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TMI Blog2024 (12) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... ue to the fact that the ld. DRP created the pendency by manually entering the details of Section 144C order. Since, it was manually entered and by not creating linkage with the assessment proceedings, it was not reflected in the pending assessment proceedings for the AO to act upon. Hon ble Supreme Court in the case of Automotive Manufactures Pvt. Ltd. [ 2023 (5) TMI 495 - SC ORDER] , Abacus Real Estate Pvt. Ltd [ 2023 (5) TMI 496 - SC ORDER] and Multiplier Brand Solutions Pvt. Ltd [ 2023 (5) TMI 497 - SC ORDER] held that the revenue should be given time to take corrective measures for updation of the software. In this case, the Revenue could bring on record about the receipt of the ld. DRP order by the Assessing Officer who has to physically apply his mind and pass an order in accordance with the provisions of Section 144C(13) of the Act. Unless, the officer who has to act upon the order of the ld. DRP receives the order, he/ she would not be in a position to even know about the passing of the order by the ld. DRP. Hence, it cannot be expected by the AO to act upon an order which has not even been received by him. The order sheet notings of the case in the assessment history from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der/ directions passed by Id. AO / Transfer Pricing Officer ( TPO ) / DRP are non- speaking and bad in law. 2. On the facts and circumstances of the case and in law, the final assessment order is bad in law as the AO/ TPO have not followed the DRP directions. 3. On the facts and circumstances of the case and in law, the final assessment order is bad in law as the AO/ TPO have exceeding their jurisdiction by going beyond DRP s directions. 4. On facts and circumstances of the case and in law, the final assessment order is invalid as the same has been passed in violation of statutory procedure under section 144 B of the Act. 5. On the facts and circumstances of the case and in law, the assessment proceedings are time barred as the same have not been completed within prescribed timelines. 6. On the facts and circumstances of the case and in law, the final assessment order is bad in law since it violates the order of Hon ble High Court in Appellant s own case by making an adjustment using Brightline Test and enforcing demand on the same. 7. Without prejudice to the above, even if adjustment made using Brightline Test is held to be protective, on the facts and circumstances of the case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the main business in the same order. 18. The TPO / AO erred on facts and in law by ignoring that the AMP function is already subsumed in net profits earned by the company and the alleged transaction can be appropriately benchmarked under Transactional Net Margin Method (TNMM)/ Resale Price Method (RPM) using aggregation approach under trading segment. 19. The TPO / AO erred on facts and in law by ignoring that the AMP function is already subsumed in net profits earned by the company and the alleged transaction can be appropriately benchmarked under TNMM using aggregation approach under manufacturing segment. 20. The TPO / AO erred on facts and in law by making incorrect adjustments under garb of intensity adjustment which is not as per prescribed Rules for application of TNMM/ RPM and that in absence of availability of adequate and accurate data in public domain, ad- hoc adjustment is not permissible under provision of Act and Rules. 21. The TPO / AO erred on facts and in law by not appreciating that AMP/ Sales ratio is not a measure of intensity of AMP function. 22. Without prejudice to any other grounds, Intensity adjustment used to adjust net profit margin of comparable compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That on facts and in laws, the AO erred, both on facts and in law, in completing assessment using loss processed under Sec 143 (1) at Rs. 21,05,08,945 /-, as against the returned loss of Rs. 22,09,49,746 /-. 35. That on facts and in laws, the AO erred, both on facts and in law, in making a disallowance of Rs. 9,92,03,093 /-, on account of Interest Income Capitalized by the Appellant. a. That the impugned disallowance is patently bad, untenable and illegal, both on facts and in law, as the AO has made the same by: i. Failing to observe that the income as per books of accounts and the taxable income are mutually exclusive, and that the treatment of a transaction in the books of accounts cannot govern to determine the taxability as per Income Tax Act; ii. Erring in recognizing the inextricable link between nature of fund available (i.e. capital nature for expansion activities) vis- a- vis its utilization for short duration, being idle funds; iii. That the addition tantamount to double taxation, as the expense depreciation has already been reduced to that extent. iv. Misinterpreting the Income Computation and Disclosure Standards and other provisions of Income Tax Act; v. Grossly ignor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to CIT(TP)-2, DCIT, TP-2(1)(1) and the National e-assessment Delhi and the assessee. (2) DRP manually uploaded the directions on the ITBA system and sent to assessee on 30.03.2022 (page 301 of appeal set). (3) As the DRP has manually passed directions u/s 144C(5) in ITBA (systems), it did not automatically become visible inside the case history notings. (4) Report from Systems Directorate As all the communication is now though computer systems, to get a authentic information about the receipt of DRP directions by the Assessing