ITAT Delhi Quashes Coca Cola India Assessments as Time-Barred, Holds DRP Process Cannot Override Section 153 Limitation

January 24, 2026 : The Income Tax Appellate Tribunal has quashed multiple final assessment orders passed against Coca Cola India Inc., holding that they were barred by limitation under the Income Tax Act, 1961.

The Delhi Bench ruled that the Dispute Resolution Panel (DRP) mechanism under Section 144C cannot override or extend the statutory time limits prescribed under Section 153 for completion of assessments. It held that even where assessments are framed pursuant to DRP directions under Section 144C(13), the Assessing Officer must strictly adhere to the outer limitation period under Section 153.

The Tribunal was dealing with a batch of six appeals filed by Coca Cola India for Assessment Years 2004–05, 2014–15, 2016–17, 2017–18, 2020–21 and 2021–22. The central issue was whether final assessment orders passed after following the DRP procedure could survive if they were issued beyond the limitation period prescribed under Section 153.

The assessee argued that Section 144C does not operate as a self-contained code and must be read harmoniously with Section 153. Relying on the Madras High Court decision in CIT v. Roca Bathroom Products (P.) Ltd., it was contended that DRP proceedings are only a continuation of the assessment process and do not suspend or enlarge statutory limitation periods. Coca Cola India also placed on record a detailed chart of dates to demonstrate that, even after accounting for timelines under Section 144C, the final assessment orders were passed beyond the permissible period.

The Revenue raised a preliminary objection, contending that the issue was pending before the Supreme Court in the Shelf Drilling matter and that Section 144C, being a special provision with a non obstante clause, overrides Section 153. It was argued that accepting the assessee’s interpretation would make the DRP framework unworkable and lead to impractical results.

Rejecting the objection, the Tribunal noted that there was no stay on the Madras High Court’s ruling in Roca Bathroom Products. It observed that a stay on the operative portion of a judgment does not nullify its ratio decidendi unless the judgment is expressly set aside. The Bench also recorded that Coca Cola India had not relied on the Bombay High Court decision in Shelf Drilling, which is under interim restraint, but solely on the Madras High Court ruling, which continues to hold the field. It further noted that several coordinate benches of the ITAT have consistently followed Roca Bathroom Products.

On merits, the Tribunal held that Sections 144C and 153 are mutually inclusive and not mutually exclusive. It reiterated that DRP proceedings form part of the assessment process and do not create an independent assessment framework. The non obstante clause in Section 144C(13), the Bench held, merely restricts the Assessing Officer from availing longer timelines after receipt of DRP directions and does not exclude the application of Section 153 altogether.

The Tribunal further observed that statutory limitation provisions go to the root of jurisdiction and must be strictly construed. Administrative delays, internal movement of files, or pendency before the DRP cannot extend statutory deadlines. Once the limitation period expires, the Assessing Officer loses jurisdiction to pass a valid assessment order.

After examining the undisputed dates on record, the Tribunal found that the final assessment orders for all six assessment years had been passed beyond the time limits prescribed under Section 153 read with Section 144C. Consequently, the impugned assessment orders were quashed as time-barred.

The appeals filed by Coca Cola India were allowed solely on the ground of limitation, and the Tribunal expressly refrained from examining the merits of the additions made by the Assessing Officer. Liberty was granted to both parties to revive the appeals if the Supreme Court were to take a contrary view in future.

The decision was delivered by a Bench comprising Shri Vikas Awasthy (Judicial Member) and Shri Sanjay Awasthy (Accountant Member) on 23 January 2026 in Coca Cola India Inc. v. DDIT, ITA No. 5223/Del/2010 and connected matters.