Section 153

Section 153 — the law in short

What the courts have decided on section 153, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• ACIT v Shelf Drilling Ron Tappmeyer Supreme CourtCuts both waysSuperseded by amendment
  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.
• Vedanta Holdings Mauritius II Ltd v CIT (International Taxation)-3 — an Approving Panel order under GAAR stayed by the Delhi High Court, with the Revenue filing its own writ against the same order High CourtHelps taxpayerNo later treatment found
  The Approving Panel has issued its order and s.144BA(14) says no appeal lies. Will a High Court actually stay a Panel order, and does the same bar stop the department from challenging a Panel order it dislikes?
  It will entertain the writ, and on this occasion it stayed the Panel's order — but by consent, not on a contested application. On 17 December 2025 the Delhi High Court issued notice in two writ petitions directed against a single order of the Approving Panel dated 28 November 2025 under the General Anti Avoidance Rule, by which the reference made by the Commissioner of Income Tax (International Taxation)-3, New Delhi under s.144BA(4) dated 26 May 2025 had been upheld; and it directed that "In the meantime, by concurrence of ld. Counsels, the impugned order and the consequent assessment proceedings shall remain stayed till the next date of hearing" — the stay was therefore made on the concurrence of counsel on both sides, and the order is not authority that a contested stay would be granted. The striking feature is who filed the second petition: W.P.(C) 19105/2025 was filed by the Assistant Commissioner of Income Tax, International Tax Circle 3(1)(1), Delhi against the same Panel order. Because s.144BA(14) binds "the Principal Commissioner or Commissioner and the income-tax authorities subordinate to him" as well as the assessee, and bars any appeal under the Act, the department is in the same position as the taxpayer: if it wants to impugn a Panel direction it must also go by writ.
• DLF Home Developers Ltd v National Faceless Assessment Centre High CourtHelps taxpayerNo later treatment found
  Our amalgamation was sanctioned by the NCLT after we had already filed the return, and the AO is pressing on with the assessment on that pre-merger return. Does s.170A stop him?
  The Delhi High Court took the prima facie view that it does. Section 170A is a non-obstante provision obliging the successor in a business reorganisation to file a modified return in the prescribed form and manner, and if the time for filing that modified return has not yet run out, the Assessing Officer cannot proceed with the assessment on the basis of a pre-merger return. The Court stayed the assessment until the end date for the modified return, and on the modified return being filed, disposed of the petition directing that the assessment proceed having regard to it.
• GE Oil & Gas India P Ltd v Addl/Jt/Dy/Asst CIT High CourtCuts both waysPartly overruled — read this first
  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 order goes, but not always as a clean quashing. The Madras High Court set aside a final order passed three days after the show cause notice cum draft assessment order and directed that the impugned order be treated as a draft assessment order, leaving the assessee to work out its remedies against it under s.144B.
• Shelf Drilling Ron Tappmeyer v ACIT High CourtCuts both waysSuperseded by amendment
  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?
  Non-resident assessees argued that the overall limitation in s.153 continued to govern even where the s.144C route was taken, so that once that date had passed no final assessment order could be made at all. The Bombay High Court agreed, holding that it could not accept that s.153 is excluded from operating on s.144C, and that the non obstante clauses in s.144C(4) and (13) serve only the limited purpose of compelling a prompt final order once the Dispute Resolution Panel has spoken. Because in each petition the draft order came only days before the limitation date of 30 September 2021, no final assessment order could be passed at all, and the Court directed that the returns of income as filed be accepted, leaving the Revenue free to take any other steps in accordance with law.
• CIT v Roca Bathroom Products High CourtCuts both waysSuperseded by amendment
  Are proceedings before the Dispute Resolution Panel outside the ordinary limitation for completing an assessment?