Officer, i.e. Faceless AO( JAO)/ Jurisdictional AO (JAO), a report has also been called from the Systems directorate, a copy of which is placed at Annexure 1 (copy of which has been duly handed over to the bench and to the assessee counsel, during the course of hearing). In the report, it has been stated by the systems, that the DRP direction appeared only on 18.04.2022. Being pertinent, the relevant part of systems is reproduced below: Sir, Kindly refer to the trailing email. The matter was referred to the ITBA technical team for their inputs and for extracting relevant information regarding the DRP order/ directions in this case. The requisite inputs/ info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62L 2018-19. pdf {which is the DRP order u/s 144C(5) dated 16.03.2022} is attached herewith. Since the document was uploaded by DCIT/ACIT(Ne AC)- 2(1)(1 ), Delhi, using the said functionality on 18.04.2022, it became available in the Case History/Notings of the assessment proceedings on the said date i.e. 18.04.2022. Thus, from the above report from the systems, it is clearly proved that as, the DRP directions were manually uploaded, it did not appear in the case history notings automatically and appeared/ became available to Assessing Officer only on 18.04.2022 and that is the date, which is to be taken for counting of limitation period. 5. Report from the Na FAC (National Faceless Assessment Centre) The CBDT has set up the National Faceless Assessment Centre (Na FAC) to facilitate the conduct of faceless assessment proceedings in a centralized manner. As the Assessing Officer is faceless and his identity is not known to the DRP, a copy of the DRP directions is invariably sent to Na FAC, New Delhi, so as to forward the same to the Assessing Officer i.e. FAO and JAO. To ascertain the actual date of receipt of DRP directions by NaFAC and also the date of receipt by respective Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AC has to be treated as Assessing Officer and date of receipt by the Ne AC should be adopted as the date for counting of limitation period for passing of final assessment order. It is respectfully submitted that till 31.03.2022 as per section 144B (1), National Faceless Assessment Centre was finalizing the assessment, however, the provisions of section 144B has been amended in the Act from 01.04.2022 and it is mentioned in section 144B(1) that National Faceless Assessment Centre is the coordination body and assessment is not done by the Ne FAC Centre. Because of the faceless regime, the national faceless assessment centre is the body which is between the AO and the assessee. The National Faceless Assessment Centre assigns the case to a respective assessment unit and only the correspondence to the asseseee and the AO are routed through the NaFAC. The scheme of faceless assessment has been discussed in detail in section 144B(1) and for the sake of brevity, the same are not being repeated. As the case involves the receipt of DRP directions, it is clearly mentioned in u/ s section 144B (1)(xxviii) that Ne FAC upon receipt of directions by the DRP, will forward such directions to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , nothing is to added or taken away from the provision. In section 144C (13), it is clearly mentioned that the date of receipt is the only relevant date for counting limitation period, then only that date, is to be seen and nothing else. Reliance is also placed on the Hon'ble SC judgment in the case CIT, Chennai vs. Mohammed Meeran Shahul Hameed 131 taxmann.com 94 (SC) 2021 for explaining the receipt of the order . Being pertinent, the relevant extract of the decision of Hon'ble Supreme Court is reproduced below: 4.3 On a fair reading of sub- section (2) of section 263 it can be seen that as mandated by sub- section (2) of section 263 no order under section 263 of the Act shall be made after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. Therefore the word used is made and not the order received by the assessee. Even the word dispatch is not mentioned in section 263 (2). Therefore, once it is established that the order under section 263 was made/ passed within the period of two years from the end of the financial year in which the order sought to be revised was passed, such an order cannot be said to be beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to some absurdity or unless there is something in the context or in the object of the statute to suggest the contrary. It has been often held that the intention of the Legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. As a consequence, a construction which requires for its support additional support, addition or substitution of words or which results in rejection of words as meaningless, has to be avoided. Obviously, the aforesaid rules of construction is subject to exceptions, just as it is not permissible to add words or to fill in a gap or lacuna. Similarly, it is of universal application that effort should be made to give meaning to each and every word used by the Legislature. In J. K. Cotton Spg. Wvg. Mills Co. Ltd. v. State of UP [1961] 3 SCR 185, it was observed by this Court: ... the Courts always presume that the Legislature inserted every part thereof for a purpose and the legislative intention is that every part of the statute should have effect.... (p.193) 7. The case of taxing statute it has been held by this Court in several cases that one must have regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes automatically visible to all once it is uploaded on systems. This interpretation is unfortunately not in line with the letter and spirit of the statute/ Act and specially in the context of settled law about the interpretation of the Act/ statute. 