2023 (8) TMI 628 - AT - Income Tax

Validity of TP order stating that the orders are passed u/s 92CA (3) - late by 1 day therefore is not passed within the due time - HELD THAT - Provisions of section 153 prescribes time limit for passing assessment order. It provides that no order of assessment shall be made u/s 143 or section 144 at any time after the expiry of two years from the end of the assessment year in which the income was first assessable. By virtue of the first proviso, this time limit was curtailed to 21 Months. Therefore for AY 2011-12, the time limit for passing assessment order u/s 143 (3) would be 31/12/2013. By virtue of second proviso if a reference u/s 92CA is made then this time limit is further extended to 33 months from the end of the Assessment year. Thus for AY 2011-12, it would be 33 months from 31/12/2013 i.e. 31/3/2015. TPO as per provisions of section 92CA (3A) of the Act is bound to pass the TP Order at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires. Therefore, 60 days period from 31/3/2015 expires on 29 January 2015. But the ld TPO has passed TP Assessment order u/s 92CA (3) of the Act on 30th January 2015. Thus, the order of ld TPO is passed beyond statutory time available. Whether assessee ceases to be an 'eligible assessee' within the meaning of section 144C (15) (b)? - The moment an assessee ceases to be an 'eligible assessee' in absence of valid transfer pricing order, the ld AO should not have passed the draft assessment order. Thus provision of section 144C does not apply to the assessee. Thus, the time limit for completion of the assessment reverts back to 21 Months from the end of the assessment year. Therefore, as held by the co-ordinate Bench in ATOS India Private Limited 2023 (2) TMI 1112 - ITAT MUMBAI the final assessment order passed by AO on 26 th February, 2016 is also barred by limitation. Therefore, following the decision of the co-ordinate Bench, we quash the assessment order passed for A.Y. 2011-12 by the learned Assessing Officer on 26 th February, 2016 as it is barred by limitation.

Summary

Issues Involved:
1. Barred by Limitation
2. Validity of Transfer Pricing Order
3. Validity of Proceedings under Section 143(3) read with Section 144C
4. Final Assessment Order Barred by Limitation

Summary:

Issue 1: Barred by Limitation
The assessee contended that the Transfer Pricing Officer (TPO) passed the order under Section 92CA(3) of the Income-tax Act, 1961 on 30th January 2015, which was beyond the statutory time limit, rendering the order null and void. The Tribunal agreed, citing the Madras High Court decision in Saint Gobain India Pvt. Ltd., which emphasized that the TPO's order must be passed within the prescribed time frame. Consequently, the Tribunal quashed the TPO's order for being time-barred.

Issue 2: Validity of Transfer Pricing Order
Since the TPO's order was quashed, the assessee ceased to be an "eligible assessee" under Section 144C of the Act. This invalidated the draft assessment order and the subsequent final assessment order. The Tribunal followed the precedent set by the ATOS India Private Limited case, which held that if the TPO's order is invalid, the entire assessment proceeding becomes void.

Issue 3: Validity of Proceedings under Section 143(3) read with Section 144C
The Tribunal found that the draft assessment order dated 23rd March 2015 and the final assessment order dated 26th February 2016 were invalid due to the invalidity of the TPO's order. The Tribunal emphasized that the assessee could not be considered an "eligible assessee" without a valid TPO order, thus nullifying the assessment proceedings.

Issue 4: Final Assessment Order Barred by Limitation
For A.Y. 2016-17, the Tribunal noted that the TPO's order was passed on 1st November 2019, beyond the statutory time limit, making it invalid. Consequently, the final assessment order passed on 9th May 2021 was also barred by limitation. The Tribunal quashed the assessment order, reiterating that the extended time limit for assessment was not available to the Assessing Officer without a valid TPO order.

Conclusion:
The Tribunal allowed the assessee's appeals for both A.Y. 2011-12 and A.Y. 2016-17, quashing the assessment orders for being barred by limitation. The appeals of the Assessing Officer and the cross objections of the assessee were dismissed as they became academic following the Tribunal's decision on the limitation issue.