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TMI Blog2021 (9) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... barred by limitation and therefore it is null in the eyes of law. DR s contention that section 292BB of the Act, comes to the rescue of the AO in such events is concerned, we note that the provisions of Section 292BB only cures any defect in the service of any notice issued under the provision of this Act and does not deal with orders passed beyond the period of limitation prescribed under the Act. In the present case the assessee has objected to the validity of the order impugned on the premise that it was barred by limitation in terms of Section 153 of the Act. The facts of the case are thus altogether different and the aforesaid provision relied upon by the Ld. DR has no relevance whatsoever. We thus uphold the order of the Ld. CIT(A) on the legal issue and confirm the action of the Ld CIT(A) holding that the AO did not had the jurisdiction to frame assessment after the limitation period has set in and therefore the assessment order passed by AO on 28.12.2018 was barred by limitation and therefore it is null in the eyes of law. and accordingly dismiss the appeal of the Revenue. Revision u/s 263 - Pr. CIT has interdicted with the assessment order passed by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merit of the addition made by the AO vide assessment order dated 28.12.2018. 3. Further the Ld. AR submitted that ITA No. 112/Kol/2021 has been preferred by the assessee against the order of the Ld. Pr. CIT passed u/s. 263 of the Act dated 23.03.2021 for AY 2012-13 wherein the Ld. Pr. CIT has interdicted the assessment order passed by the AO u/s. 143(3) read with section 144C of the Act dated 28.12.2018. According to the Ld. AR, while adjudicating these appeals, first of all if the Revenue appeal i.e. ITA No. 2652/Kol/2019 is decided and in case if the legal issue which has been assailed against the action of the Ld. CIT(A) who has held that the AO s order dated 28.12.2018 is bad in law since has been passed beyond limitation and so is null in the eyes of law, consequently then, the Ld. Pr. CIT s impugned action u/s. 263 of the Act dated 23.03.2021 against the non est order of AO dated 28.12.2018 passed u/s. 143(3) r.w.s. 144C of the Act would be null in the eyes of law. Therefore, the Ld. AR requested the Bench to hear first the legal issue upheld by the Ld. CIT(A) in favour of the assessee i.e. the Revenue Appeal numbered as ITA No. 2652/Kol/2019 to be first adjudicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any to furnish several details/information in connection with transfer pricing proceedings for the relevant AY 2012-13. Before the TPO, the assessee again objected to the reference made u/s 92CA of the Act on the same ground that it did not had carried out any international transactions with its foreign branches within the meaning of Section 92B of the Act. The Ld. AR of the assessee pointed out that, the TPO without disposing off the objections raised against the exercise of jurisdiction and without even issuing any show cause notice unilaterally proposed transfer pricing adjustment of ₹ 75,70,10,758/-to the total income of the assessee in his order dated 29.01.2016 passed u/s 92CA(3) of the Act. Consequent thereto, the AO served the order u/s 144C/143(3) of the Act dated 10.03.2016 on the assessee. Aggrieved by the aforesaid order of the TPO as well as the AO, the assessee preferred a Writ Petition No. 214 of 2016 before the Hon ble Calcutta High Court, wherein the assessee challenged the notice dated 16.04.2015 issued by the TPO exercising jurisdiction u/s 92CA of the Act and the consequent orders passed by AO u/s 92CA(3) dated 29.01.2016 and u/s 143(3)/144C dated 10.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peaking order so as to comply with the principles of natural justice. In the facts of the present case, although the circular was not in vogue at the material point of time, the applicability of the principles of natural justice and the requirement of the assessing officer deciding on a jurisdictional fact cannot be denied. The section as it stands requires the assessing officer to take a decision on a jurisdictional fact. That by itself implies that, the assessing officer while taking a decision on such jurisdictional fact, ought to afford a reasonable opportunity of hearing to the assessee concerned and thereafter pass a speaking order. The assessing officer not having afforded any opportunity of hearing to the first petitioner on the jurisdictional issue raised, it ought not to have transferred the matter to the TPO. The assessing officer has acted in breach of the principles of natural justice in doing so. The assumption of jurisdiction by the TPO and subsequently the ultimate reference to the dispute resolution panel are therefore at fault, in the facts of the present case In the facts of the present case, interest of justice would be subserved by setting aside the writin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.2018 to be bad in law and thus ab initio void. The Ld. CIT(A) also found merit in the assessee s contention that it did not have any international transactions