2. In the case of assessee, both the systems directorate as well as NaFAC has has submitted report (as mentioned supra) that the DRP directions were uploaded in systems only on 18.04.2022. Not only this, the NaFAC has also mentioned that the physical DAK was received only on 06.04.2022 and electronically it was not received. After physical receipt, the directions were uploaded in ITBA system on 18.04.2022. These facts have not been controverted by the assessee counsel and both the reports from Systems / Na FAC was duly placed before the bench and also enclosed along with this written submissions. The assessee has not placed even a single document to negate the findings of systems/Na FAC. Also, the entire case history notings of the case, (duly submitted by Assessing Officer) has also been placed before the Hon'ble Bench, which also shows the date of receipt of DRP directions by AO i.e. FAO / JAO only on 18.04.2022. when all the rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the date of receipt of CIT (A) order in the office of the jurisdictional PCIT, and not mere reflection in the View Download functionality of ITBA. F. Assessee reliance on the following case laws: 1. ITAT Delhi in the case of Haier Appliances Pvt. Ltd. vs. DCIT, 1T TP Delhi 2(1)(1) in ITA no. 417/Del/2022 for A.Y. 2017-18 i) With utmost respect, it is submitted that the order passed by the Hon ble Tribunal is perverse because in this case, the DRPs directions were uploaded on 30.11.2021 and because of systems default / technical error, the mail could not be sent. The intimation was retriggered and issued only on 01.12.2021 at 2:30AM, meaning thereby the DRP directions were uploaded on 01.12.2021. the facts are mentioned in para 17 and 18 of the order of the Hon ble Tribunal. It is respectfully submitted that when the DRP directions were sent only on 01.12.2021 then how can anybody take the date of receipt as 30.11.2021 when the same was corrupted because of systems default and could not be sent. Thus, this basic fact was overlooked by the Hon'ble Bench which in itself is sufficient to distinguished the facts of that case with the instant case. vii) Further, in this case, in pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1863/del/2022. The assessee has also relied on the decision of the Hon'ble ITAT in the case of Microsoft Corporation India Ltd. vs. DCIT 1863 /del/2022. The facts of the case are distinguishable as mentioned below:- In para 9 of the order, the Hon'ble Tribunal has taken the date of receipt by Ne FAC 07.04.2022 i.e. the date on which the DRP had uploaded its directions on systems. It is respectfully submitted that when the DRP uploads its directions on systems it does not reach the Ne AC automatically and Ne AC cannot view the DRP directions. The reply of the Ne AC on receipt of the DRP directions of the case is very pertinent and reproduced below:- Kindly refer to the trail mail. In this regard, I am directed to state as under:- 1. DRP order received in the case of M/ s Haier Appliances India Pvt. Ltd (PAN- AABCH 3162 L) for A. Y. 2018 - 19 received through physical dak in Na FAC on 06.04.2022. 2. The same was uploaded under assessment proceedings in ITBA on 18.04.2022. 3. It is further submitted that the said direction of DRP was not received electronically in Na FAC. With Regards: Chandan Srivastav ACIT, Na FAC- 1 (1)(1), Delhi From the above reply of the Ne AC, it is ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments becomes the date and time of receipt by the addressee, as both the originator and the recipient are in the systems. The systems adopted by the Income Tax Department is unique in the sense that in order to bring transparency and accountability in system, the identity of the AO is not known to the assessee as well as to the DRP. Accordingly, the system in order to protect the identity of the AO, another institution or a person is placed between the AO and the assessee and that is National Faceless Assessment Centre. As explained in detail above, the role of Ne AC is basically of coordination and facilitation and all the communications are routed through Ne AC. Thus as any document is uploaded by DRP is not automatically received by the Ne AC on systems. The receipt by Ne AC, accordingly cannot be taken as receipt by the AO because both AO as well as Ne AC are different and distinct. In fact on the same basis, the other case law relied upon by assessee i.e. decision of Hon'ble apex court in the case of G.S Chatha Rice Mills and Another 20212 SCC is distinguishable in our case the addressee i.e. assessing officer is not identifiable, because deliberately his identity is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so in the absence of any cogent evidence to the contrary. Even if April 2022 is regarded as the month in which DRPs order was received by the faceless AO, the limitation stands expired in May 2022. The final assessment order passed in the month of June 2022 is thus rendered nonest by operation of law and cannot be upheld in any event being manifestly barred by limitation. 