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2018 (4) TMI 1897 - AT - Income TaxValidity of order u/s 144C - period of limitation - whether order was passed beyond the time prescribed u/s.144C(2) read along with section 144C(4)? - HELD THAT - It is not disputed that the draft assessment order was served on the assessee on 29.12.2016 and the assessee filed objections before the DRP as on 31.01.2017 - it was filed after the thirty day time period allowed under sub-section (2) of Section 144C of the Act. As rightly pointed out by the ld.DRP, there is no power u/s.144C for the DRP to condone any delay. Powers of the DRP are exhaustively set out in Sec.144C of the Act and it has no power to condone any delay in filing of objections. DRP rightly held that application of objections could not be accepted. In our opinion, delayed filing of objections gives rise to the same consequence as non-filing of the objections. This is because objection filed after 30 days, which is beyond statutory limit, is as good as no objection. Copy of the objections was filed by the assessee before the ld. AO only on 30.03.2017, and even this was beyond the limit of 30 days. Thus, assessee did not satisfy any of the conditions mentioned in sub-section (2) of section 144C. Non-filing of objections within the time period allowed under 30 days will automatically attract application of sub-section (4) of Section 144C of the Act. Sub-section (4) clearly say that an assessment order has to be passed within one month from the end of the month when the period of filing of objections under sub-section (2) expires. Contention of the ld.D.R is that the order of the DRP rejecting the application filed by the assessee was a direction of the DRP and hence time limit set out in sub-section (13) of Section 144C was available to the Assessing Officer for passing the assessment order. An order passed by the DRP rejecting an application of objections, due to belated filing, in our opinion, cannot be equated with a direction coming within the meaning of sub-sections (5) of section 144C of the Act. There is no guidance whatsoever to the ld.AO, from such an order. Hence, the argument of the ld.DR that time limit given in sub-section (13) of Section 144C of the Act would apply cannot be accepted. In the case before us, the time limit for filing objections expired on 28.01.2017. Hence, the assessment order should have been passed on or before 28.02.2017. The assessment order was passed only 22.03.2017. Thus, assessment done was beyond the statutory limit allowed under the Act. The assessment stands set aside - Assessee appeal allowed.
Issues:
Validity of assessment done on assessee for the impugned assessment year under section 144C(2) read along with section 144C(4) of the Income Tax Act, 1961. Analysis: 1. Assessment Time Limit Dispute: The case involved an appeal against an assessment order by the Assistant Commissioner of Income Tax. The assessee challenged the validity of the assessment, claiming it was passed beyond the time prescribed under section 144C(2) read with section 144C(4) of the Income Tax Act, 1961. The dispute arose due to a delay in filing objections by the assessee before the Dispute Resolution Panel (DRP). 2. Factual Background: The assessee, engaged in precision machining, had international transactions leading to a Transfer Pricing (TP) adjustment recommended by the Transfer Pricing Officer (TPO). The draft assessment order was served on the assessee on 29.12.2016, and objections were filed before the DRP on 31.01.2017, beyond the 30-day limit. The DRP rejected the application due to the delay, leading to the assessment order on 22.03.2017, making an addition to the income based on TPO recommendations. 3. Legal Arguments: The assessee argued that the assessment order was passed after the prescribed time limit, contending it should have been passed by 28.02.2017. The assessee relied on a jurisdictional High Court judgment to support their claim. On the other hand, the Revenue argued that the assessment order was within the time limit as the DRP disposed of objections on 17.03.2017, allowing the assessment order on 22.03.2017. 4. Analysis and Decision: The Tribunal analyzed the provisions of section 144C of the Act, emphasizing the importance of timely filing of objections before the DRP. The Tribunal noted that the DRP had no power to condone delays in filing objections. The Tribunal held that delayed filing of objections had the same consequence as non-filing, rendering the objections invalid. The Tribunal rejected the Revenue's argument that the DRP's rejection constituted a direction for extending the time limit, ruling the assessment order was beyond the statutory limit and set it aside. 5. Judgment: The Tribunal allowed the appeal of the assessee in ITA No.971/CHNY/2017, finding the assessment order to be beyond the prescribed time limit, while dismissing the appeal in ITA No.970/CHNY/2017. The assessment order was set aside, emphasizing the importance of adhering to statutory time limits in assessment proceedings.
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