  A Division Bench of the Madras High Court affirmed the single judge and held that the DRP process is not unfettered by limitation: the proceedings remain circumscribed by the limits of time fixed by s.153. It is the decision the Bombay High Court followed in Shelf Drilling, and it is the High Court line the Revenue has carried to the Supreme Court.
• Pfizer Healthcare India P Ltd v JCIT High CourtHelps taxpayerSuperseded by amendment
  The TPO's order was one day late. Does that kill the transfer pricing addition?
  Yes. The sixty days run backwards from the s.153 limitation date, excluding that date itself, so an order passed on the sixtieth day is out of time. The requirement is mandatory, not directory, limitation goes to jurisdiction, and an order a single day late is non est along with everything built on it. That was the law when the case was decided and it remains the reasoning of the judgment, but as at 8 September 2026 the arithmetic no longer holds where the limitation date is 31 March or 31 December: s.92CA(3AA), inserted retrospectively from 1 June 2007 by the Finance Act 2026, fixes the count for those two dates and gives the officer one day more. It says nothing about a 30 September expiry, where this decision still governs.
• Nokia India P Ltd v Addl CIT High CourtHelps departmentNo later treatment found
  The special audit direction was passed inside the limitation period but served on me afterwards. Does the section 153 exclusion run from the date of the order or from the date I received it?
  From the date of the order. The Delhi High Court held that the starting point of the exclusion in clause (iii) of Explanation 1 to section 153 is the date on which the Assessing Officer directs the assessee to get the accounts audited, and not the date on which the assessee receives that direction. It also held that an order under section 142(2A) is communicated for this purpose when it is sent out, so a direction signed and despatched on the last day of limitation is in time even though it reaches the assessee later. The writ petition was dismissed and the assessment proceedings were held not to have abated.
• Kerala State Bamboo Corporation Ltd v CIT High CourtHelps taxpayerNo later treatment found
  You missed the fifteen days on a s.139(9) notice and the officer has written back that your return is invalid. Is there anything left to do?
  Yes. The proviso to s.139(9) lets the Assessing Officer condone the delay and treat the return as valid where the defect is cured after the fifteen days but before the assessment is made. The Kerala High Court held that the consequence of invalidity does not bite until the assessment is completed or the time for completing it runs out, so a cure filed before that date can still be accepted, and an application seeking reconsideration must be dealt with as a petition under the proviso even if it is not labelled one.
• CIT v S. P. Viz Construction Co. (No. 1) High CourtHelps taxpayer
  A different Assessing Officer finished my assessment from where the last one left off, without offering me a rehearing. Does s.129 give me a right he was bound to offer?
  The right under the proviso to s.129 is a right to demand — the successor officer may continue the proceeding from the stage at which his predecessor left it, and where no demand for reopening or rehearing is made he is not obliged to wait. The practical consequence runs the other way too: because the extension of limitation is tied to that demand, an officer who was never asked for a rehearing cannot claim the time he spent waiting.
• DCIT, Central Circle 8(3), Mumbai v Sanjana Cryogenic Storages Ltd ITATHelps taxpayerNo later treatment found
  The Approving Panel held that my client's arrangement is NOT an impermissible avoidance arrangement, but the Assessing Officer has taxed the same transaction under another section anyway. Can he do that?
  The Mumbai Tribunal did not decide the wide question, but it held that the Assessing Officer could not, while giving effect to the statutory process under section 144BA, proceed on a factual premise diametrically opposed to the findings returned by the Approving Panel on the very arrangement referred to it. It then dismissed the Revenue's appeal on the narrower ground that a company buying back its own shares, which must then be extinguished, does not 'receive' property within section 56(2)(x) at all.
• ACIT v Citigroup Global Markets India Pvt Ltd ITATCuts both waysNo later treatment found
  The CIT(A) held my TPO order time barred because it was digitally signed a day after the date printed on it. The Revenue is now relying on a new sub-section. Where does that leave me?
