2017 (2) TMI 585 - AT - Income Tax

Validity of order beyond time mentioned u/s.144C(13) - whether Revenue cannot rely on Sec.153 of the Act for extending period of limitation set out in Sec. 144C(13)? - Held that - We cannot say that in the instant case the proceedings had reached the stage where Sec. 144C(13) of the Act could be applied. This is because, as mentioned by us at para 6 above, ld. DRP had never issued any direction to ld. Assessing Officer under Sub-section (5) of Sec. 144C of the Act. That directions issued by the ld. DRP were to the ld. TPO, is clear from the notings of the ld. TPO himself in his order dated 10.02.2015. Coming to the contention of the ld. Authorised Representative that ld. TPO is having all the powers of an Assessing Officer and hence directions given by DRP to TPO had to be construed as given to the ld. Assessing Officer, it is necessary to have a look at Explanation to Sec. 92CA relied on by the ld. Departmental Representative which clearly indicate that ld. TPO is not the same as Assessing Officer. No authorization from the Board has been placed on record which equates that the powers vested on TPO as similar to that of an Assessing Officer. Section 92CA of the Act clearly sets out the powers of TPO. He has to determine the Arms Length Price in relation to the international transactions. However, power of making the assessment remains with the Assessing Officer only. Considering argument of DR that by virtue of Sub-Sec. (3) of Sec. 153 of the Act, no fetters on time can be placed on an Assessing Officer for passing a giving effect order by the ld. Assessing Officer cannot be accepted, as for the purpose of a proceedings which come under the ambit Sec.144C of the Act, there can be no application of Sec.153 of the Act. In the case before us, there is no direction given by the ld. DRP to ld. Assessing Officer but the directions were only given to the ld. TPO. This has in our opinion resulted in a procedural defect and not a jurisdictional error that could invalidate the proceedings in toto. It is only a curable defect and when the curing takes place, it puts back the proceedings to the original stage. Viz to a stage when the correct directions are issued by the ld. DRP. We are therefore constrained to setaside the order of the ld.DRP and remit the case back to it for issuing proper directions in accordance with law.

Summary

Issues:
1. Time limitation under Sec.144C(13) of the Income Tax Act, 1961 for passing assessment order.
2. Applicability of Sec.153(2A) in passing order pursuant to Tribunal directions.
3. Authority of the Dispute Resolution Panel (DRP) to issue directions to Assessing Officer.
4. Interpretation of the powers of Transfer Pricing Officer (TPO) compared to Assessing Officer.

Analysis:
1. The appeal concerned the time limitation under Sec.144C(13) of the Income Tax Act, 1961 for passing the assessment order. The Assessing Officer was required to complete the assessment within one month from the end of the month in which directions from the DRP were received. The contention was raised that the order passed by the Assessing Officer on 26.02.2015 was time-barred as it exceeded the limitation period mentioned in the Act.

2. The issue of the applicability of Sec.153(2A) in passing orders pursuant to Tribunal directions was raised. The Departmental Representative argued that there was no time limit for passing an order following the Tribunal's direction, citing Sec.153(2A) of the Act. However, the Appellate Tribunal noted that Sec.153(2A) did not override the specific time limits set out in Sec.144C(13) of the Act.

3. The authority of the Dispute Resolution Panel (DRP) to issue directions to the Assessing Officer was a crucial point of contention. The Tribunal clarified that the DRP had the power to give directions only to the Assessing Officer, as per the provisions of Sub-section (5) of Sec.144C. It was highlighted that the directions issued by the DRP were to guide the Assessing Officer in completing the assessment.

4. The interpretation of the powers of the Transfer Pricing Officer (TPO) compared to the Assessing Officer was also discussed. The Tribunal emphasized that the TPO did not possess the same powers as the Assessing Officer, as clarified by the Explanation to Sec.92CA. While the TPO had specific functions related to determining Arms Length Price, the authority to make the final assessment remained with the Assessing Officer.

In conclusion, the Tribunal found that the procedural defect in the case, where the DRP had issued directions to the TPO instead of the Assessing Officer, was curable. The order of the DRP was set aside, and the case was remitted back for proper directions in accordance with the law. The appeal of the assessee was treated as allowed for statistical purposes.