2023 (8) TMI 588 - AT - Income Tax

Validity of assessment passed u/s 144C - Period of limitation - Reference to TPO under section 92CA was made beyond permissible period as prescribed u/s 153(1) - HELD THAT - In this case, admittedly, the learned Transfer Pricing Officer has passed the order u/s 92CA(3) of the Act on 1st November, 2019. Therefore, the order passed by the TPO is beyond the time limit prescribed u/s 92CA(3A) i.e. delayed by one day. Therefore, the order of the TPO is illegal as it is barred by limitation. Thus, in the case of the assessee there is no variation as a consequence of transfer pricing order. The assessee is also a resident company. Therefore, according to section 144C(15)(b) of the Act, assessee is not an eligible assessee and therefore, extended the time limit of 12 months as prescribed u/s 153(4) of the Act is also not available to the learned Assessing Officer. Therefore, the assessment order should have been passed on or before 31st December, 2018, which is passed on 29th April, 2021, hence, final assessment order passed is barred by limitation and hence, quashed. See cases Virtusa Consultancy Pvt. Ltd. 2022 (7) TMI 497 - MADRAS HIGH COURT and Atos India Pvt. Ltd. 2023 (2) TMI 1112 - ITAT MUMBAI - Additional ground raised by the assessee is allowed.

Summary

Issues involved: Determination of Arm's Length Price of international transactions, validity of assessment order based on time limit prescribed under the Income-tax Act, 1961.

Summary:
The Appellate Tribunal ITAT Mumbai heard the appeal filed by an assessee against the assessment order passed by the National e-assessment Centre, Delhi for the assessment year 2016-17. The assessment involved the determination of Arm's Length Price of international transactions. The assessee raised an additional ground challenging the validity of the assessment order, contending that it was beyond the time limit prescribed under Section 153 of the Act.

Upon consideration, the Tribunal admitted the additional ground raised by the assessee, as it pertained to a jurisdictional issue that could be raised at any time. The assessee argued that the order passed by the Transfer Pricing Officer was beyond the due date, rendering the assessment order barred by limitation. The Departmental Representative opposed this argument, claiming the Transfer Pricing Officer's order was within the time limit.

After careful consideration and verification of dates, the Tribunal found that the Transfer Pricing Officer's order was indeed passed one day beyond the prescribed time limit. As a result, the assessment order was deemed to be barred by limitation. Citing relevant judicial precedents, including a decision of the Hon'ble Madras High Court, the Tribunal held that the assessment order was quashed due to being time-barred.

As a consequence of this finding, the Tribunal allowed the assessee's appeal, as all other grounds were deemed unnecessary to adjudicate. The final assessment order passed by the Assessing Officer was held to be barred by limitation and was therefore quashed.

The decision was pronounced in the open court on 21.07.2023.