on the effect of the non obstante clauses in s.144C(1), (4) and (13). One view treats s.144C as a self-contained code for eligible assessees, so that the ordinary limitation cannot cut across the Panel's statutory nine months. The other treats s.153 as the outer boundary of every assessment proceeding, with s.144C only regulating the sequence of steps inside it. Because both readings are available on the text and the practical consequences for hundreds of pending assessments are large, the bench considered the question fit for authoritative resolution by a larger bench rather than a casting decision. In the words reproduced by the source cited on this page: "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."
It was decided by the Supreme Court on 2025-08-08 and is reported as 2025 INSC 946; Civil Appeals arising out of SLP (C) Nos. 20569-20572 of 2023 and SLP (C) No. 25798 of 2024. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 153, section 144C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. No binding conclusion was reached. Satish Chandra Sharma J. took the view that the s.153(3) timeline governs only up to the draft assessment order and that the s.144C procedure operates independently beyond it. Nagarathna J. took the view that the entire s.144C procedure must be completed within the twelve-month limitation in s.153(3). Given the divergence, the Court directed the Registry to place the matters before the Chief Justice of India for constitution of an appropriate bench to consider the issues afresh. It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section 153, section 144C of the Income Tax Act 1961. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Continue to rely on the High Court decisions in your jurisdiction (Bombay and Madras favour the assessee) while the reference is pending. Raise the limitation ground protectively in every DRP matter so the point is preserved when the larger bench rules. Consider seeking a keep-pending order or adjournment before the Tribunal where the outcome turns wholly on this issue. Re-check the position before filing, since a larger bench decision will displace the High Court view either way.
Still good law. Separate check: this is a split verdict with no majority; the reference to a larger bench was still the reported position, and contemporaneous notes confirm the divergent opinions were placed before the Chief Justice for constitution of an appropriate bench. That finding was checked against a published source, which is linked on this page, on 2026-08-19. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
No binding conclusion was reached. Satish Chandra Sharma J. took the view that the s.153(3) timeline governs only up to the draft assessment order and that the s.144C procedure operates independently beyond it. Nagarathna J. took the view that the entire s.144C procedure must be completed within the twelve-month limitation in s.153(3). Given the divergence, the Court directed the Registry to place the matters before the Chief Justice of India for constitution of an appropriate bench to consider the issues afresh.
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