with its foreign branches and therefore the reference made by the AO u/s 92CA(2) of the Act was held to be bad in law and in gross violation of the Board Instruction No. 3 of 2016 dated 10.03.2016. The Ld. CIT(A) accordingly held the consequent orders dated 31.10.2018 28.12.2018 passed by the TPO and AO respectively to be ab initio void. The Ld. CIT(A) further held that the TPO exceeded his jurisdiction u/s 92CA of the Act by assessing and verifying the profits earned by foreign branches despite that it did not qualify as an international transaction u/s 92B of the Act. The Ld. CIT(A) also took note of the fact that the Revenue in the earlier AYs 2007-08 to 2011-12 as well as succeeding AYs 2013-14 to 2015-16 had accepted that the assessee did not have any international transactions with the foreign branches and accordingly no transfer pricing adjustment was made in this regard. Hence, in absence of change in the factual matrix and following the principle of consistency, the Ld. CIT(A) held that there was no reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not ipso facto warrant transfer pricing scrutiny. The AO however without disposing off the objections raised by the appellant straightaway referred it's case for transfer pricing scrutiny without even spelling out the specific international transaction which in his opinion warranted transfer pricing scrutiny. Before the TPO also the appellant objected to the reference made by the AO u/s 92CA. The TPO however without giving any show cause or opportunity of hearing framed the order u/s 92CA(3) proposing adjustment to the extent of ₹ 75,70,10,548/- out of the profits of the foreign branches which were excluded from the computation of total income in terms of the DTAA between India and Saudi Arabia UAE. Aggrieved by such arbitrary and high handec1 action of the Revenue authorities the appellant preferred a writ petition before the Hon'ble Calcutta High Court. One of the plea taken before the Hon'ble High Court was that both the AO as well as the TPO acted in violation of principles of natural justice. It was contended that the AO failed to dispose-off the objections raised to the proposed reference u/s 92CA which made the said reference to TPO bad in the eyes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The certified true copy of the order of the Hon'ble Calcutta High Nigh Court was served on the Department on 25.08.2017, evidence thereof is enclosed at Page 134-138 of the paper book. Subsequent to receipt of the said order, the AO issued fresh show cause dated 06.10.2017 requiring the assessee to explain as to why the case should not be referred for transfer pricing scrutiny. Vide order dated 20.11.2017 the AO rejected the objections placed by the appellant and referred the matters to the TPO-II, Kolkata. Thereafter the TPO framed the order u/s 92CA(3) on 31.10.2018 proposing adjustment to the extent of ₹ 4,57,20,215/- out of the profits of the foreign branches which were excluded from the total income chargeable to tax in India. The draft assessment order in terms of Section 144C was passed by the AO on 20.12.2018 and thereafter the final assessment order was passed on 28.12.2018. With reference to the above facts, attention is now invited to the provisions of Section 153(6) of the Income-tax Act, 1961 which prescribes the limitation period for passing of assessment order pursuant to any order passed by the Hon ble High Court other than by way of appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are dealt together. In Ground No.1 the appellant has objected to the validity of the Ld. AO's order dated 28.12.2018 on the ground of being barred by limitation. From the facts of the case and the sequence of events as narrated in the submissions of the Ld. ARs, it is apparent that the draft order u/s 144C was originally passed by the Dy.CIT, CC-l(3), Kolkata on 10.03.2016. Being aggrieved by the said order, the assessee, besides filing objections before the hon'ble DRP, also filed a writ petition before the Hon'ble Calcutta High Court challenging the reference made u/s 92CA(2) by the Ld. AO without giving an opportunity of hearing as well as the manner in which the Ld. TPO framed the order u/s 92CA(3) in complete disregard of the provisions of Chapter X and principles of natural justice. The said writ petition was disposed by the Hon'ble Calcutta High Court in WP No. 214 or 2016 dated 11 .08.2017. In it's judgment the Hon'ble High Court set aside the assumption of jurisdiction made by the Ld. TPO and the Ld. AO was directed to proceed on the basis of show cause issued by him dated 1l.03.2015 and the assessee's reply dated 24.03.2015 and in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of six months to give effect to the order : Provided further that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 shall be made within the time specified in sub-section (3). (6) Nothing contained in sub-sections (1) and (2) shall apply to the following classes of assessments, reassessments and re-computation which may, subject to the provisions of sub-sections (3) and (5), be completed- (i) where the assessment, reassessment or re-computation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, section 