2022 (2) TMI 1336 - HC - Income Tax

Validity of assessment proceedings u/s 153(3) - period of limitation - Refund Claim alongwith interest as per Section 244 - HELD THAT - The period u/s 153(3) read with Section 153(4) would stand extended till 31.12.2018 in terms of Section 92CA(3A) and the TPO would then be required to pass an order as on 31.10.2018. In the present case the notice of TPO is dated 09.07.2021 as per Annexure-L. Clearly on the admitted period available as discussed above the notice is beyond the time prescribed and is the one barred by limitation and is liable to be set aside on that sole ground alone. What needs to be noticed is that the proceedings were restored back to TPO/AO/DRP in terms of the order dated 03.11.2016. Petitioner submits that since the entirety of the proceedings have been restored to the Officers abovementioned the consequential refund of tax beyond the admitted liability is to flow and there is no further discretion at the end of the Department. If what has been restored is the entirety of the proceedings and as held above the notice dated 09.07.2021 being time barred the logical consequence of refund of amount in excess of admitted liability insofar as the tax paid will have to be made good by the respondent-Department taking note of the principle under Section 240 of the Income Tax Act. Accordingly the notice is set aside and the respondents to refund an amount in terms of the discussion made hereinabove alongwith interest as per Section 244 of the Income Tax Act for the Assessment Year 2006-2007 before the end of April 2022.

Summary

Issues:
Declaration of proceedings as barred by limitation for Assessment Year 2006-2007, challenge to notice issued by the first respondent, refund of amount with applicable interest, time period for completion of assessment proceedings, order passed by the Income Tax Appellate Tribunal, extension of time under Section 153(4), refund of tax beyond admitted liability, discretion of the Department, application of Section 240 of the Income Tax Act.

Analysis:
The petitioner sought a declaration that the proceedings initiated by the second respondent for the Assessment Year 2006-2007, along with the notice issued by the first respondent, were barred by limitation. The petitioner challenged the notice dated 09.07.2021, stating it was without jurisdiction and sought a refund of Rs.14,04,01,147/- with applicable interest under Section 244 of the Income Tax Act, 1961. The Income Tax Appellate Tribunal had set aside the impugned order and remanded the proceedings for a fresh decision to the Assessing Officer/Transfer Pricing Officer/Dispute Resolution Panel.

The time period for completion of assessment proceedings under Section 153(3) was discussed, indicating that the order needed to be passed by 31.12.2017 as per the financial year ending on 31.03.2017. The order for the Transfer Pricing Officer was required to be passed sixty days prior to the time prescribed under Section 153, with a possible extension till 31.12.2018 under Section 153(4) if a reference was made under Section 92CA. The notice dated 09.07.2021 was found to be beyond the prescribed time, being barred by limitation.

Since the proceedings were restored back to the relevant officers, the petitioner argued that any refund beyond the admitted liability should be made by the Department as a logical consequence. The judgment emphasized the application of Section 240 of the Income Tax Act in this context, indicating that the Department had no further discretion in this matter. Consequently, the notice dated 09.07.2021 was set aside, and the respondents were directed to refund the specified amount with interest before the end of April 2022, in compliance with the relevant provisions of the Income Tax Act.

In conclusion, the petition was disposed of with the above observations and directions, ensuring the refund of the excess amount paid by the petitioner in light of the time-barred notice and the restored proceedings.