9911796707
TMI Blog2023 (5) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... g Order under section 92CA(3) dated 30.01.2014, beyond the time limit prescribed under section 92CA(3A). The Appellants submit that the Transfer Pricing Order is barred by limitations and, therefore, void ab initio. The Appellant pray that the same be quashed. 2. The Assessing Officer erred in passing the final order dated 27.05.2014, beyond the period of limitation prescribed under section 153 of the Act. The Appellants submit that the Assessment Order is barred by limitations and, therefore, void ab initio. The Appellant pray that the same be quashed. In the Additional Ground No.2, due to typographical error instead of 153B only 153 have been mentioned." 3. Even though, the Ld. CIT-DR objected to the admission of the afore-stated additional grounds, the same are admitted being purely legal issues; and for doing that, we rely on the decision of the Hon'ble Supreme Court in the case of NTPC Vs. CIT (229 ITR 383) (SC). 4. Relevant facts pertaining to the legal issue are that the assessee had filed original return of income u/s 139(1) of the Income Tax Act, 1961 (hereinafter "the Act") on 30.09.2009 declaring total income at Nil. Thereafter, search u/s 132 of the Act was carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the 1st day of April, 2009 or any subsequent financial year and during the course of the proceeding for the assessment or reassessment of total income, a reference under sub-section (1) of section 92CA is made, the provisions of clause (a) or clause (b) of this sub-section shall notwithstanding anything contained in clause (i) of the second proviso, have effect as if for the words "two years". The words "three years" had been substituted." 6. Thereafter, the Ld. AR drew our attention to section 92CA(3A) of the Act which prescribes the time limit (the relevant provision) are reproduced below: Reference to Transfer Pricing Officer. 92CA.(1)................. (2)................... (3A) where a reference was made under sub-section (1) before the 1st day of June, 2007 but the order under sub- section (3) has not been made by the Transfer Pricing Officer before the said date, or a reference under sub-section (1) is made on or after the 1st day of June, 2007, an order under sub-section (3) may be made at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged that the order passed by TPO u/s 92CA of the Act be quashed being barred by limitation. 10. And regarding Additional Ground No. 2, the Ld. AR submitted that the AO passed the draft assessment order u/s 144C(1) of the Act on 25.03.2014, and thereafter passed the final order on 27.05.2014, which was bad in law being barred by limitation. According to Ld. AR, as per section 144C(1) of the Act, the draft assessment order need to be passed only if the assessee is an 'Eligible Assessee' and drew our attention to section 144C(1) of the Act (relevant provision) are extracted as under: - "(1) The AO 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 if the proposes to make, on or after the 1st day of Oct, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee." 11. The term "Eligible assessee" is defined u/s 144C(15) of the Act which is reproduced as under: - (b) "eligible assessee" means - (i) any person in whose case the variation referred to in sub- s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer pricing mechanism erodes the subsequent proceedings emanating from flawed foundation is without jurisdiction. 17. In the light of facts of the case and decisions referred above, we find merit in the additional grounds of appeal No.48 & 49. The assessee succeeds on the aforesaid legal grounds." 13. Therefore, the Ld AR urged us to allow the legal issue and quash the TPO/AO order. Per Contra, the Ld DR supports the action of TPO and AO and submitted that the department has already preferred appeal against the Hon'ble Madras High Court in Hon'ble Supreme Court and is awaiting its outcome. Till that time, the Ld DR doesn't want us to interfere with the impugned action of TPO/AO. 14. Having heard both the parties and after perusal of the records and case-laws cited before us, we find that the legal issue raised before us are, no longer res-integra. For adjudicating the legal issue it would be gainful to look at the relevant provisions of section 92CA(3A) and section 153B of the Act and the third proviso as is applicable to the impugned assessment year which are reproduced herein below: Section 92CA (3A) "(3A) Where a reference was made under sub-section (1) before the 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted including the 31st 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 since section 92CA(3A) states 'before 60 days prior to the date on which the period of limitation referred to section 153 expires'. Excluding 31-12-2019, the period of 60 days would expire on 1-11-2019 and the transfer pricing orders thus ought to have been passed on 31-10-2019 or any date prior thereto. Incidentally, the Board, in the Central Action Plan also indicates the date by which the Transfer Pricing orders are to be passed as 31-10- 2019. The impugned orders are thus, held to be barred by limitation". 16. The aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [(1846) 6 Moore PC 1: 4 MIA 179] "we cannot aid the legislature's defective phrasing of an Act, we cannot add or mend and, by construction make up deficiencies which are left there". In case of an ordinary word there should be no attempt to substitute or paraphrase of general application. Attention should be confined to what is necessary for deciding the particular case. This principle is too well settled and reference to a few decisions of this Court would suffice. (See: Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests [1990 Supp SCC 785: AIR 1990 SC 1747] , Union of India v. Deoki Nandan Aggarwal [1992 Supp (1) SCC 323 : 1992 SCC (L&S) 248 : (1992) 19 ATC 219 : AIR 1992 SC 96] , Institute of Chartered Accountants of India v. Price Waterhouse [(1997) 6 SCC 312] and Harbhajan Singh v. Press Council of India [(2002) 3 SCC 722: JT (2002) 3 SC 21] .)" 29. The language employed is simple. 31-12-2019 is the last date for the assessing officer to pass his order under section 153. The TPO has to pass order before 60 days prior to the last date. The 60 days is to be calculated excluding the last date because of the use of the words "prior to" and the TPO has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dispute Resolution Panel and also the Assessing Officer. Sub-section (5) of section 144C of the Act provides that if any objections are raised by the assessee before the Dispute Resolution Panel, the Panel is empowered to issue such direction as it thinks fit for the guidance of the Assessing Officer after considering various details provided in Clauses (A) to (G) thereof. 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. It goes without saying that if no objections are filed by the Assessee either before the DRP or the assessing officer to the determination by the TPO, section 92CA(4) would come into operation. Therefore, it is very clear that once a reference is made, it would have an impact on the assessment unless a decision on merits is taken by DRP rejecting or varying the determination by the TPO. 33. It would only be apropos to note that as per 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 extende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, as rightly held by the learned Judge in paragraphs 22 to 29 of the order dated 7-9-2020, the order of the TPO or the failure to pass an order before 60 days will have an impact in the order to be passed by the Assessing Officer, for which an outer time limit has 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO in this case to frame draft assessment order, when the TPO order was bad in law, the Ld. AR pointed out that assessee is not qualifying as eligible assessee as per the definition given in sub-section (15) to section 144C of the Act. For convenience 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) (ii) any non-resident not being a company, or any foreign company" 21. It is admitted position that assessee would not fall in sub clause (ii) supra. So, we need to examine whether assessee falls in sub clause (i). A perusal of sub-clause (i) of the definition would show that "eligible assessee" means any person in whose case variation arises as a consequence of the order of the TPO passed u/s. 92CA(3) of the Act. However, in the instant case since we have already found that the order of TPO was passed beyond the period of limitation, it is not a valid order/non-est order. Therefore, assessee is not an "eligible assessee" in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
