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2023 (2) TMI 712 - HC - Income TaxAssessment u/s 144C - TP adjustments were not received in time and the AO has confirmed the draft assessment order and the same is in violation of Section 144C - HELD THAT - As submission that under Section 144C of the IT Act, the Assessing Officer is bound by the directions issued by the DRP and required to pass the assessment order in conformity with the directions issued within one month from the end of month in which such directions are issued. ITAT has recorded that impugned order is not in conformity with the provisions of Section 144C of the IT Act and barred by time. Shri.Dilip's contention is, the AO has rightly passed the order within time. But it is relevant to note that the said order is not in conformity with Section 144C of the IT Act.
Issues:
1. Timeliness of the assessment order 2. Compliance with directions of the Dispute Resolution Panel (DRP) 3. Extension of limitation period under Section 153(3) of the Act 4. Validity of the assessment order under Section 143(3) read with Section 144C(13) Timeliness of the assessment order: The Revenue challenged the order passed by the Income Tax Appellate Tribunal (ITAT) on the grounds of timeliness of the assessment order. The Assessing Officer contended that the order was passed within the time limit and therefore should be upheld. However, the Senior Advocate for the assessee argued that the order was in violation of Section 144C as it did not comply with the directions of the DRP within the specified time frame. The ITAT found the order to be non-compliant with Section 144C and barred by time, leading to the dismissal of the appeal. Compliance with directions of the Dispute Resolution Panel (DRP): The Senior Advocate for the assessee emphasized the binding nature of the DRP's directions on the Assessing Officer under Section 144C of the Income Tax Act. It was argued that the Assessing Officer failed to incorporate the DRP's directions within the stipulated time, rendering the assessment order invalid. The ITAT concurred with this argument, highlighting the non-conformity of the order with Section 144C, ultimately resulting in the dismissal of the appeal. Extension of limitation period under Section 153(3) of the Act: The issue of whether the limitation period gets extended under Section 153(3) of the Act when an assessment order is set aside was raised. Reference was made to a decision of the Hon'ble Punjab and Haryana High Court, but the Tribunal did not follow this precedent in the present case. However, this issue did not play a significant role in the final decision of the case. Validity of the assessment order under Section 143(3) read with Section 144C(13): The Assessing Officer's order was found to be non-compliant with Section 144C of the IT Act, as it did not adhere to the DRP's directions within the specified time frame. Despite the contention that the order was passed within the time limit, the ITAT upheld the Senior Advocate's argument, leading to the dismissal of the appeal and a ruling in favor of the assessee against the Revenue. The judgment highlighted the importance of adherence to statutory provisions and the binding nature of DRP's directions on the Assessing Officer.
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