  The Tribunal applied clause (c) of s.92CA(3AA) — then still the proposed clause 4 of the Finance Bill 2026, enacted three days after the order was pronounced — and held the TPO's order within time. The order was dated 31 October 2019 but digitally signed and issued on 1 November 2019, and the CIT(A) had annulled the transfer pricing adjustment on the footing that a 31 December 2019 assessment deadline required the TPO's order by 31 October. Because s.92CA(3AA)(c) deems that where limitation expires on 31 December the order may be made up to 1 November, the Tribunal allowed the Revenue's grounds on limitation and remanded the merits of the adjustment to the CIT(A), who had never decided them.
• Novateur Electrical and Digital Systems Pvt Ltd v ACIT ITATHelps taxpayerNo later treatment found
  My case was moved between charges during a restructuring and the department says that gives it extra time under Explanation 1 to s.153 because of s.129. Is that right?
  No. The extension in Explanation 1 to s.153 for time taken in reopening a proceeding or in giving an opportunity of being reheard is available only where the assessee has demanded a rehearing under the proviso to s.129 — and s.129 applies only to a change of the incumbent of an office, not to a change of jurisdiction, which is s.127. Where the case simply moved from one jurisdiction to another and no rehearing was asked for, no time is excluded and the assessment is time-barred.
• Mondelez India Foods P. Ltd v Addl CIT ITATHelps taxpayerSuperseded by amendment
  The TPO's order is dated one day inside the sixty-day window as I count it, but the department counts it differently. Is the order time barred, and if it is, does the assessment fall with it?
  On the counting the Tribunal applied Pfizer Healthcare and the Madras High Court Division Bench in DCIT v Saint Gobain India: the s.153 expiry date is EXCLUDED, sixty days are counted back from it, and the TPO must pass his order BEFORE the sixtieth day. On that arithmetic a 31 March 2014 assessment deadline meant a TPO order by 29 January 2014, and the order of 30 January 2014 was barred by one day. THAT ARITHMETIC HAS SINCE BEEN REVERSED RETROSPECTIVELY: s.92CA(3AA), inserted by the Finance Act 2026 (Act 4 of 2026) with effect from 1 June 2007 and expressly notwithstanding any judgment of any court, deems the sixty days to be counted so that a 31 March (non-leap year) deadline permits a TPO order up to 30 January, a 31 March (leap year) deadline up to 31 January, and a 31 December deadline up to 1 November. The second holding survives the amendment: where the TPO's order IS invalid, there is no order under s.92CA(3), so there is no 'eligible assessee' within s.144C(15)(b), no reference to the DRP could be made, and the subsequent proceedings are without jurisdiction.
• Naina Saluja v DCIT ITATHelps taxpayerNo later treatment found
  The officer sent my property to the Valuation Officer. Does that give him extra time to finish the assessment?
  No, not where the reference is under s.50C. The extension in clause (iv) of Explanation 1 to s.153 is given only where the Assessing Officer makes a reference to the Valuation Officer under s.142A(1); a reference under s.50C or s.55A does not stop the clock. The assessment, completed after the ordinary period had run out, was quashed as barred by limitation.
• Statutory position — the Finance Act, 2026 and reassessment: s.147A, s.292BC, the thirty-day floor in s.148(1), and ss.153(10) and 153B(1A) CBDT Circulars & InstructionsCuts both waysUnder appeal
  The Finance Act 2026 seems to have changed the reassessment rules backwards in time. What exactly did it change, from which dates, and which of my grounds has it taken away?
