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TMI Blog2017 (11) TMI 1373X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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. - ITA No. 6131/Del/2017 - - - Dated:- 23-11-2017 - SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : Sh. Himanshu Sinha, Adv. Ms. Vrinda Tulshan, Adv. For The Respondent : Sh. H.K. Choudhary, CIT(DR) ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 27/07/2017 passed by the Additional Commissioner of Income Tax, Special Range-2, New Delhi (i.e. the Assessing officer who finally passed the order) in terms of section 143(3) read with section 144C(13) of the Income-tax Act, 1961 (in short the Act ), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and circumstances of the case and in law, the AO has erred in charging interest under Sections 234B of the Act. 6. That on the facts and circumstances of the case and in law, the AO erred in initiating penalty proceedings under Section 271(1 )(c) of the Act for furnishing of inaccurate particulars and concealment of income. Each of the above grounds are independent and without prejudice to the other grounds of appeal preferred by the Appellant. 2. The briefly stated facts of the case are that the assessee is before the Tribunal in second round of proceedings. During the relevant period the assessee company, was engaged in the business of export of customized electronic data in the form of design, drawing, calculations and providing technical consultancy relating to engineering services. The assessee entered into international transactions with its associated enterprises (AEs). In first round of assessment proceedings, the Ld. Transfer Pricing Officer (TPO) proposed an adjustment of ₹ 20,86,13,660/- to the international transaction. The assessee filed objections against the draft assessment order before the Ld. DRP, who directed to include one comparable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable and indefinite period of limitation is available under section 153(3)(ii) of the Act by erroneously disregarding that section 153(3) is subject to the provisions of section 153(2A) of the Act. 3.2 In support, the learned counsel placed reliance on the decisions of the Hon ble Delhi High Court in the case of Nokia India (P) Ltd Vs. DCIT (2017) 85 taxmann.com 291 (Delhi) and Commissioner of Income Tax Vs. Bhan Textile (P) Ltd (2008) 300 ITR 176 (Delhi). 3.3 Secondly, he submitted that impugned assessment order has been passed on 27/07/2017 in pursuance of the ld. DRP direction dated 26/05/2017. The impugned order has been passed after 27 days of the expiry of the period of limitation laid down in section 144C(13) of the Act wherein it has been provided that AO shall complete the assessment within one month from the end of the month in which the direction of the ld. DRP are received. It is evident that the ld. DRP s directions were received in the month of May, 2017 since the ld. TPO passed the order giving effect vide letter dated 31/05/2017 and accordingly the time limit for passing final assessment order u/s 144C(13) of the Act expired on 30/06/2017. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(DR) submitted that the Tribunal restored the matter to the AO/TPO with limited direction and therefore, in terms of section 153(3) of the Act, no limitation period was applicable for passing assessment in compliance of said directions of the Tribunal. He referred to the direction of the Tribunal in order dated 08/03/2013. 4.2 In respect of the issue that impugned order has been passed beyond the period of one month from the receipt of the order of the Ld. DRP, the Ld. CIT(DR) referred to the noting on the copy of the order of the Ld. DRP, available on page 45 of the appeal set and submitted that order of the Ld. DRP was received by the office superintendent of the Assessing Officer on 05/06/2017 and, therefore, limitation period starts from 05/06/2017. According to the Ld. CIT(DR), the impugned assessment order was passed within limitation period of one month from the end of the month in which the order of the Ld. DRP was received. 4.3 On the issue of multiple assessment order passed, the Ld. CIT(DR) submitted that it was factually incorrect proposition. He submitted that the appeal effect order dated 09/12/2013 passed by the Assessing Officer was merely to reduce the outst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11/08/2016 The Ld. AO passed order under section 143(3) /254 of the Act incorporating the adjustment proposed by the TPO in order dated 29/01/2016. 5. 07/09/2016 The AO cancelled the order dated 11/08/2016 and a draft assessment order under section 144C/254/143(3)/144C(13) was passed making addition of ₹ 11, 12, 31, 042/-as proposed by the learned TPO 6. 13/10/2016 assessee filed objections before the DRP 7. 26/05/2017 the DRP issued directions to the Assessing Officer/TPO for recompute the length price of the international transaction 8. 31/05/2017 The learned TPO recomputed the arm s length price of the international transaction at ₹ 10, 34, 34, 962/- 9. 27/07/2017 the Ld. Assessing Officer passed the final assessment order after incorporating the recomputed arm s length price. 