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TMI Blog2022 (10) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... learned DRP. Whether the rectification proceedings were carried out well within the permissible time?- AO even as of now, has the powers under section 154 to rectify the impugned assessment order since four years have not yet elapsed from the end of the financial year in which the assessment order was passed. It is so given the legal position under section 154(7), which provides that save as otherwise provided in section 155 or sub-section (4) of section 186, no amendment under this section (i.e. 154) shall be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed . When AO being an income tax authority under section 116, is allowed a certain time frame for the rectification of mistakes apparent on record in his orders, that time frame cannot be diluted, curtailed or otherwise narrowed down by us. It cannot thus be said that no useful purpose will be served by remitting the matter to the file of the AO even at this stage. To that extent, the plea of the assessee is incorrect. Quite contrary to what has been argued by the learned counsel for the assessee, if we are to quash the assessment order, as being urg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent taxpayer and is therefore invalid, bad-in-law and deserves to be quashed. The Appellant prays that the final assessment order and DRP directions be treated as invalid, bad-in-law and should be quashed. Ground 2: Revised DRP directions passed beyond due date On the facts and circumstances of the case and in law, the Hon'ble DRP erred in passing revised directions dated April 22, 2021 u/s. 144C(5) read with rule 13 of the DRP Rules beyond the due date of March 31, 2021 specified to pass the directions as per section 144C(12) of the Act. The Appellant prays that the revised DRP directions passed beyond the prescribed due date of March 31, 2021, should be considered time-barred, invalid and the assessment proceedings be quashed. Ground 3: No opportunity given of being heard On the facts and circumstances of the case and in law, the order passed by the Ld. AO / TPO is in violation of principles of natural justice as the Appellant was not provided with an opportunity of personal hearing as to why the transfer pricing ('TP') adjustment should not be made, even on specific request of the Appellant. The Appellant therefore prays that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to some other assessee, and yet the Assessing Officer implemented these directions, clearly shows that the impugned assessment order has been passed in a perfunctory manner and it cannot meet any judicial approval. As evident from a plain reading of the second ground of appeal before us, it is stand of the assessee that the DRP erred in passing revised directions dated April 22, 2021 u/s. 144C(5) read with rule 13 of the DRP Rules beyond the due date of March 31, 2021 specified to pass the directions as per section 144C(12) of the Act. It is further contended that in any event, the Assessing Officer could have implemented the DRP‟s directions only within one month from the end of the month in which directions are received by him. It is submitted that the DRP can issue the directions only under section 144C(5) and that section 144C(13) categorically provides that the Assessing Officer shall give effect to these directions within one month from the end of the month in such directions are received . Learned counsel contends that the very purpose of creating the Dispute Resolution Panel, for certain categories of taxpayers, was to ensure that the assessment proceedings are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DRP, which can be implemented by the Assessing Officer- the directions dated 23rd March 2021 are admittedly irrelevant inasmuch as these directions pertain to another assessee, and the directions dated 22nd April 2021 are passed beyond the time permissible under section 144C(12) of the Act. This time learned counsel for the assessee has a different point to make. He submits that he is no longer on the point was whether rectification under rule 13 could have been legally carried out in this case or not, his sole point is that such a rectification was required to be implemented within a certain time frame, i.e. within a month from the date of receiving the directions, and when the Assessing Officer does not so implement the rectification order. When asked about the time limit within which an Assessing Officer could have rectified the order under section 154, learned counsel submitted that section 154 would not apply to this situation as right now we are dealing with the DRP provisions, which constitutes a special scheme for certain categories of taxpayers. Application of time limits under section 154 within which rectification of mistakes apparent on record can be carried out, on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot proceed on the basis that an income tax authority must rectify the order within the time limit for passing the order which is sought to be rectified. Such an interpretation is patently incorrect and contrary to the scheme of the Income Tax Act. As regards the implementation of the DRP‟s directions, by the DRP, within one month from the end of the month in which directions are received., learned Commissioner points out that this time limit concerns the assessment proceedings and not rectification proceedings. When rectification proceedings are specifically permitted within a certain time frame of time, that time limit cannot be reduced, curtailed or otherwise narrowed down. It is then pointed out that there is no infirmity in the order of the Assessing Officer inasmuch as it is not open to him to question the directions of the DRP; he has to give effect to these directions as issued- and that too within a strict time limit. All that he could have done, if the Assessing Officer was to be aggrieved of the directions, was to invite the attention of the DRP to these mistakes and, once the mistakes are rectified, pass the consequent rectification in