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TMI Blog2023 (3) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... - 26-12-2022 - SHRI G.S. PANNU, HON BLE PRESIDENT AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER For the Assessee : Shri Bhimanshu Kansal, CA Ms. Mamta Verma, CA Fort the Revenue : Shri Sanjay Kumar, Sr. DR ORDER PER SAKTIJIT DEY, J.M. Captioned appeal by the assessee arises out of the order dated 20.07.2020 of learned Commissioner of Income Tax (Appeals)- 43, New Delhi pertaining to Assessment Year 2016-17. 2. Registry has notified delay of 177 days in filing the present appeal. 3. Before us, Learned Counsel appearing for the assessee submitted that, essentially, there is no delay as the period of limitation got extended by virtue of order of the Hon ble Supreme Court of India, keeping in view the situation arising out of Covid-19 pandemic. 4. Learned Departmental Representative did not raise any objection qua the aforesaid submissions of the assessee. 5. In view of the aforesaid, we condone the delay and admit the appeal for adjudication on merits. In addition to the grounds raised in the memorandum of appeal, the assessee has raised the following additional grounds: Ground No. 3 Without prejudice to ground no. 1 2, on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by learned Commissioner (Appeals) while deciding assessee s appeal. 9. Before us, the primary contention of learned Counsel appearing for the assessee is, firstly, the assessment order passed under section 143(3) read with section 144C(3) of the Act is invalid as there is no variation in the income returned by the assessee. He submitted, the Assessing Officer has merely re-characterized the royalty income offered by the assessee as income from business. Drawing our attention to Section 144C(1) of the Act he submitted, in case of an eligible assessee, if there is any variation in the income returned which is prejudicial to the interest of the assessee, then the Assessing Officer is empowered to frame a draft assessment order. He submitted, since in the present case there is no variation in the income offered by the assessee, the Assessing Officer had no jurisdiction to pass the order under section 144C(1) read with section 144C(3) of the Act. Proceeding further, he submitted, the only provision under which the Assessing Officer could have framed the assessment is under section 143(3) of the Act. However, he submitted by the time the Assessing Officer passed the impugned assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raft assessment order without appreciating that there was no variation in income returned by the appellant and, therefore the impugned order passed by the Assessing Officer is void ab initio and, therefore, is liable to be quashed. 17. The representatives of both the sides were heard at length, the case records carefully perused and relevant provisions of the Act have been duly considered. 18. Briefly stated, the facts of the case are that the Assessing Officer assumed jurisdiction over the assessee on filing of return by the assessee and accordingly, statutory notices were issued and served upon the assessee. 19. As per provisions of section 144C and 92B of the Act where the assessee had entered into international transactions or it is a foreign company being an eligible assessee as defined in Section 144C of the Act in respect of his income/loss, the Assessing Officer has made variation which is prejudicial to the interest of such assessee, the Assessing Officer is mandatorily required to pass proposed order of assessment, which is termed as Draft Assessment order . 20. Provisions of section 144C as they stood at the relevant point of time of the caption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in sec,144C of the Act is not in accordance with the mandate of law. We get support for our view from the decisions rendered by Chennai bench and Pune bench of Tribunal in the cases referred above. Hence the assessment order passed by the AO gets vitiated and the same is liable to be quashed. We order accordingly. 24. Similar view was taken by the Tribunal Mumbai Bench in IPF India Property Cyprus [No. 1] in ITA No. 6077/MUM/2018. Relevant observations of the Co-ordinate bench in this case read as under: 5. So far as the first issue is concerned, we find that, in the present case, there are no variations in the returned income and the assessee income. The controversy is thus confined to the question as to what will be the rate on which income returned by the assessee is to be taxed. While the assessee has claimed taxation @ 10% under article 11(2) of the India Cyprus DTAA, the Assessing Officer has declined the said treaty protection on the ground that the assessee was not beneficial owner of the said interest, and, accordingly, brought the income is to tax0 40% thereof. There is, quite clearly, no variation in the quantum of income. The question whether it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment was available only upto 31st December 2017. The mere issuance of draft assessment order, when it was legally not required to be issued, cannot end up enhancing the time limit for completing the assessment under section 143(3). We, therefore, uphold the plea of the assessee on this point as well. The impugned assessment order is indeed, in our considered view, time barred. We, accordingly, hold so. 8. As the impugned assessment order itself is held to be time barred, all other grievances raised in appeal, which deal with the merits of stand taken by the Assessing Officer in the assessment order, are rendered academic and infructuous. No adjudication, therefore, is required on these grievances at this stage. 