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2016 (1) TMI 167 - AT - Income TaxValidity of reassessment proceedings - maintainability of appeal - Held that - The appeal is maintainable before this tribunal against the order passed by the Learned AO u/s 143(3) read with section 147 read with section 144C pursuant to the directions of the DRP. The time limit for completion of this reassessment is within one year from the end of the financial year in which the notice u/s 148 was issued. The Learned AO did not seek to refer the case to Learned TPO u/s 92CA(1) of the Act in the reassessment proceedings. Hence he is not entitled for extended one year time limit for completion of reassessment. Hence the reassessment ought to have been completed by 31.3.2015. In the instant case, the Learned AO had completed the reassessment proceedings on 6.4.2015 which is beyond the time limit for completion of assessment prescribed in section 153 of the Act and accordingly the same is barred by limitation by 6 days. - Decided in favour of assessee.
Issues Involved:
1. Validity of reassessment based on the reference to the Transfer Pricing Officer (TPO). 2. Maintainability of the appeal before the tribunal under Section 253(1)(d) of the Act. 3. Reassessment barred by limitation. Detailed Analysis: 1. Validity of Reassessment Based on Reference to TPO: The primary issue is whether the reassessment based on the TPO's order is valid. The assessee filed its original return for the assessment year 2010-11 on 25.09.2010, declaring a loss, which was later revised. The assessment was initially completed under Section 143(1) of the Act, and no notice under Section 143(2) was issued, leading the assessee to believe the assessment was complete. The case was referred to the TPO for determining the Arm's Length Price (ALP) of international transactions, and an adjustment of Rs. 7,51,20,484/- was made. The AO, realizing no proceedings were pending due to the lack of a notice under Section 143(2), reopened the assessment by issuing a notice under Section 148. The reassessment was based on the TPO's earlier order without a fresh reference. The tribunal found that the reference to the TPO was invalid since the case was not selected for scrutiny, a prerequisite for such a reference as per Section 92CA and CBDT Instruction No. 3 of 2003. Consequently, the TPO's order was declared void ab initio and illegal. The tribunal cited the CBDT Circular No. 549 and decisions from the Pune Tribunal and Karnataka High Court supporting this view. Thus, the reassessment based on the TPO's order was deemed void and bad in law. 2. Maintainability of the Appeal Before Tribunal: The assessee argued that it was not an "eligible assessee" and thus the DRP had no jurisdiction. The DRP dismissed the objections, stating only an eligible assessee could file objections under Section 144C(2). However, the tribunal noted that the AO had accepted the assessee as an eligible assessee by referring the case to the TPO and making an adjustment based on the TPO's order. The tribunal held that the DRP should have addressed the facts and validity of the AO's actions instead of dismissing the objections outright. The tribunal distinguished the case from the Chennai Tribunal decision cited by the revenue, which dealt with a different issue of filing objections beyond the statutory time limit. Thus, the tribunal found the appeal maintainable. 3. Reassessment Barred by Limitation: The assessee contended that the reassessment was barred by limitation, as the notice under Section 148 was issued on 26.03.2014, and the reassessment should have been completed by 31.03.2015. The reassessment was completed on 06.04.2015, beyond the time limit. However, since the assessee did not raise a specific ground on this issue or file an additional ground of appeal, the tribunal did not address this aspect. Final Conclusion: The tribunal allowed the appeal, declaring the reassessment order void ab initio and bad in law due to the invalid reference to the TPO. Consequently, other grounds became infructuous, and no decision was given on the merits of the case. The appeal of the assessee was allowed. Pronouncement: The order was pronounced in open court on 15/10/2015.
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