TPO order under section 92CA(3) held time-barred by one day, making final assessment order invalid

ITAT Mumbai held that the TPO's order u/s 92CA(3) passed on 01/11/2019 was time-barred by one day, as the 60-day limitation period under section 92CA(3A) expired on 30/12/2019, while the assessment completion due date was 31/12/2019. Following precedents from Transporter Industry International and Pfizer Healthcare India, the tribunal ruled the TPO order invalid. Since no valid TPO order existed, the extended limitation period under section 153(4) was unavailable to the AO, rendering the final assessment order also time-barred. Decision favored the assessee.

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Issues:
Validity of order u/s. 92CA(3) of the Income Tax Act dated 31/10/2019 - Time limitation for passing the order - Date of order as per digital signature - Computation of limitation period - Impact on subsequent final assessment order u/s. 143(3) dated 30/06/2021.

The judgment addresses the challenge to the validity of an order u/s. 92CA(3) of the Income Tax Act dated 31/10/2019, based on the contention that it was passed beyond the period of limitation. The appellant argued that the order was digitally signed on 01/11/2019, making that the effective date of the order, rendering it time-barred by one day. The appellant relied on various decisions to support this argument, emphasizing the importance of the date of digital signature in determining the validity of the order.

The Tribunal analyzed the provisions of the Income Tax Act regarding the time limit for passing assessment orders, particularly focusing on sections 153 and 92CA(3A). The Tribunal referred to a decision by the Madras High Court in Pfizer Healthcare India (P.) Ltd. case to explain the computation of the limitation period for passing orders u/s. 92CA(3) of the Act. The Tribunal concluded that the order in question, passed on 01/11/2019, was indeed beyond the limitation period prescribed by law, as it should have been passed by 31/10/2019 or any date prior thereto.

The Tribunal cited the case of Transporter Industry International Gmbh, where a similar issue was considered, and held that the order passed on 01/11/2019 was beyond the prescribed limitation period, thus invalid. Relying on the legal provisions and precedents, the Tribunal determined that the order by the Transfer Pricing Officer was time-barred. Consequently, the final assessment order dated 30/06/2021 was also deemed time-barred due to the absence of a valid order u/s. 92CA(3) of the Act.

Ultimately, the Tribunal ruled in favor of the appellant, allowing the appeal due to the jurisdictional issue regarding the time limitation for passing the order u/s. 92CA(3) being breached. As a result, the other grounds raised by the appellant challenging additions on merit were not discussed, as they became academic. The appeal was allowed, and the final order was pronounced on 13th November 2023.

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