25. This view also finds support from the Delhi Bench in the case of Silver Bells 189 ITD 678. The relevant findings read as under: 8. Provision of section 144C( 1) read as under:- 144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30-Mar-06 31-Dec-10 01-Sep-11 - 31-Mar-11 15-Sep-11 2007-08 24-Oct-07 24-Dec-09 21-Sep-10 - 31-Dec-09 04-Oct-10 2008-09 25-Sept-08 31-Dec-10 01-Sep-11 - 31-Dec-10 15-Sep-11 2009-10 30-Sep-09 23-Dec-11 25-Jul-12 31-Dec-11 31-Aug-12 2010-11 12-May-11 07-Mar-13 14-Aug-13 31-Mar-13 30-Oct-13 2011-12 30-Sep-11 28-Jan-14 15-Oct-14 - 31-Mar-14 25-Nov-14 2012-13 12-Sep-12 19-Feb-15 - 29-Apr-15 31-Mar-15 30-Apr-15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction as it thinks fit for the guidance of the Assessing Officer after considering various details provided in Clauses (A) to (G) thereof. As per sub-section (12), the DRP has no authority to issue any directions under subsection (5) from the end of the month in which the draft order is forwarded to the eligible assessee and not from the date when the assessee submits the objections. Sub-section (13) of section 144C of the Act provides that upon receipt of directions issued under sub-section (5) of section 144C of the Act, the Assessing Officer shall in conformity with the directions complete the assessment proceedings within one month from the end of the month in which the directions are received. It goes without saying that if no objections are filed by the Assessee to the draft order, the assessing officer has to pass the final assessment order based on the draft order within one month from the end of the month in which the period for filing the objection had expired as per section 144C(4). As per the proviso to Section 92CA (3A), if the time limit for the TPO to pass an order is less than 60 days, then the remaining period shall be extended to 60 days. This implies that not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly done so by the learned Judge. 19. Admittedly, the facts including the dates are not under dispute. As regards the appeal in W.A.No.1854 of 2021, even though the remand was on 24.01.2013 and the assessee had received the order on 08.02.2013, the first notice by the DRP was issued on 19.02.2014 and the first hearing in the Chennai office was on 10.03.2014. Therefore, it is lucid that the DRP had the knowledge of the order before 19.02.2014. The matter was heard on various dates in Chennai office and written submissions were also filed. Thereafter, the files have been transferred to Bengaluru by the CBDT notification dated 31.12.2014. The Learned Judge relying upon the findings in the batch of cases which was decided first and rendered additional findings, which have been extracted in paragraphs 10 and 11 above, has allowed the writ petitions holding that the time limit under Section 153 (2A) was not adhered to and in any case, the proceedings have not been concluded within a reasonable time. 20. As rightly contended by the learned senior counsels and affirmed by the Learned Judge, the DRP proceedings is a continuation of assessment proceedings. To put it further, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that the DRP ought to have concluded the proceedings within 9 months from the date of receipt of the Tribunal's order, when it had issued a notice on 19.02.2014 and conducted the hearing as early as on 10.03.2014 and on several dates. The DRP at Chennai, in fact ought to have passed orders before 19.11.2014, even if the date of receipt of the notice is taken as 19.02.2014. In that event, the assessing officer ought to have passed the order before 31.12.2014 or at the latest before 31.03.2015 considering that the order was received during the Financial year 2013-14. The transfer of the files to Bengaluru, after the lapse of the time, will not indefinitely extend the time and can have no impact on the time lines. It is an inter-department arrangement and it cannot defeat the rights of the assessee. 22. Insofar as the non-obstante clause in Section 144C(13) is concerned, we concur with the view of the Learned Judge. The exclusion of applicability of Section 153 or Section 153 B is for a limited purpose to ensure that dehors larger time is available, an order based on the directions of the DRP has to be passed within 30 days from the end of the month of receipt of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C at p. 634, Curtis v. Stovin [(1889) 22 QBD 513 : 58 LJQB 174 : 60 LT 772 (CA)] referred to in S. Teja Singh case [AIR 1959 SC 352 : (1959) 35 ITR 408]). 18. The statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make a consistent enactment of the whole statute. 19. The court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with other parts of the law and the setting in which the clause to be interpreted occurs. (See R.S. Raqhunath v. State of Karnatoka [(1992) 1 SCC 335 : 1992 SCC (LAS) 286 : (1992) 19 ATC 507 : AIR 1992 SC 81] .) Such a construction has the merit of avoiding any inconsistency or repugnancy either within a section or between two different sections or provisions of the same statute. It is the duty of the court to avoid a head-on clash between two sections of the same Act. (See Sultana Begum v. Prem Chand Jain [(1997) 1 SCC 373 : AIR 1997 SC 1006]). (iii) Franklin Templeton Trustee Services (P) Ltd. v. Amruta Garci. (2021) 6 SCC 736 : 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded. The timeline given under the Act is to be strictly followed. 30. The Hon'ble High Court concluded as under: (a) The provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually inclusive. The period of limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders. (b) Even in case of remand, the TPO or the DRP have to follow the time limits as provided under the Act. The entire proceedings including the hearing and directions have to be issued by the DRP within 9 months as contemplated under Section 144C (12) of the Income Tax Act. (c) Irrespective of whether the DRP concludes the proceedings and issues directions or not, within 9 months, the Assessing officer is to pass orders within the stipulated time, (d) In matter involving transfer pricing, upon remand to DRP, the Assessing officer is to pass a denova draft order and the entire proceedings as in the original assessment, would have to be completed within 12 months, as the very purpose of exten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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