2023 (5) TMI 31 - AT - Income Tax

Validity of assessment u/s 92CA - period of limitation as prescribed u/s 92CA(3A) r.w.s. 153 - HELD THAT - As the time limit for passing the order under Section 92CA(3) of the Act, computed as per the above judgements of Saint Gobain India Pvt. Ltd. 2022 (4) TMI 808 - MADRAS HIGH COURT expired on 31/10/2019. Since the order under section 92CA(3) of the Act has been passed 01/11/2019, i.e., after the expiry of the period of limitation, the same is set aside as being barred by limitation. Whether the Final Assessment Order passed on 31/03/2021 is barred by limitation and bad in law? - the order, dated 01/11/2019 passed by TPO under Section 92CA(3) of the Act is barred by limitation. The Appellant, therefore, does not qualify as an Eligible Assessee under Section 144C(15)(b)(i) of the Act. The Assessing Officer did not have jurisdiction to pass the Draft Assessment Order, dated 24/12/2019 u/s 144C(1) of the Act. As a result, the time limit available to the AO u/s 153 of the Act for passing the assessment order expired on 31/12/2019 even if the benefit of extended period of 12 months is granted on account of a valid reference having been made u/s 92CA of the Act. The Final Assessment Order has been passed in present case on 31/03/2021 and therefore, the same is barred by limitation. Assessee appeal allowed.

Summary

Issues Involved:

1. Whether the Transfer Pricing Order dated 01/11/2019 was passed beyond the prescribed time limit under Section 92CA(3A) read with Section 153 of the Income Tax Act, 1961, making it illegal and void.
2. Whether the Final Assessment Order dated 31/03/2021 was barred by limitation and bad in law.

Summary:

Issue 1: Transfer Pricing Order Beyond Time Limit

The Appellant challenged the Transfer Pricing Order dated 01/11/2019, arguing it was beyond the time limit prescribed under Section 92CA(3A) read with Section 153 of the Income Tax Act, 1961, making it illegal and void. The Appellant's representative cited several judgments, including Pfizer Healthcare India Private Ltd Vs. Joint Commissioner of Income Tax and DCIT vs. Saint Gobain India Pvt. Ltd., which supported the argument that the order should have been passed on or before 31/10/2019. The Tribunal found merit in these precedents, noting that the Transfer Pricing Order was indeed passed on 01/11/2019, one day late, making it barred by limitation and thus invalid.

Issue 2: Final Assessment Order Barred by Limitation

Following the invalidation of the Transfer Pricing Order, the Tribunal examined whether the Final Assessment Order dated 31/03/2021 was also barred by limitation. The Tribunal referred to its own decisions in cases like Mondelez India Foods Pvt. Ltd. and Atos India Pvt. Ltd., which held that an invalid Transfer Pricing Order renders the subsequent Draft Assessment Order and Final Assessment Order null and void. Given that the Transfer Pricing Order was invalid, the Appellant did not qualify as an "Eligible Assessee" under Section 144C(15)(b)(i) of the Act. Consequently, the Draft Assessment Order dated 24/12/2019 and the Final Assessment Order dated 31/03/2021 were also deemed to be without jurisdiction and barred by limitation.

Conclusion:

The Tribunal quashed both the Transfer Pricing Order dated 01/11/2019 and the Final Assessment Order dated 31/03/2021 as being bad in law and barred by limitation. Ground No. 1 raised by the Appellant was allowed, and all other grounds were disposed of as infructuous. The appeal was allowed in favor of the Appellant.