2024 (12) TMI 775 - HC - Income Tax

Validity of assessment proceedings as barred by limitation - HELD THAT - There can be no dispute regarding the date of receipt of the order passed by the learned ITAT. Concededly, further proceedings by the TPO or by the AO pursuant to the remand by the learned ITAT are now barred as the time stipulated for passing an order under Section 153 of the Act has since expired. Consequently, the petitioner s return is required to be considered as accepted.

Issues Involved:

1. Whether the assessment proceedings for AY 2012-13 are time-barred.
2. Entitlement of the petitioner to a refund of INR 45,51,85,614/- with interest under Section 244A of the Income Tax Act, 1961.
3. Validity of the additions made by the Assessing Officer in the assessment order dated 03.10.2017.
4. Compliance with the statutory time limits under Section 153 of the Income Tax Act for passing orders post-remand by the ITAT.

Issue-wise Detailed Analysis:

1. Time-barred Assessment Proceedings:

The petitioner argued that the assessment proceedings for AY 2012-13 were time-barred, as no order was passed pursuant to the remand by the ITAT within the statutory time limit. The ITAT had remanded the transfer pricing issue to the Transfer Pricing Officer (TPO) for fresh assessment on 24.02.2021. However, no subsequent order was issued by the TPO or the Assessing Officer (AO) within the period specified under Section 153 of the Income Tax Act. The court observed that the timeline for passing an order under Section 153(5) commenced from the date of the ITAT order, and since no order was passed within this timeframe, the proceedings were indeed time-barred.

2. Refund Entitlement:

The petitioner sought a refund of INR 45,51,85,614/- along with statutory interest, which was adjusted against the refund due to the petitioner. The court acknowledged that since the assessment proceedings were time-barred, the petitioner's return should be considered accepted, entitling them to the refund claimed. The court directed the respondent to process the refund as the proceedings had exceeded the statutory time limit for completion.

3. Validity of Additions Made by the AO:

The assessment order dated 03.10.2017 included several additions: transfer pricing adjustments, disallowance under Section 36(1)(va) for late deposit of employee PF contributions, disallowance of advertisement expenses, provision for customer claims, and advances written off. The ITAT had remanded the transfer pricing issue for fresh assessment and deleted the disallowances related to advertisement expenses, customer claims, and advances written off, subject to verification. Since no further order was passed post-remand, the court determined that the additions could not be sustained, and the original return filed by the petitioner should be accepted.

4. Compliance with Statutory Time Limits:

The court examined the statutory provisions under Section 153 of the Income Tax Act, which prescribes time limits for passing orders after a remand by the ITAT. The court noted that the ITAT's order was pronounced in open court on 24.02.2021, and the timeline for passing an order under Section 153(5) began from this date. The court emphasized that the period of limitation is triggered when the order is pronounced and received by the department's representative, and not when it is received by a specific officer. Since no order was passed within the stipulated period, the court concluded that the proceedings were time-barred, and the petitioner's return should be accepted as filed.

Conclusion:

The court allowed the petition, declaring the assessment proceedings for AY 2012-13 as time-barred and directed the respondent to process the refund claimed by the petitioner. The court underscored the importance of adhering to statutory time limits and the consequences of failing to pass orders within such periods, resulting in the acceptance of the petitioner's return as filed.

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