2024 (3) TMI 141 - AT - Income Tax

Validity of assessment order passed u/s 144C - period of limitation - whether the final assessment order dated 30.06.2022 passed by the ld AO is passed within the time limit prescribed u/s 144C(13) of the Act or not.? - HELD THAT - Section 144B(5) of the Act clearly stipulates that all the communication shall be through National Faceless Assessment Centre. Further, section 144B(6)(v) clearly stipulates that the time and place of dispatch and receipt of electronic record shall be determined in accordance with the provision of section 13 of the Information Technology Act, 2000. On a cohesive reading of provision of section 130 and 144B of the Act read together with section 13 of the Information Technology Act, 2000, we hold that the moment document is uploaded by the originator (which in the present case ld DRP) on 07.04.2022 in ITBA portal that dispatch from the side of the ld DRP is complete and since the entire documents are uploaded through electronic mode, the same happens seamlessly and accordingly, the receipt of the said document also becomes instantaneously. Hence, the date of receipt of DRP direction also happened on 07.04.2022 itself and the due date in terms of section 144C(13) would start reckoning from that date. Merely, because the NeAC had retained the document receipt from ld DRP in the form of DRP directions for few months in its kitty and the later transfer the same to the assessment unit on 02.05.2022, the due date in terms of section 144C(13) of the Act for framing the final assessment order by the ld AO does not get automatically extended. Hence, we have no hesitation to hold that the final assessment order ought to have been passed by the ld AO on or before 31.05.2022 in the instant case. Since, the same was done on 30.06.2022 which is barred by limitation. Appeal of assessee allowed.

Summary

Issues Involved:
1. Whether the final assessment order dated 30.06.2022 passed by the Assessing Officer (AO) is within the time limit prescribed under section 144C(13) of the Income Tax Act.

Summary:

Issue 1: Timeliness of the Final Assessment Order under Section 144C(13)

The assessee, a wholly owned subsidiary of Microsoft Corporation USA, raised a preliminary ground that the assessment order passed by the AO pursuant to the directions of the Dispute Resolution Panel (DRP) is barred by limitation. The return of income for AY 2018-19 was filed on 30.11.2018 and revised on 31.03.2019. The AO referred the case to the Transfer Pricing Officer (TPO) who passed an order on 30.07.2021 proposing an arm's length price (ALP) adjustment. The AO issued a draft assessment order on 28.09.2021, and the assessee filed objections before the DRP, which issued directions on 25.03.2022. The AO passed the final assessment order on 30.06.2022.

The key issue was whether the final assessment order was passed within the time limit prescribed under section 144C(13) of the Act. The provision states that the AO must complete the assessment within one month from the end of the month in which the DRP's directions are received. The AO claimed that the directions were uploaded in the ITBA system on 02.05.2022, giving them until 30.06.2022 to pass the order. However, the assessee argued that the directions were uploaded on 07.04.2022, requiring the final order to be passed by 31.05.2022.

Upon review, it was confirmed that the DRP's directions were indeed uploaded on 07.04.2022. The court held that the date of receipt of the DRP directions should be 07.04.2022, and thus, the final assessment order should have been passed by 31.05.2022. The order passed on 30.06.2022 was therefore barred by limitation.

Consequently, the final assessment order was quashed, and the appeal of the assessee was allowed. Other grounds raised by the assessee were deemed academic and left open.

Order pronounced in the open court on 28/02/2024.