Assessee's Appeal Allowed Due to Barred TPO Order - Assessment Proceedings Declared Void

The Tribunal allowed the appeal of the assessee, holding that the Transfer Pricing Officer's (TPO) order dated 01/11/2019 was barred by limitation, rendering the assessee ineligible under section 144C. Consequently, the draft assessment order dated 07/12/2019 and the final assessment order dated 31/03/2021 were also deemed invalid and void. The Tribunal quashed the entire assessment proceedings as void ab initio, citing various judicial precedents.

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Issues Involved:
1. Whether the order of the TPO u/s 92CA(3) is barred by limitation and hence, invalid in law.
2. Whether the assessee becomes an "eligible assessee" u/s 144C of the Act if the TPO's order is barred by limitation.
3. The validity of the draft assessment order and final assessment order if the TPO's order is invalid.

Summary:

1. Order of TPO u/s 92CA(3) Barred by Limitation:
The assessee argued that the order passed by the TPO on 01/11/2019 was barred by limitation as per Section 92CA(3A) of the Act, which mandates that the TPO's order should be passed at any time before sixty days prior to the date on which the period of limitation referred to in Section 153 expires. The Tribunal noted that the time limit for completion of assessment u/s 153 of the Act for A.Y. 2016-17 was 31/12/2019. Therefore, the TPO's order should have been passed by 31/10/2019. Since the order was passed on 01/11/2019, it was held to be barred by limitation and invalid.

2. Eligibility of Assessee u/s 144C:
The Tribunal held that if the TPO's order is barred by limitation, the assessee would not be considered an "eligible assessee" u/s 144C(15)(b)(i) of the Act. Consequently, the extended time period for passing the draft assessment order provided in Section 153 would not apply. The draft assessment order dated 07/12/2019 was thus barred by limitation and deemed void ab initio. Any subsequent proceedings, including the DRP directions dated 19/03/2021 and the final assessment order dated 31/03/2021, were also rendered void ab initio.

3. Validity of Draft and Final Assessment Orders:
The Tribunal referenced various judicial precedents, including the decisions of the Hon'ble Madras High Court in Pfizer Healthcare India (P.) Ltd. vs. JCIT and DCIT vs. Saint Gobain India (P.) Ltd. The Tribunal concluded that the TPO's order being invalid due to time-bar makes the assessee ineligible for the extended assessment timeline. Therefore, the draft assessment order and the final assessment order were invalid and void. The Tribunal allowed the appeal of the assessee, quashing the entire assessment proceedings as void ab initio.

Conclusion:
The Tribunal allowed the appeal of the assessee, holding that the TPO's order dated 01/11/2019 was barred by limitation, rendering the assessee ineligible u/s 144C. Consequently, the draft assessment order dated 07/12/2019 and the final assessment order dated 31/03/2021 were also invalid and void. The other grounds raised by the assessee on merits were not addressed as the entire assessment proceedings were quashed.

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