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TMI Blog2024 (3) TMI 1323X X X X Extracts X X X X X X X X Extracts X X X X ..... has uploaded the DRP directions in May 2022. In the absence of any material to indicate that the FAO also received the DRP directions in May 2022 for its onward transmission to JAO on 2/05/2022, we are in no position to dislodge the order sheet notings indicating transfer of records in the month of April 2022. The limitation thus stands expired in May 2022 in the present case. Claim of the Revenue that assessment unit was served with the DRP order electronically on 02.05.2022 do not resonate with the records available before us. This date only signifies the date of receipt of order by JAO whereas the limitation would be counted from the date on which the DRP directions were received by FAO prior to its onward uploading to JAO in terms of approval u/s 144B(8) of the Act. The combined reading of three documents extracted above as analysed, gives an infallible impression that FAO being designated assessment unit (even if considered distinct from NFAC) was privy to DRP order in April 2022. Therefore, the limitation in extreme case scenario would run from April 2022 and will end on 31st May, 2022. The assessment order however has been passed on 30th June, 2022 and thus is clearly time b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the Dispute Resolution Panel ( DRP ) erred in upholding the same. 4.1 That on the facts and circumstances of the case and in law, the AO / DRP / TPO have erred in re-characterizing the Appellant as service provider rendering brand building services to its AE, without appreciating that it is a full risk bearing distributor incurring AMP expenditure in the course of its own business to promote its sales in India. 5. That on the facts and circumstances of the case and in law, the orders passed by the AO / DRP / TPO were bad in law as the unilateral AMP expenditure incurred by the Appellant was categorized as international transaction' under chapter X of the Act, by the AO / DRP / TPO, contrary to law in as much the AO neither granted any opportunity of being heard to the Appellant, nor passed a speaking order recording his satisfaction in relation to characterisation / categorization of the AMP expenditure as an 'international transaction'. 6. That on the facts and circumstances of the case and in law, the TPO erred in re-characterizing the unilateral AMP expenditure being payments made by Appellant to independent third parties as an 'international transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -up could have been levied, on the facts and circumstances of the case and in law, AO / TPO have erred in cherry picking the comparable companies for purpose of computing the mark-up for the alleged AMP as an international transaction. The DRP further erred in upholding the above action of the Assessing Officer / TPO, observing that the Appellant has not filed any submissions on comparables, ignoring the details submissions made in the DRP objections. 10.2 Notwithstanding and without prejudice that no mark-up could have been levied, on the facts and circumstances of the case and in law, the AO / TPO have erred in selection of improper comparable companies for application of mark-up, being entities providing market support functions and without sharing a search process for identifying the comparable companies. Further, the DRP erred in upholding the erroneous approach of AO / ТРО. 10.3 Notwithstanding and without prejudice that no mark-up could have been levied, on the facts and circumstances of the case and in law, AO / DRP / TPO have erred in not considering the search conducted by the Appellant on a without prejudice basis. 11. That on the facts and circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order towards alleged international transactions of AMP alleged to be incurred for development of the brand owned by its foreign AE. The AO also made certain additions of Rs.2,40,28,377/- as disallowance of reversal of provisions and another disallowance of bonus under Section 43B of the Act. 5. The assessee preferred appeal before the Tribunal against the impugned final assessment order. 6. When the matter was called for hearing, the ld. counsel for the assessee at the outset submitted that although several legal and factual grounds have been taken as per the grounds of appeal, he seeks to advert to Ground No.2 of the appeal at the outset and seeks to challenge final assessment order so passed on the pivotal issue that such order is vitiated in law owing to bar of limitation and thus non est in law at the threshold. To buttress such plea, the ld. counsel pointed out that directions of the DRP issued under s. 144C(5) are dated March 17, 2022. The assessee received the same under covering letter dated March 30, 2022 on April 11, 2022 via speed post. As a corollary, the copy of DRP directions has been also simultaneously provided to the AO. Section 144C(13) provides embargo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortal of NFAC cannot be reckoned and equated with receipt of order by AO. The Ld. CIT-DR extensively referred to faceless scheme in vogue and the provisions of s. 144B governing methodology and procedures adopted in newly introduced faceless assessment and attempted to dispel the purportedly wrong notions on delivery of DRP order to the AO[ faceless or jurisdictional] in a faceless environment. 9. As noted above, the assessee has predominantly challenged the legal existence of the impugned assessment order passed under Section 143(3) r.w. Section 144C(13) of the Act. Since the challenge involves bar of limitation for passing the assessment order and thus strikes to the root of the whole controversy, it will be ostensibly appropriate to adjudicate this aspect of the appeal in primacy to other aspects. 