2014 (12) TMI 879 - AT - Income Tax

Order passed by TPO within the period of limitation or not - Income of assessee increased by TPO - Held that - The power to pass assessment order other than block assessment in the case of search flows from section 143(3) - Section 153 provides for limitation for passing the assessment order - section 92CA(3A) enables the TPO to pass an order before 60 days prior to the time limit provided for passing the assessment order in 153 or 153B as the case may be - wherever the issue of adjustment of transfer pricing arises for consideration the TPO is expected to pass his order before 60 days prior to the period of limitation referred in 153 or 153B as the case may be - the income is assessable for AY 2009-2010 - three years period expired on 31.03.2013 - However the assessment order was admittedly passed on 28.3.2014 - Therefore it is beyond the period prescribed u/s 153. The AO do not want to disclose the actual date of receipt of the direction of the DRP - The Office of the ACIT Circle 1(1) Trivandrum who passed the assessment order is maintaining register for inward tapals as per the procedure prescribed by Government of India - It is not known how the AO could claim that the date of receipt of the direction of DRP is not recorded in his office - AO cannot take advantage of his negligence in not maintaining the register for inward tapal - when the Income-tax Act provides for one month period for passing the assessment order after receipt of the direction of the DRP it is a mandatory requirement for the AO to record the date of actual receipt of the direction from DRP - there is no question of any deemed receipt of direction of DRP by the AO in February 2014 especially when the order of the DRP is dated 29.11.2013 and the assessee received the same on 05.12.2013 thus when the direction of the DRP is dated 29.11.2013 it ought to have been received within two months period from the date of order - the direction of the DRP dated 29.11.2013 might have been received by the AO by the end of January 2014 thus the AO is expected to pass the assessment order by the end of February 2014 - the assessment order passed by the AO on 28.3.2014 is beyond the extended period of limitation provided in section 144C(13) - the impugned order of assessment dated 28.03.2014 cannot sustained and is set aside Decided in favour of assessee.

Summary

Issues:
1. Timeliness of assessment order in conformity with DRP direction.

Analysis:
The appeal before the Tribunal arose from a transfer pricing adjustment made by the Assessing Officer following the DRP's direction. The Counsel for the assessee argued that the assessment order was time-barred as per section 144C(13) since it was passed after the stipulated deadline. The DR, on the other hand, contended that the order was within the time limit specified in section 144C. The Tribunal examined the provisions of the Income-tax Act related to passing assessment orders and transfer pricing adjustments.

The Tribunal noted that section 153 of the Income-tax Act provides a three-year limitation for passing assessment orders from the end of the assessment year in which the income was first assessable. Additionally, section 144C(13) mandates the Assessing Officer to complete the assessment within one month from the end of the month in which the DRP's direction is received. The Tribunal emphasized the importance of harmoniously interpreting conflicting provisions of the Act.

Regarding the specific case, the Tribunal found that the assessment order passed on 28.03.2014 exceeded the time limit prescribed under section 153, which expired on 31.03.2013. The Tribunal then analyzed the content of section 144C(13) and highlighted that the Assessing Officer must adhere to the one-month deadline from the receipt of the DRP's direction. The Tribunal scrutinized the Assessing Officer's claim of not recording the date of receipt of the DRP's direction and emphasized the mandatory requirement to maintain proper records for timely assessment orders.

Ultimately, the Tribunal concluded that the assessment order dated 28.03.2014 was beyond the extended period of limitation provided in section 144C(13), rendering it invalid in the eyes of the law. Consequently, the Tribunal allowed the assessee's appeal and quashed the impugned assessment order passed by the Assessing Officer.

In summary, the Tribunal's detailed analysis focused on the timeliness of the assessment order in line with the DRP's direction, highlighting the statutory provisions governing assessment timelines and the necessity for strict adherence to procedural requirements to ensure the validity of assessment orders.