2017 (11) TMI 1373 - AT - Income Tax

Assessment u/s 153A - Time limit for completion of assessments and reassessments - limitation period - date of limitation in terms of section 153 (2A) - whether the Assessing Officer was required to pass order within the limitation period as provided in section 153(2A) of the Act or in accordance with section 153(3) - Held that - First of all, according to us, some noting on the copy of order of the Ld. DRP, appended by the assessee in appeal set, is not an evidence which could establish the date of receipt of the order by the Assessing Officer. This noting is contrary to the fact mentioned by the Assessing Officer himself in the assessment order that the learned TPO passed the order on 31/05/2017 pursuant to the direction of the Ld. DRP. It is the Assessing Officer, who was required to send order of the Ld. DRP to the Ld. TPO for re-computing the arm s length price of the international transaction. Further, the Revenue has not brought on record any other evidence like dark register or copy of the order of the Ld. DRP bearing date and stamp of the office of the Ld. Assessing Officer, which could substantiate the claim of the Ld. CIT(DR) that the order of the Ld. DRP was received by the Assessing Officer on 05/06/2017. In absence of any such evidences, we are inclined to accept that the Assessing Officer received the order of the Ld. DRP before 31/05/2017 and therefore, he was required to pass the order before 30/06/2017. The impugned order passed by the Assessing Officer being beyond the period provided in section 144C(13) of the Act, and thus barred by limitation. Accordingly, it is liable to be set-aside. - Decided in favour of assessee.

Summary

Issues Involved:
1. Assessment of total income.
2. Transfer pricing adjustment.
3. Jurisdiction and validity of orders.
4. Determination of arm’s length price.
5. Charging of interest under Section 234B.
6. Initiation of penalty proceedings under Section 271(1)(c).

Issue-wise Detailed Analysis:

1. Assessment of Total Income:
The appellant contested the assessment of total income at ?39,65,69,131/- against the revised returned income of ?29,31,34,169/-. The Tribunal noted that the case had undergone multiple rounds of assessment and re-assessment, with the final assessment incorporating adjustments proposed by the Transfer Pricing Officer (TPO).

2. Transfer Pricing Adjustment:
The appellant challenged the jurisdiction of the Dispute Resolution Panel (DRP), Assessing Officer (AO), and TPO in enhancing the income by ?10,34,34,962 on account of transfer pricing adjustment related to engineering design services. The Tribunal found that the initial adjustment proposed by the TPO was ?20,86,13,660/-, which was later revised to ?11,12,31,042/- after the DRP's directions. In the second round, the final adjustment was ?10,34,34,962/-.

3. Jurisdiction and Validity of Orders:
The appellant argued that the subsequent orders passed by the AO/TPO after the initial assessment were illegal, null, and void. The Tribunal examined the sequence of events and orders, noting that the AO had issued multiple assessment orders and a corrigendum, which the appellant claimed violated the provisions of the Act. The Tribunal referred to the Delhi High Court’s decision in Pr. CIT Vs. City Financial, emphasizing that the assessment order under section 143(3) can only be rectified/cancelled/modified under specific provisions.

4. Determination of Arm’s Length Price:
The appellant contended that the DRP/AO/TPO erred in rejecting the appellant’s determination of the arm’s length price for engineering design services. The Tribunal noted that the AO included/excluded comparable companies on unreasonable comparability criteria and violated principles of natural justice and judicial discipline.

5. Charging of Interest under Section 234B:
The appellant contested the AO’s decision to charge interest under Section 234B of the Act. The Tribunal did not specifically address this issue in detail, focusing more on the procedural and jurisdictional aspects of the case.

6. Initiation of Penalty Proceedings under Section 271(1)(c):
The appellant argued against the initiation of penalty proceedings for furnishing inaccurate particulars and concealment of income. The Tribunal’s decision to set aside the assessment order rendered this issue academic, as the primary order itself was found to be time-barred.

Chronology and Limitation:
The Tribunal meticulously reviewed the timeline of actions taken in the second round of assessment proceedings, noting key dates such as the ITAT’s order on 08/03/2013, the AO’s draft assessment order on 11/08/2016, and the final assessment order on 27/07/2017. The Tribunal held that the AO was required to pass the assessment order within the limitation period specified under section 153(2A) of the Act, which had expired on 31/03/2016. Consequently, both the draft assessment order and the final assessment order were deemed to be passed beyond the permissible period, rendering them invalid.

Conclusion:
The Tribunal concluded that the assessment order was barred by limitation under section 153(2A) and section 144C(13) of the Act. The Tribunal set aside the impugned order on these grounds, rendering the other issues academic and not requiring further adjudication. The appeal was allowed in favor of the appellant.