his assessment order with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of this assessee. To this extent, there is no dispute between the parties. The dispute is on the point that, according to the assessee, the passing of the impugned assessment order shows complete non-application of mind, whereas, according to the learned Departmental Representative, the Assessing Officer had no choice but to pass an order based on the directions of the DRP and then take whatever remedial measures were required to be taken. We see merits in the plea of the learned Departmental Representative. Section 144C(13) enjoins the Assessing Officer to complete the assessment in conformity with the directions issued by the learned Dispute Resolution Panel, and it is not open to him to hold giving effect to these directions even if he finds the same to be prima facie incorrect. What needs to be done is to at best, take up the matter, in whatever way feasible, with the Dispute Resolution Panel for rectification of the mistake- particularly when no such rectification proceedings are being carried out anyway by the DRP. Giving effect to the directions of the DRP, despite apparent incorrectness, cannot be, by any stretch of logic, said to be non-application of mind b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or example, under section 154 or 254(2), no additional time limit can be allowed for rectification of mistakes in the DRP directions. When this matter was fixed for a second hearing, learned counsel abandoned this plea but submitted that whenever be the rectification of mistakes having been carried out by the learned DRP, the time available to the Assessing Officer for giving effect to these rectification directions is, under section 144C(13), one month from the end of the month in which any directions by the DRP, including rectification thereof, are issued. That period, according to the learned counsel, is already completed, and all these discussions about the time limit for issuance of rectification order are thus wholly academic. On this point, in substance, the learned Departmental Representative‟s stand is two-fold- first, that, in the absence of a time frame for rectification of mistake not having been provided in the statute, we have to infer a reasonable time frame for such exercise being carried out; and , second, that the Assessing Officer still has time to rectify the assessment order under 154(7), which provides that save as otherwise provided in section 155 or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n employed and also to the object of the statute. It is well settled that, if possible, the words of a statute must be construed so as to give a sensible meaning to them. The words ought to be construed ut res magis valeat quam pereat. This latin maxim, i.e, ut res magis valeat quam pereat, means that the words of the statute should be given a sensible meaning so as to make them effective rather than making them redundant. As observed by Hon‟ble Supreme Court, in the case of CIT v. Teja Singh [(1959) 35 ITR 408, at page 414 (SC)] a statute is designed‟, observed Lord Dunedin in Whitney v. IRC [1925] 10 Tax Cas. 88 to be workable, the interpretation thereof by a court should be to secure that object . It is, therefore, only elementary that law is to be interpreted in such a manner as to make it work rather than make it redundant. When there is no specific time limit for passing the rectification order under rule 13 of the DRP Rules, these provisions will become unworkable. Undoubtedly, there has to be a reasonable time limit within which an order can be passed even for rectification. When the time limit is not set out in the statute, it is indeed open to us to consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the order was passed, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make a such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer. There is perhaps one common thread in the functioning of the DRP and the ITAT, and that is with respect to the adjudicatory function- though much different in scope and application. When a higher forum like this Tribunal can be permitted six months‟ time for the rectification of the mistakes apparent on record, there should be no good reason that similar time for rectification of mistake apparent on record is not allowed to the Dispute Resolution Panel. We see no reasons to hold that the time limit permitted to the DRP for the rectification of mistakes apparent on record should be any less than the time permitted to the ITAT for the rectification of mistakes apparent on the record. We, therefore, hold that any order passed under rule 13 of the DRP rules cannot be held as barred by limitation if it is passed within six months from the end of the month in which the order was passed . Viewed thus, the rectification order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. It is so given the legal position under section 154(7), which provides that save as otherwise provided in section 155 or sub-section (4) of section 186, no amendment under this section (i.e. 154) shall be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed . When the Assessing Officer, being an income tax authority under section 116, is allowed a certain time frame for the rectification of mistakes apparent on record in his orders, that time frame cannot be diluted, curtailed or otherwise narrowed down by us. It cannot thus be said that no useful purpose will be served by remitting the matter to the file of the Assessing Officer even at this stage. To that extent, the plea of the assessee is incorrect. Quite contrary to what has been argued by the learned counsel for the assessee, if we are to quash the assessment order, as being urged by the learned counsel, these rectification powers will be preempted in the sense that once the assessment order itself is quashed, there will be nothing left to be rectified, as a consequence to rectification order passed by the DRP, even though the Assessing Officer has the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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