2024 (1) TMI 493 - AT - Income Tax

Validity of assessment order passed u/s 144C as barred by limitation - TP adjustment u/s 92CA - HELD THAT - According to the provisions of section 144C (13) of the act the AO shall upon the receipt of the direction issued under subsection (5) in conformity with such direction complete notwithstanding anything to the contrary contained in section 153 the assessment without providing any further opportunity by of being heard to the assessee within one month from the end of the month in which such directions are received. According to rule 11 of The Income Tax (Dispute Resolution Panel) Rules, 2009 the panel shall after the directions issued, communicate the same to the eligible assessee and to the assessing officer. The order is communicated to the assessee on 14 June 2022 at 4.10 p.m. digitally signed by one of the members of the learned dispute resolution panel. According to rule 11 of Dispute Resolution Scheme 2022 dated 5/4/2022 the delivery of such direction would be by placing an authenticated copy of such order in the registered account of the assessee or by sending an authenticated copy to the registered email address of the assessee or any other person. It is not the case of the revenue that the direction is not been received by AO on or before 30 June 2022, if not on 14 June 2022. Therefore, apparently the assessment order passed on 1/8/2022 is barred by limitation and hence quashed. Ground number 1 of the appeal of the assessee is allowed.

Summary

Issues:
The issues involved in this judgment are the assessment order passed under section 143 (3) read with section 144C (3) read with section 144B of The Income Tax Act, 1961, transfer pricing adjustment under section 92CA, and the grounds of appeal raised by the assessee.

Assessment Order and Transfer Pricing Adjustment:
The appeal was filed against the assessment order passed by the Income Tax Department for the assessment year 2018-19, where the return filed by the assessee declaring a loss was assessed at a higher amount due to a transfer pricing adjustment under section 92CA. The assessee provided marketing support services to its associated enterprises, and the transfer pricing adjustment was proposed by the Transfer Pricing Officer and confirmed by the Dispute Resolution Panel, resulting in an upward adjustment to the total income of the appellant.

Grounds of Appeal:
The assessee raised multiple grounds of appeal, including challenging the time limitation of the assessment order, disputing the transfer pricing adjustments made by the Transfer Pricing Officer and the Dispute Resolution Panel, objecting to the selection of comparable companies for benchmarking, and highlighting errors in the computation of margins and operating revenue. The grounds of appeal also addressed the consistency of the benchmarking approach adopted by the appellant in previous assessment years.

Time Limitation and Quashing of Assessment Order:
The authorized representative argued that the assessment order passed on 1 August 2022 was barred by limitation as it was not issued within the prescribed timeframe after receiving directions from the Dispute Resolution Panel. The representative contended that the order should have been passed by 31 July 2022 but was signed on 2 August 2022. The Tribunal found that the assessment order was indeed passed beyond the permissible time limit, as per the provisions of section 144C (13) of the act, and therefore quashed the order.

Conclusion:
The Tribunal allowed the appeal of the assessee based on the finding that the assessment order was passed beyond the statutory time limit, rendering it invalid. As a result, the adjudication on other grounds raised in the appeal was not required, and the appeal was allowed in favor of the assessee.