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TMI Blog2023 (9) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the Draft Assessment Order, dated 08/11/2019. As a result, the time limit available to the Assessing Officer under Section 153 of the Act for passing the assessment order expired on 31/12/2019 even if the benefit of extended period of 12 months is granted on account of a valid reference having been made under Section 92CA of the Act. The Final Assessment Order has been passed in present case on 31/03/2021 and therefore, the same is barred by limitation. Assessee appeal allowed. - SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER For the Appellant : Shri Madhur Agrawal/Shri Abdulkadir Jawadwala For the Respondent : Dr. Yogesh Kamat ORDER Per Rahul Chaudhary, Judicial Member: 1. The present appeal is directed against the Assessment Order dated, 31/03/2021, passed under Section 143(3) read with Section 144C(13) read with Sections 143(3A) 143(3B) of the Income Tax Act, 1961 [hereinafter referred to as the Act ], as per directions, dated 25/02/2021, issued by the CIT (Dispute Resolution Panel-1), Mumbai (hereinafter referred to as the DRP ) under Section 144C(5) of the Act pertaining to the Assessment Year 2016-17. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Order on 31/03/2021 which has been challenged by the Appellant by way of the present appeal filed before the Tribunal. 7. The Ld. Authorised Representative for the Appellant appearing before us submitted that the additional ground raised by the Appellant stands decided in favour of the Appellant by virtue of the judgment of Hon ble Madras High Court in the case of Pfizer Healthcare India Private Ltd Vs. Joint Commissioner of Income Tax: (2021) 433 ITR 28 (Madras) and also decision of the co-ordinate bench of the Tribunal in the case of Atos India Private Limited Vs. DCIT [ITA No. 1795/Mum/2017, dated 23/02/2023, Assessment Year 2012-13], and Mondelez India Foods Pvt. Ltd. vs. Addl. CIT [ITA No. 1492/Mum/2015, dated 14/11/2022]. On the strength of the aforesaid judgments/decisions, the Ld. Authorised Representative for the Appellant submitted that the order, dated 01/11/2019 passed by the TPO as well as the Final Assessment Order, dated 31/03/2021, passed by the Assessing Officer should be quashed as being barred by limitation and therefore, null void. He submitted that following the aforesaid judicial precedents, in identical facts and circumstances prevailing in As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on record, copy of decision of the Tribunal in the case of M/s Indian Hotels Ltd. vs. DCIT Circle 2(2)(1), Mumbai [ITA No. 2308 3022/Mum/2016, dated, 29/11/2022]. 9. We have considered the rival submissions and perused the material on record. We find that the Hon ble Madras High Court has, in the case of Pfizer Healthcare India Private Limited (supra), held as under: 30. Now, coming to the question of how the 60 day period is to be computed, the critical question would be whether the period of 60 days would be computed including the 31 st of December or excluding it. Section 153 states that no order of assessment shall be made at any time after the expiry of 21 months from the end of the assessment year in which the income was first assessable. The submission of the revenue is to the effect that limitation expires only on 12 am of 1-1-2020. However, this would mean that an order of assessment can be passed at 12 am on 1-1-2020, whereas, in my view, such an order would be held to be barred by limitation as proceedings for assessment should be completed before 11.59.59 of 31-12-2019. The period of 21 months therefore, expires on 31-12- 2019 that must stand excluded sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enior standing counsel for the appellants is that the usage of the word may in section 92CA (3A) indicates that the time fixed is only directory, a guideline, not mandatory and is for the sake of internal proceedings. 32. Let us now examine the relevant procedures relating to Transfer Pricing. After an international transaction is noticed subject to satisfaction of section 92B, a reference is made to the TPO under sub-section (1) of section 92CA of the Act. The TPO after considering the documents submitted by the assessee is to pass an order under section 92CA (3) of the Act. As per section 92CA(3A), the order has to be passed before the expiry of 60 days prior to the date on which the period of limitation under section 153 expires. As per 92CA(4), the assessing officer has to pass an order in conformity with the order of the TPO. After receipt of the order from the TPO determining ALP, the assessing officer is to forward a draft assessment order to the assessee, who has an option either to file his acceptance of the variation of the assessment or file his objection to any such variation with the Dispute Resolution Panel and also the Assessing Officer. Sub- section (5) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been prescribed under sections 144C and 153 and is hence mandatory. What is also not to be forgotten, considering the scheme of the Act, the inter-relatability and inter-dependency of the provisions to conclude the assessment, is the consequence or the effect that follows, if an order is not passed in time. When an order is passed in time, the procedures under 144C and 92CA(4) are to be followed. When the determination is not in time, it cannot be relied upon by the assessing officer while concluding the assessment proceedings. 39. Upon consideration of the judgments and the scheme of the Act, we are of the opinion that the word may used therein has to be construed as shall and the time period fixed therein has to be scrupulously followed. The word may is used there to imply that an order can be passed any day before 60 days and it is not that the order must be made on the day before the 60th day. The impact of the proviso to the subsection clarifies the mandatory nature of the time schedule. The word may cannot be interpreted to say that the legislature never wanted the authority to pass an order within 60 days and it gave a discretion. Therefore, the learned Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Mumbai Bench of the Tribunal has, in the case of Mondelez India Foods Pvt. Ltd. (Supra), held as under: 16. The ld. Counsel for the assessee has further pointed that reference to DRP can only be made by eligible assessee . The expression eligible assessee has been defined in sub-section (15) to section 144C of the Act. The definition of eligible assessee is reproduced herein below: (b) eligible assessee means (i) Any person in whose case the variation referred to in sub-section(1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any non-resident not being a company, or any foreign company A perusal of the above definition would show that eligible assessee mean any person in whose case variation arises as a consequence of the order of the TPO passed u/s. 92CA(3) of the Act. The order has to be a valid order. In the instant case since, the order of TPO was beyond the period of limitation it is not a valid order. Therefore, there is no eligible assessee in terms of the definition provided in sub-section (15) to section 144C of the Act. If there is no eligible asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not to be forgotten that the period of 33 months is to pass the final order of assessment after the directions from the DRP. In this case, we find from the undisputed dates and events that not only was the reference to the TPO made after the period of expiry of the period of limitation to pass assessment orders, but also that the assessing officer has failed to pass final assessment orders in time. The time to pass the original assessment would end on 31.12.2008 being 21 months from the end of the assessment year 2006-07 i.e., 31.03.2007. Then the last date for the assessing officer to pass the final assessment order would end on 31.12.2009, even considering the extension by twelve months. In the present case, the order of the DRP itself is only 24.09.2010 much beyond the permissible period. 46. Thus taking into the provisions of law and the judgment referred to above, we hold that the final assessment order passed on 31 January 2017 is beyond the prescribed period of limitation under section 153 of the Act expiring on 31 March 2016, thus, barred by limitation and is hereby quashed. (Emphasis Supplied) 16. In the present case we have already held in paragraph 12 A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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