254, section 260, section 262, section 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, on or before the expiry of twelve months fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs otherwise than by way of appeal or reference under this Act. In such case order of assessment, reassessment or re-computation is required to be made on or before the expiry of twelve months from the end of the month in which such order is received or passed by the Commissioner, as the case may be. From the material on record, it is evident that the order impugned in this appeal was passed with a view to give effect to the directions and the findings contained in the judgment of the Hon'ble Calcutta High Court passed in WP No.214 of 2016 dated 24,08.2017, The Ld. AR of the appellant filed evidence which showed that the said order of the Hon'ble Calcutta High Court was communicated to the Department on 29.082017. Upon receipt of the order, proceedings were initiated by the Ld. AO on 06.10.2017 for giving effect to the directions of the Hon'ble Calcutta High Court. These facts therefore prove beyond doubt that by October 2017, the Revenue was certainly aware of the order of the Hon'ble Calcutta High Court requiring the Ld AO to re-compute the income in terms of the directions contained therein, The Ld. AO was therefore legally bound to pass the order within the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Order passed by the Hon ble Calcutta HC in WP No. 214 of 2016 11.08.2017 8. Intimation given to the AO regarding the above WP order on 29.08.2017 9. Order passed by DRP disposing off appeal 26.09.2017 10. Show Cause Notice issued by the AO on 06.10.2017 11. Order passed by the AO disposing off objections on 20.11.2017 12. Transfer Pricing Order passed u/s. 92CA(3) on 30.10.2018 13. Notice u/s. 142(1) issued by the AO on 26.11.2018 14. Order passed u/s. 14393) by the AO on 28.12.2018 13. Before we controvert to the legal issue held in favour of the assessee by the Ld. CIT(A), let us look into section 153 which reads as under: Time limit for completion of assessment, reassessment and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce under sub-section (1) of section 92CA is made during the course of the proceeding for the assessment or reassessment, the period available for completion of assessment or reassessment, as the case may be, under the said sub-sections (1), (2) and (3) shall be extended by twelve months. (5) Where effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 is to be given by the Assessing Officer, wholly or partly, otherwise than by making a fresh assessment or reassessment, such effect shall be given within a period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 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 Commissioner or Commissioner : Provided that where it is not possible for the Assessing Officer to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any assessment year, which stands revived under sub-section (2) of section 153A, shall be made within a period of one year from the end of the month of such revival or within the period specified in this section or sub-section (1) of section 153B, whichever is later. (9) The provisions of this section as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment, reassessment or Re-computation made before the 1st day of June, 2016: 86a[Provided that where a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 has been issued prior to the 1st day of June, 2016 and the assessment or reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of this section as it stood immediately before its substitution by the Finance Act, 2016 (28 of 2016).] Explanation 1.-For the purposes of this section, in computing the period of limitation- (i) the time taken in reopening the whole or any part of the proceeding or in giving an opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder sub-section (1) of section 245Q and ending with the date on which the order rejecting the application is received by the Principal Commissioner or Commissioner under sub-section (3) of section 245R; or (ix) the period commencing from the date on which an application is made before the Authority for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Principal Commissioner or Commissioner under sub-section (7) of section 245R; or (x) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or (xi) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub-section (1) of section 144BA and ending on the date on which a dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of such income on such other person shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, if such other person was given an opportunity of being heard before the said order was passed.] 