2022 (9) TMI 527 - AT - Income Tax

Validity of order u/s 143(3) r.w.s. 144C(13) - Reference to dispute resolution panel - Period of limitation - Whether timeline for completion of original assessment pursuant to directions of DRP shall not be governed by provision section 153 ? - HELD THAT - In the recent case of CIT v Roca Bathroom Products (P.) Ltd. 2022 (6) TMI 848 - MADRAS HIGH COURT the High Court held that sections 144C and 153 are mutually inclusive and not mutually exclusive as both contain provisions relating to section 92CA and are interdependent and overlapping and hence, period of limitation prescribed under section 153(2A) or 153(3) is applicable and when matters are remanded back irrespective of whether it is to Assessing Officer or TPO or DRP, duty is on Assessing Officer to pass orders. The High Court held that even in case of remand, TPO/DRP have to follow time limits as provided under Act and entire proceedings including hearing and directions have to be issued by DRP within 9 months as contemplated under section 144C(12) and thereafter, Assessing Officer is to pass orders within stipulated time. The assessing officer was required to pass order within 9 months from the end of the financial year in which the order was received by the Principal Commissioner of Income Tax i.e. 31st December 2018. Hence, the present order dated 15-03-2019 passed by Ld. DCIT is barred by limitation and hence liable to be set aside. Hence, the appeal of the assessee is allowed on the ground of jurisdiction.

Summary

Issues Involved:

1. Validity of the assessment order being time-barred.
2. Upward TP adjustment under Section 92C(2).
3. Addition under Section 40(a)(i) for non-deduction of TDS.
4. Deduction under Chapter VIA for disallowed income.
5. Credit for taxes paid.
6. Interest charged under Section 234C.
7. Interest recovery under Section 244A.
8. Initiation of penalty proceedings under Section 271(1)(c).

Detailed Analysis:

1. Validity of the Assessment Order Being Time-Barred:
The appellant argued that the assessment order dated 15/03/2019 was time-barred under Section 153(3) of the IT Act, which mandates that an order of fresh assessment must be passed within nine months from the end of the financial year in which the ITAT's order under Section 254 is received. The ITAT's order was received by the Principal Commissioner on 06/06/2017, thus the deadline was 31/12/2018. The Revenue countered that Section 144C, which contains the words "notwithstanding anything to the contrary contained in section 153,"� overrides Section 153, implying the timeline for passing the order was not governed by Section 153. The Tribunal, referencing the statutory provisions and the case of CIT v Roca Bathroom Products (P.) Ltd., concluded that Sections 144C and 153 are mutually inclusive. Therefore, the assessment order dated 15/03/2019 was deemed time-barred and void ab-initio.

2. Upward TP Adjustment Under Section 92C(2):
The appellant contended that the AO/TPO erred in not granting the benefit of five percent under the second proviso to Section 92C(2) and confirmed an upward TP adjustment of INR 16,79,093. However, this issue was not adjudicated as the appeal was allowed on jurisdictional grounds.

3. Addition Under Section 40(a)(i) for Non-Deduction of TDS:
The appellant challenged the addition of Rs. 18,18,96,302 under Section 40(a)(i) for non-deduction of TDS under Section 195. This issue was also not adjudicated due to the jurisdictional decision.

4. Deduction Under Chapter VIA for Disallowed Income:
The appellant argued for further deduction under Chapter VIA from the income added by disallowance under Section 40(a)(i). This issue remained unaddressed as the appeal was allowed on jurisdictional grounds.

5. Credit for Taxes Paid:
The appellant claimed an error in the credit for taxes paid, arguing the correct amount was Rs. 20,21,14,033 instead of Rs. 19,97,53,105. This issue was not examined due to the jurisdictional ruling.

6. Interest Charged Under Section 234C:
The appellant contested the excess interest charged under Section 234C amounting to Rs. 1,08,603. This matter was not evaluated as the appeal was allowed on the basis of jurisdiction.

7. Interest Recovery Under Section 244A:
The appellant disputed the recovery of interest under Section 244A amounting to Rs. 1,79,390. This issue was not decided due to the jurisdictional decision.

8. Initiation of Penalty Proceedings Under Section 271(1)(c):
The appellant argued against the mechanical initiation of penalty proceedings under Section 271(1)(c) for each addition made in the assessment order. This issue was not addressed as the appeal was allowed on jurisdictional grounds.

Conclusion:
The Tribunal allowed the appeal on the ground of jurisdiction, declaring the assessment order dated 15/03/2019 time-barred and void ab-initio. Consequently, the other grounds of appeal were not adjudicated. The appeal of the assessee was allowed, and the order was pronounced in the open court on 09-09-2022.