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 (Supreme Court of India — Nagarathna J. and Satish Chandra Sharma J. (separate and divergent opinions)) 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.
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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 (Supreme Court of India — Nagarathna J. and Satish Chandra Sharma J. (separate and divergent opinions)) 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 (Supreme Court of India — Nagarathna J. and Satish Chandra Sharma J. (separate and divergent opinions)). 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, and was decided by Supreme Court of India — Nagarathna J. and Satish Chandra Sharma J. (separate and divergent opinions). 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. Do not plead the High Court decisions in Bombay or Madras as the governing position without first checking the date the draft order was forwarded, because s.144C(4A) and (13A) now displace them where it was forwarded in time. 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.
Superseded by amendment. Section 8 of the Finance Act, 2026 has overtaken the question. It inserted four sub-sections into s.144C. Sub-section (4A) opens "Notwithstanding anything contained in any judgment, order or decree of any court, or section 153" and clarifies, for the purposes of sub-section (4), that where a draft of the proposed order of assessment under sub-section (1) is forwarded within the time period allowed under section 153, the further time available to the Assessing Officer to complete the assessment under sub-section (3) "shall be governed and shall always be deemed to have been governed by the provisions of sub-section (4)". Sub-section (4B) is the same with section 153B in place of section 153. Sub-section (13A) carries the idea to sub-section (13): where the draft is forwarded within the section 153 time, the time available to pass the order on receipt of the Panel's direction is governed, and always deemed to have been governed, by sub-sections (12) and (13); sub-section (13B) is (13A) with section 153B. Sub-sections (4A) and (13A) are deemed inserted with effect from 1 April 2009 and (4B) and (13B) with effect from 1 October 2009, so they reach back to the beginning of the section. Section 12 of the same Act inserted section 153(10), also with retrospective effect from 1 April 2009. The effect is that the question these two judges divided on has been answered by Parliament, and answered in the sense taken by Satish Chandra Sharma J. Where the draft order under s.144C(1) is forwarded within the time allowed under s.153, the further time to complete the assessment under s.144C(3) is governed by s.144C(4), and the time to pass the order on receipt of the Panel's direction is governed by s.144C(12) and (13). The amendment reaches back to 1 April 2009 and 1 October 2009 and overrides any judgment, order or decree of any court, so it displaces the divergent opinions here and the High Court decisions in CIT v Roca Bathroom Products and Shelf Drilling Ron Tappmeyer along with them. This record keeps its value as the account of how the question stood before March 2026 and for the fact that no binding ratio was laid down; it should not now be cited as authority for the question being open. What the amendment does not cover is a draft order forwarded after the s.153 date had expired: each of the four new sub-sections operates only on a draft forwarded within the time allowed. 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.
TaxSphere, “ACIT v Shelf Drilling Ron Tappmeyer”, https://taxnotice.vittsphere.com/caselaw/case/acit-v-shelf-drilling-supreme-court-split-reference/ (validity last checked 2026-08-19)
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Are proceedings before the Dispute Resolution Panel outside the ordinary limitation for completing an assessment?
You are an eligible assessee with a transfer pricing adjustment and the faceless unit passed a final order instead of a draft. What relief will the court give?
The TPO's order was one day late. Does that kill the transfer pricing addition?
Does the DRP route under s.144C buy the Assessing Officer extra time, or must the whole assessment still finish within the s.153 limitation?
