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2024 (6) TMI 216 - AT - Income TaxTime limit for issuance of TP Order as per Section 92CA(3A) - appellant argued that the assessment order is barred by limitation - HELD THAT - The undisputed fact that emerges is that for AY 2016-17, the order has been passed by Ld. TPO u/s 92CA (3) on 01.11.2019. As per the decision of M/s Pfizer Healthcare India Pvt. Ltd. ors. 2021 (2) TMI 1152 - MADRAS HIGH COURT this order would be barred by limitation. In this decision, bunch of assessee invoked writ jurisdiction of Hon ble Court on the ground that the order passed u/s 92CA(3) was barred by limitation by one day. It was noted that in terms of Sec.92CA(3A), an order has to be passed by TPO before 60 days prior to the last day on which the period of limitation referred to in Sec.153 for making assessment expires. The assessment is to be completed within 21 months from end of assessment year in which the income was first assessable. Therefore, counting from 31.03.2017, the assessment was to be framed on or before 31.12.2019. The period of 60 days prior thereto would run till 01.11.2019 and any date prior thereto would mean 31st of October or before. Since the order was passed on 01.11.2019, the same would be barred by limitation. Since Transfer Pricing proceedings were barred by limitation of time, the transfer pricing adjustment would be non-est. Consequently, the assessee would cease to be an eligible assessee as defined u/s 144C(15)(b) of the Act and therefore, the machinery provisions of Section 144C of the Act would not get triggered in the assessee s case. In such a scenario, the assessment in the case of the assessee ought to have been completed within 33 months from the end of the Assessment year as per Sec. 153(1) read with Section 153(4) of the Act, i.e., on or before 31-12-2019. The argument of Ld. CIT-DRP that it was not possible for Ld. AO to predict that fate of Ld. TPO s order do not appeal to us since any order passed beyond prescribed statutory time limit, for whatever reasons, could not be held to be a valid order. In the result, the corporate additions made in the assessment order would not survive. The appeal stand allowed on legal grounds.
Issues Involved:
1. Disallowance u/s 14A 2. Disallowance u/s 35(2AB) 3. Disallowance u/s 2(24) r.w.s. 36(1)(va) 4. Validity of assessment order being time-barred Summary: Issue 1: Disallowance u/s 14A The judgment does not delve into the specifics of the disallowance u/s 14A as the primary focus is on the validity of the assessment order. Issue 2: Disallowance u/s 35(2AB) Similar to Issue 1, the judgment does not provide detailed discussion on the disallowance u/s 35(2AB) due to the overarching issue of the assessment order's validity. Issue 3: Disallowance u/s 2(24) r.w.s. 36(1)(va) The judgment does not specifically address the disallowance u/s 2(24) r.w.s. 36(1)(va) due to the primary focus on the time-barred nature of the assessment order. Issue 4: Validity of Assessment Order Being Time-Barred The core issue revolves around whether the assessment order dated 28-02-2020 is time-barred and thus null and void. The appellant argued that the assessment order is barred by limitation, referencing the timeline of the assessment proceedings and the relevant statutory provisions. The appellant's key argument was that the Transfer Pricing Officer (TPO) issued the order u/s 92CA(3) on 01-11-2019, which was beyond the statutory time limit, making the transfer pricing adjustment void-ab-initio. Consequently, the appellant ceased to be an eligible assessee u/s 144C(15)(b), and the machinery provisions of Section 144C would not apply. Therefore, the assessment should have been completed by 31-12-2019, but it was concluded on 28-02-2020, rendering it time-barred. The respondent countered that the AO had to wait for the TPO's determination of the Arm's Length Price (ALP) and could not foresee the TPO's order being challenged. The respondent cited case laws to argue that procedural irregularities should not invalidate the proceedings. The Tribunal, however, found the appellant's timeline undisputed and agreed that the transfer pricing proceedings were barred by limitation. Consequently, the assessment order dated 28-02-2020 was held to be null and void-ab-initio. The Tribunal dismissed the respondent's argument that the AO could not predict the TPO's order's fate, emphasizing that any order passed beyond the statutory time limit is invalid. Conclusion: The appeal was allowed on legal grounds, declaring the assessment order null and void-ab-initio due to being time-barred. The corporate additions made in the assessment order were rendered academic and did not survive. The judgment was pronounced on 3rd June, 2024.
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