2022 (10) TMI 1053 - HC - Income Tax

Dispute Resolution Panel's Directions Overturned Due to Expired Limitation Period; Writ Petition Allowed Without Costs.

The HC set aside the Dispute Resolution Panel's directions dated 28.02.2020, ruling them as barred by limitation. The Court determined that the limitation ... TP adjustments - Period of limitation for proceedings before the DRP - HELD THAT:- As in this case, the order of the Tribunal having been received by the officer as early as in 2016, the limitation for passing of the order expires on or before 31.03.2017 and the proceedings under the impugned order are thus clearly barred by limitation. As to acquiescence of the petitioner, reject the submission of the respondents for the reason that once an order is established to be beyond limitation, mere co-operation of the party in the proceedings would not extend the same. In fact, even as on 29.01.2020 when the petitioner had written to the DRP, limitation had long expired and thus there is no merit in this submission of the respondents. The impugned order is set aside and this writ petition is allowed. Issues:Challenge to directions by Dispute Resolution Panel on grounds of limitation.Analysis:The writ petition challenged directions issued by the Dispute Resolution Panel (DRP) on 28.02.2020, primarily on the basis that the impugned order was barred by limitation. The petitioner had filed an appeal before the Income Tax Appellate Tribunal (ITAT) against a final assessment order passed by the Assessing Officer under the Income Tax Act, 1961. The Tribunal remanded all issues to the Assessing Officer for re-examination by the DRP, directing the revenue to provide a reasonable opportunity to the assessee. A miscellaneous application was filed seeking clarity on the remanded issues, which was allowed by the Tribunal. The Assessing Authority communicated the Tribunal's order to the DRP, instructing a re-examination. The petitioner approached the DRP multiple times, with the final request made in January 2020. The respondents argued that the petitioner cooperated in the proceedings, thus waiving the limitation defense.The Court referred to previous judgments establishing that orders of the DRP are subject to limitation under Section 153(2A) of the Act. The Division Bench confirmed this position, emphasizing that the limitation for passing the order expires one year from the end of the financial year in which the Tribunal's order is received. Since the Tribunal's order was received in 2016, the proceedings under the impugned order were clearly barred by limitation by 31.03.2017. The Court rejected the respondents' argument of acquiescence, stating that cooperation in proceedings does not extend the limitation period. The petitioner's communication in January 2020 was beyond the limitation period, further supporting the rejection of the respondents' submission. Consequently, the impugned order was set aside, and the writ petition was allowed with no costs.This detailed analysis of the judgment highlights the issues involved, the legal arguments presented, and the Court's reasoning in deciding the matter.