2019 (1) TMI 597 - HC - Income Tax

Assessment u/s 144C - expression eligible assessee - assessee had not filed objection within the limitation period prescribed even if assumed as correct is of no avail and relevance - Held that - The expression eligible assessee defined in sub-section (15) to Section 144C of the Act means a person in whose case the variation in taxable income in the draft assessment arises as a consequence of the order of the Transfer Pricing Officer. It is accepted by the Revenue that the variation in the assessment order dated 28.03.2014 was as a consequence of the report of Transfer Pricing Officer which was relied upon. The respondent-assessee would not cease to be an eligible assessee as no fresh order or report from the Transfer Pricing Officer was called post the remand. Definition of eligible assessee would equally apply to the proceedings remanded to the Assessing Officer for fresh adjudication when the variation in income or loss returned which is prejudicial to the interest of the assessee arises as a consequence of the order of the Transfer Pricing Officer. No merit in the present appeal as the issue is covered by decision of this court in JCB India Ltd. 2017 (9) TMI 673 - DELHI HIGH COURT .

Summary

Issues:
1. Condonation of delay in filing and re-filing applications.
2. Interpretation of Section 144C of the Income Tax Act, 1961.
3. Compliance with the procedure under Section 144C.
4. Application of the definition of "eligible assessee" in the context of Transfer Pricing Officer's order.

Issue 1: Condonation of delay in filing and re-filing applications
The High Court allowed the condonation of delay in filing and re-filing applications for 34 days and 25 days, respectively, as they were unopposed by the respondent's counsel. The applications were granted, showing leniency in procedural matters.

Issue 2: Interpretation of Section 144C of the Income Tax Act, 1961
The case involved an appeal by the Revenue under Section 260A of the Income Tax Act, 1961, concerning NT Back Office Services Pvt. Ltd. The Tribunal annulled the Assessment Order for failure to follow the procedure under Section 144C. The court analyzed the procedure outlined in Section 144C, emphasizing the necessity for the Assessing Officer to forward a draft order to the eligible assessee and complete the assessment based on the draft order after considering objections within the specified time frame.

Issue 3: Compliance with the procedure under Section 144C
The court highlighted that the Assessing Officer must hear the assessee before passing the draft assessment order and not after. The procedure does not allow for a fresh hearing on merits post passing the draft order. The Dispute Resolution Panel plays a crucial role in issuing directions based on objections filed by the assessee, and these directions are binding on the Assessing Officer. The court stressed the mandatory nature of the procedure outlined in Section 144C.

Issue 4: Application of the definition of "eligible assessee" in the context of Transfer Pricing Officer's order
The court addressed the concept of an "eligible assessee" defined in Section 144C, emphasizing that the respondent remained an eligible assessee as the variation in the assessment order was a consequence of the Transfer Pricing Officer's report. The court dismissed the appeal, citing precedent and affirming the application of the definition of "eligible assessee."

In conclusion, the judgment delved into the nuances of Section 144C of the Income Tax Act, emphasizing procedural compliance, the role of the Dispute Resolution Panel, and the definition of an "eligible assessee" in the context of Transfer Pricing Officer's orders. The court dismissed the appeal, citing previous decisions and upholding the importance of following the prescribed procedures in tax assessments.