20. On a nuanced consideration of the rival arguments and on perusal of the material placed before us, we are of the considered view that limitation period prescribed under Section 144 C(13) is clearly breached in the present case. On a combined reading of ' Systems Report', affidavit of the AO and order sheet notings extracted in paragraphs 15,16 and 17 respectively, it is seen that embargo of limitation for passing the final assessment order is not complied with. 20.1 As per Section 1440 (13) of the Act, the AO is required to pass the final assessment order within one month from the end of the month in which the DRP directions are received by the AO. The AO would encompass both FAO as well as JAO without any distinction for the purposes of limitation. To put it little differently, a transfer of case reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 20.3 As a sequel to such delineations, the 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 under 144 B(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 v May, 2022. The assessment order however has been passed on 30th June, 2022 and thus is clearly time barred and outside the limitation period assigned under Section 1440 (13) of the Act. 21. We may also usefully refer to various judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls during physical hearings. Even at the cost of repetition, the first para of report is reproduced below- 1) Visibility of the DRP order in the Case History/Notings (CHN) of the pending assessment proceedings: The DRP Order is reflected automatically in the pending assessment work- item (pending either with FAO or JAO), if DRP user initiates DRP proceedings in the ITBA DRP Module, by using the option of selecting Draft Order u/ s 144C in the screen. When DRP proceedings are initiated in this manner, this creates linkage with the Assessment Module and hence when DRP passes the order u/s 144C(5), such order is automatically reflected in the Case History Noting of AO ( FAO or JAO) with whom the assessment work- item is pending. Where, however, the DRP user initiates DRP proceedings by using the option of manually entering the details of the case in the screen, the DRP Order passed does not reflect automatically inside the case history noting of pending Assessment Proceedings work- item of the AO(JAO/FAO). In the present case, the DRP created the pendency by manually entering the details of the 144C order in the screen. The DRP Order u/s 144C(5) dated 16. 03. 2023 was uploaded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been introduced recently and therefore, the Revenue ought to have been given some leverage to correct themselves and take corrective measures and therefore the High Court ought to have remanded the matter to the Assessment Officer to pass a fresh order in accordance with law, after following the due procedure, as required under the law, namely, more particularly, under Section 144 B of the Act. 5. In view of the above for the reasons stated above, we modify the impugned judgment and order passed by the High Court and remand the matter to the Assessment Officer to pass a fresh Assessment Order, after following due procedure, in accordance with law under Section 144 B of the Act. From the perusal of the above order, it is absolutely crystal clear that the Hon'ble Supreme Court had taken notice of the launch and introduction of the faceless scheme by the Income Tax Department and at the same time allowed leverage to the department to take corrective measures in case of violation of the provisions of the IT Act, as required under the law. 7. The ld. DR further submitted evidences with regard to visibility of the ld. DRP order, report of the ADIT(ITBA)-5 certifying that the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4C(13) of the Act. Unless, the officer who has to act upon the order of the ld. DRP receives the order, he/ she would not be in a position to even know about the passing of the order by the ld. DRP. Hence, it cannot be expected by the AO to act upon an order which has not even been received by him. The order sheet notings of the case in the assessment history from 22. 09.2019, the date on which notice u/ s 143(2) has been issued to 30.05.2022, the date of passing of the Assessment Order containing 27 pages have also been examined with regard to receipt of the order of the ld. DRP by the Assessing Officer who has completed the assessment proceedings. 11. In this case, the Revenue has proved that the ld. DRP order has been received by NAFC by 06.04.2022, the same was uploaded by ITBA on 18.04.2022. After uploading, the AO has received it on 18.04.2022 and the order has been passed on 30.05.2022 which is well within the time allowed u/s 144C(13) of the Income Tax Act, 1961. 12. Reliance is being placed on the judgment of Hon ble Supreme Court in the case of CIT Vs. Mohammed Meeran Shahul Hameed in CA No. 6204 of 2021 dated 07.10.2021 wherein the Hon ble Apex Court explained as to what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding that the order under Section 263 of the Act passed by the learned Commissioner was barred by period of limitation, as provided under subsection (2) of Section 263 of the Act. 5. In view of the above and for the reasons stated above the question of law framed is answered in favour of the revenue appellant and against the assessee respondent herein and it is held that the order passed by the learned Commissioner under Section 263 of the Income Tax Act was within the period of limitation prescribed under subsection (2) of Section 263 of the Act. The present appeal is allowed accordingly. No costs. J. (M. R. SHAH) J. (A. S. BOPANNA) New Delhi, October 07,2021. 13. We have read and examined the provisions of Section 144C(13) of the Act. It reads as under: (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 or section 153B, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received. 14. In this case, it is undisputed fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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