5.2 First, we take up the objection of the assessee related to limitation period of passi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment in pursuance of order passed by Appellate/Revisional Authority setting aside or cancelling an assessment, may be made at any time before the expiry of the prescribed time limit under Section 153(2A). Section 153(3)(ii) authorizes the completion of assessment at any time if the purpose is to give an effect to the direction or finding contained in the ITAT order. The question that arises for consideration is whether fresh assessment which was required to be made in pursuance to the order of I.T.A.T. as aforesaid ought to have been made within the period prescribed under Section 1S3(2A) or under Section 153(3)(ii). The Hon'ble Bombay High Court in the case of C.I.T. v. Mrs. Ratanbai N.K. Dubhash reported in (198) 230 ITR 495 (Bombay) has explained the scope of setting aside the assessment , cancellation of assessment and annulment of assessment and the time limit for making fresh assessment in pursuance to the order setting aside the assessment. The Court has held thus:- In an appeal against on order of assessment, the first appellate authority under Section 251 of the Act has the power to affirm, reduce, enhance or annual the assessment or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 143 of the Act. The appellate authority may limit the scope of enquiry by the Assessing Officer to any specified aspect or issue. Thus, the distinction is fine in the application of Section 153(2A) and Section 153(3)(ii). If there is a case of mere setting aside the assessment order and allowing the Assessing Officer to make fresh assessment then limitation prescribed under Section 153(2A) would apply and where the assessment or reassessment re-computation is to be made in pursuance of finding or direction made in the Appellate/Revisional order then provisions of Section 153(3)(ii) would apply and such assessment, reassessment or re-computation could be made at any time. The perusal of the order dated 08.03.2013 passed by the ITAT Delhi Bench as extracted above would show that there was specific direction to the A.O. that he should follow certain specific directions of assessment and frame the order in a specific manner. The directions given by the I.T.A.T. as aforesaid clearly fail with n the purview of Section 153{3)(ii) of the Act and thus the assessment/ reassessment could be completed at any time. it may be reiterated that provisions of Section (2A) of Section 153 en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner or Chief Commissioner or Principal Commissioner of Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner: Provided that where the order under section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner of Commissioner on or after the 1st day of April, 1999 but before the 1st day of April, 2000, such an order of fresh assessment may be made at any time up to the 31st day of March, 2002 :] [ Provided further that where the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner of Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Commissioner on or after the 1st day of April, 2005, the provisions of this sub-section shall have effect as if for the words one year , the words ni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.6 We find that in the instant case, the order of the Tribunal has been passed after 01/04/2010, the last proviso to section 153(2A) is relevant to the facts of the case in hand. In view of the main section 153(2A) read with this proviso, the Revenue is contending that if entire assessment order is set aside for making the fresh assessment order, then it would be hit by section 153(2A) of the Act and if an issue, out of multiple issues in the appeals is set aside then it would be covered by the section 153(3) of the Act. 5.7 This controversy of application of limitation provided in section 153(2A) versus section 153(3) has been decided by the Hon ble Delhi High Court in the case of Nokia India Private Limited (supra). The Hon ble Court has held that section 153(2A) would apply even when one of the issues, out of multiple issues, has been remanded to the AO for afresh determination. The relevant finding of the decision of the Hon ble High Court is reproduced as under: 23. The Court is also unable to agree with the contention that unless the entire assessment order is wholly set aside, the time limit for passing the fresh order under Section 153 (2A) would not be at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decisions of the Madhya Pradesh High Court in Gulabchand Motilal v. CIT [19881 174 ITR 117/IT 9871 34 Taxman 456 (MP), the High Court of Punjab and Haryana in Bharti Engg. Corpn. v. Union of India [20081 298 ITR 400/[20061 154 Taxman 487 fPuni Har.) and Deep Chand Jain v. ITO [19841 145 ITR 676/[ 19831 15 Taxman 522 (Punj. Har.), and the Karnataka High Court in CIT v. Paul Noel Rodrigues [20151 231 Taxman 811/57 taxmann.com 12 (Kar.), all hold likewise. The Kerala High Court in R.P. Patel v. ACIT [2015] 5 KHC 370 (Ker.) held that Section 15L (2A) of the Act would apply even where more than one issue is involved i.e. even where one of the issues has been remanded to the AO for a fresh determination. Conclusion 34. For all the aforementioned reasons, the Court holds that, in the present case, the assessment proceedings had to necessarily be completed by the AO within the time limit specified in Section 153 (2A) of the Act. Inasmuch as the AO failed to do so. the impugned notice dated 14th September 2015 issued by the AO and all proceedings consequential thereto including the order dated 2nd December 2015 passed by the AO are hereby set aside. 5.8 On exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order, which itself read that the Ld. TPO passed order on 31/05/2017 in pursuant to the direction of the Ld. DRP. The relevant paragraph of the impugned order is reproduced as under: 11.1 Pursuant to the directions of the Hon ble DRP given vide its order dated 26.05.2017, a letter was sent to Transfer Pricing Officer for re-computation of the Arm's Length Price in this case. The response from DC1T, TPO dated 31.05.2017vide F. No. DC1T/TPO-1(1)(2)/2017-18 /58 with the following observations:- . 6.2 Thus, according to the Ld. counsel, the order of Ld. DRP must have been received by the Assessing Officer prior to 31/05/2017 and if the period of one month is counted from 31/05/2017, the final assessment order should have been passed before 30/06/2017, whereas it has been passed on 27/7/2017, thus, it was barred by limitation. 6.3 On the other hand, Ld. CIT(DR) contended that according to the noting on the order of Ld. DRP filed by the assessee in appeal set, this order was received by the office of the Assessing Officer on 05/06/2017 and therefore, it was well within the limitation period. 6.4 We have heard the rival submission of the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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