Court quashes orders for exceeding time limit, interprets statute as mandatory

The Court quashed the impugned orders dated 1-11-2019 as they were beyond the limitation period under Section 92CA(3) of the Income-tax Act, 1961. The Court held that the word "may" in Section 92CA(3A) should be interpreted as "shall," making the provision mandatory for timely completion of assessments. Despite the availability of alternate remedies, the Court found the writ petitions maintainable due to the mixed question of law and facts involved. Some petitions were closed, while the remaining were allowed, and connected miscellaneous petitions were closed without costs.

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Issues Involved:
1. Whether the impugned orders under Section 92CA(3) of the Income-tax Act, 1961 are barred by limitation.
2. Whether the impugned orders were passed in violation of the principles of natural justice.
3. Whether the word "may" in Section 92CA(3A) should be interpreted as "shall."
4. Whether the writ petitions are maintainable despite the availability of alternate remedies.

Issue-wise Detailed Analysis:

1. Limitation of Orders under Section 92CA(3):
The petitioners challenged the orders under Section 92CA(3) on the ground that they were barred by limitation by one day. According to Section 92CA(3A), an order must be passed by the Transfer Pricing Officer (TPO) before 60 days prior to the last day on which the period of limitation referred to in Section 153 for making an assessment expires. The assessments were to be completed within 21 months from the end of the assessment year, i.e., by 31-12-2019. Therefore, the period of 60 days prior would end on 1-11-2019, meaning the orders should have been passed by 31-10-2019. The Court held that the impugned orders dated 1-11-2019 were beyond the limitation period and thus barred.

2. Violation of Principles of Natural Justice:
Some petitioners argued that the orders were passed in violation of the principles of natural justice as notices were issued towards the close of the limitation period, giving them insufficient time to make submissions. The Court acknowledged this argument but primarily focused on the limitation aspect to quash the orders.

3. Interpretation of "May" as "Shall":
The petitioners argued that the word "may" in Section 92CA(3A) should be read as "shall," making the provision mandatory. The Court examined various judgments and principles of statutory interpretation, concluding that the period of 60 days stipulated for passing an order of transfer pricing is mandatory and not merely directory. The Court emphasized that the legislative intent and the scheme of the Act support a mandatory interpretation to ensure timely completion of assessments.

4. Maintainability of Writ Petitions:
The Revenue argued that the writ petitions were not maintainable as the petitioners had alternate remedies, such as filing objections before the Dispute Resolution Panel (DRP). However, the Court held that the writ petitions were maintainable since the issue of limitation is a mixed question of law and facts, with no factual disputes in the present case. The Court decided to address the matter directly rather than relegating the petitioners to alternate remedies.

Conclusion:
The Court quashed the impugned orders dated 1-11-2019 as they were barred by limitation. The Court also noted that some petitioners had pursued statutory remedies or requested final orders, and those writ petitions were closed accordingly. The remaining writ petitions were allowed, and the connected miscellaneous petitions were closed without costs.

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