Time limit for Transfer Pricing Officer referral crucial in assessment proceedings. Invalid reference renders assessment void.

The court held that the reference to the Transfer Pricing Officer (TPO) made after the expiration of the 21-month period for assessment completion was invalid, rendering the assessment proceedings void. The court emphasized adherence to statutory timelines, ruling that the extended 33-month period is contingent upon a valid reference within the initial 21 months. The court also clarified that jurisdictional issues cannot be waived, allowing the appeal and granting the writ petition to quash the assessment proceedings.

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Issues Involved:
1. Validity of the Reference to Transfer Pricing Officer (TPO)
2. Limitation Period for Assessment
3. Jurisdiction and Authority of the Assessing Officer
4. Estoppel and Waiver of Statutory Rights

Detailed Analysis:

1. Validity of the Reference to Transfer Pricing Officer (TPO):
The appellant contended that the reference made by the Assessing Officer to the TPO was contrary to the mandate under Section 153 of the Income Tax Act, which prescribes a time limit of 21 months from the end of the assessment year for completing the assessment. The reference to the TPO was made on 17.02.2009, after the expiration of the 21-month period on 31.12.2008, rendering the entire assessment proceedings invalid and barred by limitation. The court held that the words "during the course of the proceedings for the assessment of total income" in Section 153 indicate that the reference must be made within the 21-month period. The reference made after the expiration of this period is legally unsustainable, and the extended period of 33 months for completing the assessment is contingent upon a valid reference made during the course of the assessment proceedings.

2. Limitation Period for Assessment:
The court emphasized that the limitation period for completing the assessment is 21 months from the end of the assessment year, as per Section 153. The extended period of 33 months is applicable only if a reference to the TPO is made within the 21-month period. The court rejected the contention that the reference could be made within 24 months and the extended period would be 9 months. The court clarified that the extended period is 12 months, making the total period for completing the assessment 33 months. The court also noted that the time limit to pass the final assessment order would end on 31.12.2009, and in this case, the order of the DRP was dated 24.09.2010, which was beyond the permissible period.

3. Jurisdiction and Authority of the Assessing Officer:
The court held that the jurisdiction of the Assessing Officer to refer the matter to the TPO is limited by the time frame prescribed under Section 153. The reference made after the expiration of the 21-month period is invalid, and the Assessing Officer becomes functus officio, losing the authority to make such a reference. The court emphasized that the statutory provisions conferring jurisdiction cannot be waived or created by consent, and any procedural lapse in this regard cannot be overlooked.

4. Estoppel and Waiver of Statutory Rights:
The court rejected the contention that the appellant was estopped from challenging the reference to the TPO due to their participation in the proceedings. The court reiterated that a legal plea, especially one that goes to the root of jurisdiction, can be raised at any stage. The court also emphasized that there cannot be any waiver of a statutory requirement or provision that goes to the jurisdiction of assessment. The court cited several judgments to support the view that jurisdictional issues can be raised at any stage and that there is no estoppel or waiver in matters of jurisdiction.

Conclusion:
The court concluded that the reference to the TPO was invalid as it was made after the expiration of the permissible period, rendering all subsequent proceedings void. The appeal was allowed, and the writ petition was granted, quashing the assessment proceedings. The court emphasized the importance of adhering to statutory timelines and the non-waivability of jurisdictional requirements in tax matters.

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