  The Finance Act, 2026 (No. 4 of 2026), assented to on 30 March 2026, amended the Income-tax Act, 1961 through clauses 4 to 33, and six of those clauses are about assessment and reassessment. Clause 9 inserted section 147A, deemed in force from 1 April 2021, which makes the Assessing Officer for sections 148 and 148A an officer other than the National Faceless Assessment Centre or a section 144B(3) assessment unit, notwithstanding any judgment, section 151A or any scheme under it; clause 33 inserted section 292BC, also deemed in force from 1 April 2021, which makes an approval in any assessment or reassessment administrative and supervisory in nature and immune to attack for insufficient reasons or a missing digital signature. Clause 10 gave the section 148 notice a thirty-day floor from 30 March 2026, clause 11 substituted section 150 from 1 February 2026, and clauses 12 and 13 inserted section 153(10) and section 153B(1A), reaching back to 2009, to fix when a draft order under section 144C(1) may be made. Sections 147, 148A, 149, 151 and 151A were not amended at all. Section 147A has since been struck down by the Punjab and Haryana High Court in Jyoti Sareen v. Union of India on 10 September 2026, and that judgment was stayed by the Supreme Court on 18 September 2026, which hears the appeal on 3 December 2026.
• Statutory position — s.201: who is deemed an assessee in default, the Form 26A escape that covers non-deduction only, one per cent and one and one-half per cent for two different periods, and the six-year limit from 1 April 2025 CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  The TDS officer has passed an order under section 201 treating me as an assessee in default and has added interest under section 201(1A). Who exactly is in default, what gets me out of it, which interest rate runs for which period, and how far back can he go?
  Section 201(1) deems a person who does not deduct, does not pay, or after deducting fails to pay the whole or any part of the tax to be an assessee in default in respect of that tax. Its first proviso takes him out of that deeming, but only for a failure to deduct, and only if the payee has furnished his return under section 139, has taken the sum into account in computing income in that return and has paid the tax due on the income declared — and the deductor furnishes a certificate to that effect from an accountant, which rule 31ACB requires in Form 26A. Interest under section 201(1A) runs at two rates for two different periods: one per cent for every month or part of a month from the date the tax was deductible to the date it was deducted, and one and one-half per cent for every month or part of a month from the date it was deducted to the date it was actually paid. Where the first proviso to section 201(1) rescues the deductor from the tax, the proviso to section 201(1A) still charges the one per cent, from the date the tax was deductible to the date the payee furnished his return. Since 1 April 2025 an order under section 201(1) for a failure to deduct cannot be made after six years from the end of the financial year in which payment is made or credit is given, or two years from the end of the financial year in which a correction statement is delivered under the first proviso to section 200(3), whichever is later; until 31 March 2025 the figure was seven years and the limit protected only a failure to deduct from a person resident in India. Section 201 governs a default on a sum paid or credited up to 31 March 2026; where the earlier of credit or payment falls on or after 1 April 2026, the consequences provision is section 398 of the Income-tax Act, 2025.
• Statutory position — section 158BA(2) to (6): what abates on a search, what revives if the block order falls, and why the search year is assessed twice CBDT Circulars & InstructionsCuts both ways
  A search took place in November 2024 while my client's scrutiny assessment for an earlier year was pending. What happens to that assessment, and what happens if the block assessment is later annulled?
  The pending assessment abates. Section 158BA(2)(a) provides that any assessment, reassessment or recomputation under provisions other than Chapter XIV-B, pertaining to any assessment year falling in the block period and pending on the date of initiation of the search or the making of the requisition, shall abate and be deemed to have abated on that date. If the block proceeding or the block order is later annulled in appeal or other legal proceedings, section 158BA(5) revives the abated proceeding from the date the Principal Commissioner or Commissioner receives the order of annulment — and the revival itself ceases if the annulment is set aside.
• Statutory position — section 158BE: the block assessment is barred twelve months from the end of the QUARTER, not the month CBDT Circulars & InstructionsCuts both ways
  The last panchnama in my client's search is dated 9 April 2025. By when must the block assessment order be passed?
  Twelve months from the end of the QUARTER in which the last of the authorisations was executed — so, on those facts, from the end of the quarter ending 30 June 2025, which gives 30 June 2026, subject to the exclusions and extensions in the section. The old Chapter ran the period from the end of the MONTH; the substituted section 158BE runs it from the end of the quarter, which can add up to nearly three months to the department's time.