14. We note that section 153 of the Act contains the statutory time limits prescribed by the Parliament for the completion of assessment, reassessment and re-computation. It is noted that the provisions of Section 153 of the Act was amended by the Finance Act 2016. The earlier time limits for completion of assessment, reassessment or computation were substituted. The time limits prescribed there-under are as follows: Clause (1) of Section 153 provides that the time limit for completion of assessment under Section 143(3)/144 of the Act is twenty-one months from the end of the relevant assessment year. The words twenty-one months was substituted by the words eighteen months from 01.04.2018 and again substituted for the words twelve months and nine months w.e.f from 01.04.2019 and 01.04.2021 respectively. Clause (2) of Section 153 of the Act states th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (b) any other person, in consequence of or to give effect to any finding or direction contained in, (i) order u/s 250 passed by CIT(A) or (ii) order u/s 254 passed by Tribunal or (iii) order u/s 260 passed by High Court or (iv) order u/s 262 passed by Supreme Court or (v) Revision order u/s 263/264 passed by Pr.CIT or (vi) in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, then such order has to be passed before the expiry of twelve months from the end of the month in which such order is received or passed by the CIT. Sub-clause (ii) of Clause (6) of Section 153 of the Act states that where in case of a Firm, an assessment is to be made on its partner in consequence of an assessment made on the firm u/s 147 of the Act then, such order has to be passed within a period of twelve months from the end of the month in which the assessment order in case of the firm is passed. Clause (7) of Section 153 of the Act states that where the effect to any order or finding or direction under clauses (5) or (6) is to be given in respect of orders received or passed before 01.06.2016, then such order has to be passed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s received by CIT or the order u/s 263/264 is passed by CIT (6)(i) Any assessment, re-assessment or re-computation either of the assessee or any person in pursuance to finding or direction contained in order u/s 250/254/260/ 262/263/264 or an order of any Court in a proceeding other than appeal or reference under this Act [subject to provisions of sub-section (3) (5)] 12 months from the end of the month in which order of Tribunal u/s 254 or order of High Court u/s 260 or order of Supreme Court u/s 262 or any order of the Court in a proceeding other than appeal or reference is received by CIT or the order u/s 263/264 is passed by CIT (6)(ii) Assessment of partner in consequence to an order of assessment made on firm u/s 147 of the Act 12 months from the end of the month in which the assessment order is passed in the case of the firm (7) Any order to be passed in terms of sub-section (5) (6) in relation to such order which was received or passed prior to 01.06.2016 Applicable only to orders w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he orders passed u/s 250/254/260/262/263/264 are found mentioned both in sub-section (5) and (6) of Section 153 of the Act. Plain reading of sub-section (6) shows that, if any order is covered by sub-section (5), then the period of limitation set out in the latter would prevail. Meaning thereby, only if the finding or direction contained in the aforesaid orders u/s 250/254/260/262/263/264 is not covered by the scope of sub-section (5) that the period of limitation set out in sub-section (6) shall come into play. As noted earlier, in the facts of the present case, the order impugned has not been passed in consequence of any order u/s 250/254/260/ 262/263/264 of the Act. It is noted that apart from the aforesaid orders, there is another class of order covered by sub-section (6) of Section 153 viz., an order passed by the AO in consequence of any finding or direction contained in an order by any Court in a proceeding other than appeal or reference under this Act. In such a case, the AO is required to pass the order within twelve months from the end of the month in which the order has been received by the CIT . As rightly observed by the Ld. CIT(A), the case of the assessee falls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the assessee had raised such objection before the completion of assessment. In the present case however, the assessee has objected to the validity of the order impugned on the premise that it was barred by limitation in terms of Section 153 of the Act. The facts of the case are thus altogether different and the aforesaid provision relied upon by the Ld. DR has no relevance whatsoever. 21. For the reasons set out above, we thus uphold the order of the Ld. CIT(A) on the legal issue and confirm the action of the Ld CIT(A) holding that the AO did not had the jurisdiction to frame assessment after the limitation period has set in and therefore the assessment order passed by AO on 28.12.2018 was barred by limitation and therefore it is null in the eyes of law. and accordingly dismiss the appeal of the Revenue. 22. Coming to the Cross Objection of the assessee which is against the merit of the addition made by the AO, we are not inclined to decide the Cross Objection since it has become infructuous being academic in nature. 23. Coming to the appeal preferred by the assessee against the impugned order of the Ld. Pr. CIT passed u/s. 263 of the Act dated 23.03.2021 in AY ..... X X X X Extracts X X X X X X X X Extracts X X X X
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