2024 (10) TMI 1276 - HC - Income Tax

Validity of TP order due to lack of digital and physical signatures within the prescribed period - HELD THAT - TPO order was not digitally signed on 31.07.2021 or subsequently even on 02.08.2021 when the respondent addressed an email to the petitioner and that the same was subsequently physically / manually signed on 12.08.2021 and furnished to the petitioner along with an email on 13.08.2021 is clearly borne out from the material on record. In other words, despite recognising, confirming and affirming that the TPO order was not signed either physically or digitally on 31.07.2021, the 1st respondent signed the same physically only subsequent on 12.08.2021 and it is this manually / physically signed copy that was uploaded on the ITBA portal on 16.08.2021, thereby leading to the sole inference that as on the last date of limitation i.e., 31.07.2021, a legally valid TPO order had not been passed by the 1st respondent and as such, the impugned order deserves to be quashed. TPO order was not passed on the last date of limitation i.e., 31.07.2021 as contended by the respondents - TPO order, even if passed, had not been digitally or physically / manually signed by 1st respondent on the last date i.e., 31.07.2021, thereby rendering the same illegal, invalid and barred by limitation - TPO order had not been uploaded on the ITBA portal on 31.07.2021, the last date of limitation. 2nd respondent addressed an email on 02.08.2021 to the 1st respondent confirming that the TPO order had not been digitally signed and asked him to take necessary action, thereby also indicating that the TPO order had not been physically / manually signed even as on 02.08.2021. Petitioner received an email on 02.08.2021 enclosing a copy of the TPO order which was neither signed digitally nor manually / physically as on that day, thereby rendering the same invalid, illegal and barred by limitation. The petitioner received an email on 13.08.2021 enclosing a copy of the TPO order which was physically / manually signed only on 12.08.2021, much beyond the last date of limitation i.e., 31.07.2021. The undisputed fact that the 2nd respondent noticed that the TPO order was digitally unsigned on 31.07.2021 as evident from the email addressed by him to the 1st respondent on 02.08.2021 is sufficient to come to the conclusion that digital / physical / manual signature of the TPO on the order is an essential and mandatory requirement, failing which, the TPO order would be rendered invalid, illegal, and non-est in the eye of law. The physically / manually signed TPO order was also uploaded in the ITBA portal only on 16.08.2021, much beyond the last date of limitation i.e., 31.07.2021. The mere generation of DIN number in the TPO order is not sufficient to cure the various inherent defects, lacunae, omissions and deficiencies in the TPO order which was barred by limitation warranting interference by this Court in the present petition. The impugned TP Order at Annexure-C said to have been passed on 31.07.2021 and the consequent draft assessment order at Annexure-M dated 29.09.2021 are illegal and arbitrary and deserves to be quashed. WP allowed.

Summary

Issues:
Challenging transfer pricing order and draft assessment order for assessment year 2018-19 due to lack of digital and physical signatures within the prescribed period.

Analysis:
The petitioner, a private limited company, challenged an unsigned transfer pricing order and draft assessment order issued by the Transfer Pricing Officer (TPO) for the assessment year 2018-19. The petitioner contended that the TPO order was not digitally or physically signed on the last date of limitation, 31.07.2021, as evidenced by emails from the respondents. The respondents argued that a technical glitch caused the order to be generated without a digital signature but was later manually signed and provided to the petitioner. The court noted that the TPO order was not legally valid as it was not digitally signed as required by law. The physically signed order was uploaded after the limitation period, leading to the conclusion that the orders were illegal and non-est.

The court highlighted the sequence of events showing that the TPO order was not passed on the last date of limitation, was not digitally or physically signed on that date, and was uploaded after the deadline. The respondents' acknowledgment of the lack of digital signature on the order and subsequent manual signing indicated the order's invalidity. The court emphasized that digital and physical signatures were mandatory requirements for the TPO order to be valid. The mere generation of a Document Identification Number (DIN) was insufficient to rectify the order's defects. Consequently, the court deemed the transfer pricing order and draft assessment order as illegal and arbitrary, warranting their quashing.

In the final order, the court allowed the petition, quashing the impugned Transfer Pricing Order and draft assessment order for assessment year 2018-19.