2024 (1) TMI 150 - AT - Income Tax

TPO order under section 92CA(3) quashed for being time-barred after 60-day limitation period expired

ITAT Mumbai held that a Transfer Pricing Officer's order passed under section 92CA(3) was time-barred and liable to be quashed. The TPO passed the order ... Time-bar of Transfer Pricing Officer's order under section 92CA(3A) read with section 153 - computation of the 60-day period for TPO orders excluding the terminal date - consequence of a time barred TPO order on consequent assessment proceedingsTime-bar of Transfer Pricing Officer's order under section 92CA(3A) read with section 153 - computation of the 60-day period for TPO orders excluding the terminal date - Validity of the TPO order dated 30/01/2021 in view of the time-limit prescribed by section 92CA(3A) read with section 153 - HELD THAT: - The Tribunal examined the computation of the 60-day period mandated by section 92CA(3A) read with section 153 and applied the approach in the Madras High Court decision in Pfizer Healthcare India and co ordinate Tribunal precedents. The court treated the terminal date under section 153 as excluded for the purpose of computing the 60 day prior period, thereby requiring the TPO order to be passed on or before the day which is 61 days before the expiry under section 153. Applying that computation to the facts of the case, the 60 day prior cut off fell on 29/01/2021, whereas the TPO passed the order on 30/01/2021. The Tribunal therefore concluded that the TPO order was passed beyond the prescribed period and was accordingly time barred and liable to be quashed. [Paras 9]TPO order dated 30/01/2021 is time barred and quashed.Consequence of a time barred TPO order on consequent assessment proceedings - Effect of the quashing of the TPO order on the assessment proceedings and merits of transfer pricing adjustments - HELD THAT: - Having held the TPO order to be void as barred by limitation, the Tribunal reasoned that the transfer pricing adjustment founded on that order became infructuous. As a result, the related grounds on merits did not require adjudication because they depended on the validity of the TPO order which had been set aside. [Paras 10, 11]Consequential transfer pricing adjustment and related assessment proceedings became infructuous; appeal allowed.Final Conclusion: The TPO's order dated 30/01/2021 was held to be time barred under section 92CA(3A) read with section 153 and was quashed; consequentially the transfer pricing adjustment and assessment became infructuous and the assessee's appeal was allowed. Issues Involved:1. Legality of the final assessment order u/s 143(3) r.w.s. 144C(13) and 144B.2. Validity of the Transfer Pricing Officer (TPO) order u/s 92CA(3).3. Jurisdiction of the Assessing Officer in passing the draft assessment order u/s 144C.4. Time limitation for passing the final assessment order u/s 153.Summary:Issue 1: Legality of the Final Assessment OrderThe assessee contended that the final assessment order dated 29/01/2022 was barred by limitation as per section 153(1) of the Income-tax Act, rendering it void-ab-initio, bad in law, and liable to be quashed.Issue 2: Validity of the TPO OrderThe assessee argued that the TPO's order dated 30/01/2021 was beyond the time limit prescribed u/s 92CA(3A) r.w.s. 153, making the transfer pricing order illegal, null, and void. The Ld.AR provided a detailed chronology of dates to support this claim, emphasizing that the TPO order should have been passed by 29/01/2021.Issue 3: Jurisdiction of the AO in Draft Assessment OrderThe assessee asserted that since the TPO order was illegal and void due to being barred by limitation, the draft assessment order dated 30/03/2021 passed by the AO u/s 144C was without jurisdiction, making all subsequent proceedings illegal and bad in law.Issue 4: Time Limitation for Final Assessment OrderThe assessee claimed that the final assessment order dated 29/01/2022 was also barred by limitation as prescribed under section 153, thus making it illegal, null, and void.Tribunal's Findings:1. Admission of Additional Grounds: The Tribunal admitted the additional grounds raised by the assessee, citing that they were purely legal and did not require investigation of new facts, relying on the judgment of the Hon'ble Apex Court in National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC). 2. Legality of the TPO Order: The Tribunal, after considering the submissions and relevant case laws, including Pfizer Healthcare India Pvt Ltd vs JCIT (2021) and DSV Air & Sea Pvt Ltd vs ADIT (2023), held that the TPO order dated 30/01/2021 was indeed passed beyond the prescribed time limit and thus was barred by limitation. Consequently, the TPO order was quashed.3. Impact on Subsequent Proceedings: Given the quashing of the TPO order, the Tribunal noted that the grounds raised on merits became academic and did not warrant adjudication.Conclusion:The Tribunal allowed the appeal of the assessee, quashing the TPO order for being barred by limitation, which rendered the final assessment order and subsequent proceedings void. The decision was pronounced in the open court on 27/10/2023.