• Statutory position — s.144C(1) to (5): the Assessing Officer must, notwithstanding anything to the contrary in the Act, forward a draft order to an eligible assessee before he makes any prejudicial variation, and the assessee has thirty days to accept or to object to the Dispute Resolution Panel AND to the Assessing Officer CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer has served a final assessment order on our foreign company raising a transfer pricing addition, without ever serving a draft order. Was he obliged to serve one first, and what was I supposed to do with it if he had?
  He was obliged to serve one first, if the company is an eligible assessee and the variation is prejudicial. Section 144C(1), as printed on the departmental edition stamped Year 2025, reads: "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." Three things follow from the words themselves. The obligation is cast in the mandatory "shall"; it operates "notwithstanding anything to the contrary contained in this Act", so it overrides the ordinary assessment machinery; and it bites "in the first instance", that is, before and not after the order that would otherwise be the assessment order. Sub-section (2) gives the eligible assessee thirty days of the receipt by him of the draft order to do one of two things: "(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." The "and" in clause (b) is conjunctive: an objection is filed with the Panel and with the Assessing Officer, not with one or the other. Sub-section (3) requires the officer to complete the assessment on the basis of the draft order if the assessee intimates acceptance of the variation or if no objections are received within the period specified in sub-section (2). Sub-section (4) fixes the time for that order — one month from the end of the month in which the acceptance is received or the period of filing objections expires, notwithstanding s.153 or s.153B. Sub-section (5) is the Panel's charging provision: where any objection is received under sub-section (2), the Panel "shall ... issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment".
• Statutory position — s.144C(2), (4), (5), (12) and (13): the thirty days to object run from receipt, but the officer's one month and the Panel's nine months both run from the END OF THE MONTH, and the two one-month clocks start on different events CBDT Circulars & InstructionsCuts both ways
  We received a draft order on 12 March. Nobody objected. When was the final order due, and if we had objected, by when must the Dispute Resolution Panel have issued its directions and by when must the officer have given effect to them?
  Four clocks, and only one of them runs from a date. Section 144C(2) gives the eligible assessee thirty days "of the receipt by him of the draft order" to file acceptance with the Assessing Officer or objections with the Panel and the Assessing Officer — that one runs from the date of receipt. The other three run from the end of a month, and that is where the counting goes wrong. Section 144C(4): where the assessee accepts or files no objection, "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." Section 144C(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." Section 144C(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." Note the four different starting EVENTS. The thirty days in (2) start on RECEIPT by the assessee. The nine months in (12) start at the end of the month in which the draft order is FORWARDED — the officer's act of despatch, not the assessee's receipt, so the (2) clock and the (12) clock can start in different months on the same draft order. The one month in (4) starts at the end of the month in which the acceptance is received or the thirty-day period expires. The one month in (13) starts at the end of the month in which the DIRECTION is received by the officer. Both (4) and (13) run notwithstanding s.153 and s.153B.
• Statutory position — s.153 Explanation 1(xi): the limitation clock stops from the day the GAAR reference reaches the Commissioner until his direction or the Panel's comes back, and then never leaves less than sixty days CBDT Circulars & InstructionsCuts both ways
  A reference under s.144BA has been made in my case and months have gone by. Does the ordinary time limit for completing the assessment keep running while the Approving Panel sits on it?
  No. Clause (xi) of Explanation 1 to s.153 excludes from the limitation period "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". The clock therefore stops on receipt of the Assessing Officer's reference and restarts only when the outcome — the Commissioner's own direction under s.144BA(3), the Approving Panel's direction under s.144BA(6), or the Commissioner's order under s.144BA(5) dropping the matter — reaches the Assessing Officer. The proviso that follows the Explanation then gives the officer at least sixty days: if what is left after the exclusion is less than sixty days, the remaining period is extended to sixty days.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.