2017 (8) TMI 409 - AT - Income Tax

Effect of assessment order passed by the AO u/s 144C(13) beyond the period prescribed - Held that - From the plain provisions of section 144C of the Act, we are of the considered opinion that the proceedings cannot be declared as null and void simply because the AO passed the assessment order beyond the period prescribed there under. In the circumstances, grounds relating to limitation, raised by the assessee-company are dismissed

Summary

Issues Involved:
1. Timeliness of the final assessment order passed by the Assessing Officer under sub-section (13) of section 144C of the Income-tax Act, 1961.

Analysis:

Issue 1: Timeliness of the final assessment order
The appeal was filed against the assessment order passed by the DCIT, Central Circle 1(1), Bengaluru, under section 143(3) of the Income-tax Act, 1961 for the assessment year 2011-12. The appellant, a partnership firm engaged in the business of manufacturing and selling various products, reported international transactions with its Associated Enterprises (AE). The Transfer Pricing Officer (TPO) suggested an adjustment of &8377;72,83,34,973. The Assessing Officer (AO) incorporated this adjustment in the draft assessment order served on the assessee on 31/3/2015. The assessee filed objections before the Dispute Resolution Panel (DRP) contesting the ALP adjustment. The DRP gave directions under section 144C(8) of the Act on 17/12/2015, received by the AO on 29/12/2015. The final assessment order was passed by the AO on 18/2/2016, beyond the prescribed period of 31/01/2016 as per section 144C(13) of the Act.

The main contention raised by the assessee was that the final assessment order was passed in contravention of the provisions of section 144C(13) of the Act as it was not passed within the prescribed time limit. The Tribunal analyzed whether the provision in section 144C(13) was mandatory and went to the root of the AO's jurisdiction to pass the order. The Tribunal referred to relevant case laws, such as Thirumalai Chemicals Ltd. v. Union of India and Rain Cements Ltd. v. Dy.CIT, to determine the nature of limitation provisions. It was observed that the provision in section 144C(13) did not create any substantive right and did not go to the root of the matter. The Tribunal concluded that the AO's failure to pass the final assessment order within the prescribed period did not render the proceedings null and void. Therefore, the grounds relating to limitation raised by the assessee were dismissed, and the appeal was directed to be posted for a hearing to consider the merits of the case.

In conclusion, the Tribunal held that the delay in passing the final assessment order by the AO under section 144C(13) did not invalidate the proceedings, as the provision was not jurisdictional and did not go to the root of the matter. The Tribunal dismissed the assessee's objection regarding the timeliness of the assessment order and directed the appeal to be heard on its merits.