9.1 To determine the controversy of limitation, it may be appropriate to list chronology of events as under: Date Particulars March 17,2022 Date of DRP directions, bearing document No. ITBA/DRP/M/144C(5)/2021- 22/1042081052(1), with manual signatures. March 25, 2022 Manual signing date of DRP directions. March 30, 2022 Intimation letter bearing DIN Document No. ITBA/DRP/S/91/2021-22/10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRP order from May 2, 2022 and was accountable for actions from this date. The Revenue thus contends that while the DRP order was uploaded manually, the said order was lying with National Faceless Appeal Centre (NFAC) only but was not available in the Case History Noting of the assessment proceedings with the assessment unit empowered by the Act to carry out assessment functions. With reference to S. 144B of the Act providing for scheme of faceless assessment and procedures inbuilt therein, the revenue contends that there is a qualitative difference between the NFAC and the assessment unit working under its umbrella. The NFAC requires to assign the case to the assessment unit to put the assessment action in motion. The NFAC is a centralized agency and a mere facilitator or a conduit to carry out the assessment by the designated assessment unit. Thus, mere uploading of DRP directions with NFAC would not tantamount to providing the directions to the AO i.e. assessment unit. The revenue thus reinforces its case that the DRP directions was actually uploaded in the Case History Noting of the assessment unit on 02.05.2022 and therefore, the limitation period would run from the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO concurrently in a limited manner to merely facilitate the conduct of faceless assessment proceedings contemplated under Section 144B of the Act. In the absence of the DRP order being visible in the Case History Noting, it is not practically feasible for the assessment unit to proceed with the assessment. The limitation needs to be seen in this backdrop/ scheme of faceless assessment. 13. While the revenue professed its case in the light of s. 144B of the Act as noted above, the bench made enquiries about order sheet details annexed to covering letter dated 04.07.2023 placed by the AO before the Bench wherein it is observed that the assessment case is being transferred to JAO under Section 144B(8) of the Act for completion of assessment showing date of 22.04.2022. In this regard, the Revenue submits that the date of 22.04.2022 in the order-sheet merely represents the transfer of jurisdiction of assessment case by faceless AO[FAO] to jurisdictional AO [JAO] to implement approval and directions of CBDT towards assignment of jurisdiction to JAO by the FAO. Such notings, by itself, can not be read to mean that the DRP order was available or delivered with the faceless AO (FAO) prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiates DRP proceedings by using the option of manually entering the details of draft order u/s 144C in the screen, (Manual to System), the DRP Order passed does not reflect automatically inside the case history noting of pending Assessment Proceedings work-item of the AO (JAO/FAO). The facts regarding the visibility of DRP orders - explaining the above is part of the 'FAQ on where the orders passed by DRPs can be seen by other ITBA users available in ITBA Help Guide on the ITBA Home Page. The document is available at S. No. 4(a) FAQ in the 'Assessment' folder and at S.No. 4 (d) in the Faceless Assessment folder. Uploading of DRP directions/order in ITBA in the present case: (a) As checked from system, in the present case, the DRP order u/s. 144C(5) was uploaded by the DRP in the system on 30.03.2022 at 3:03:34 PM. Since at the time of the creation of the DRP proceedings, the DRP had manually entered the details of draft order u/s 144C in the screen (Manual to System), the said DRP Order, when uploaded in ITBA on 30.03.2022, did not automatically become visible inside the case history noting of assessment proceedings pending before the AO at that time. (b) Subsequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 17.03.2022 was received in this office on 02.05.2022(digitally) after uploading the same by DC/ACIT (NeAC)-2(2)(2), Delhi. Verified at Gurugram, on this the 15th day of September, 2023 that the contents of the above affidavit are true and correct as per the official records maintained in this office and believed to be correct, no part of it is false and nothing material has been concealed there from. 17. The order-sheet filed by the Revenue along with covering letter dated 04.07.2023 of the AO annexed to the covering letter dated 05.07.2023 filed by the ld. CIT-DR, ITAT New Delhi also throws light on the controversy and thus being critical also needs to be extracted. 22/04/2022 Transfer RANGE Assessment Unit Circle 3(1), Gurgaon Notings/Remarks: This assessment case is being transferred to you as JAO u/s 144B(8) of the Income-tax Act with the approval of CBDT for their completion within the limitation. The assessment cannot be finalized by Faceless AU because amended provisions of section 144B of the Act has become effective from 01.04.2022 and required changes in Systems/hierarchy is under implementation. Kindly note that as per FAU the limitation. In this case, is falling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... versy in hand and to kick-start the date on which limitation period is set in motion. Firstly, the date on which the DRP directions were issued, i.e., 17.03.2022 and uploaded manually on March 30, 2022 vide DIN number assigned on that date. Another date cropped up from the order-sheet filed on behalf of the Revenue stands on 22.04.2022 which signifies the transfer of assessment case from FAO (Range Assessment Unit) to JAO (Circle-3, Gurgaon). The third date relevant for determination is 02.05.2022, i.e., the date on which the DRP directions were uploaded and stated to be found visible in the Case History Noting of pending assessment on the records of JAO. 19. The Revenue contends that for the purposes of determination of limitation, the relevant date is 02.05.2022 on which the DRP directions were actually received by the jurisdictional AO in its Case History Noting to enable it to proceed and continue with the assessment proceedings. The assessee, on the other hand, contends that the date on which the DRP directions were uploaded in ITBA portal / NFAC on 30th March, 2022 is the determinative date for count of limitation period under s. 144C(13) of the Act. The assessee further cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. The System s Report clearly say that information regarding when the DRP order was received by DC/ACIT (NeAC)-2(2)(2), Delhi is not known. Coupled with such assertions, the affidavit of the AO is critical to throw light on the date of receipt of DRP directions by the FAO. The affidavit vouches for the fact that the DRP order was received by JAO digitally on 02.05.2022 which was uploaded by FAO i.e. DC/ACIT (NeAC)-2(2)(2), Delhi. Thus, from such assertions in the affidavit, it is ostensible that FAO in the instant case was privy to the DRP order prior to its transfer to JAO. When these facts are seen along with order-sheet, it becomes more clear that the DRP orders were available with the FAO on or before 22.04.2022 which was the date on which the records were transferred. The order-sheet itself points out and cautions the JAO for completion of the assessment and that points out that limitation ends in April 2022. The revenue despite having raised long drawn defense, failed to furnish any material of evidentiary value towards the date on the DRP directions came to the privy of FAO which was in turn uploaded to the case history noting of the pending assessment of JAO on 2nd Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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