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

ITAT Mumbai held that the TPO order under section 92CA(3) passed on 30/01/2014 was time-barred by one day, as the limitation period expired on 29/01/2014 (sixty days prior to assessment limitation of 31/03/2014). The order was declared bad in law and non-est. The tribunal emphasized that statutory limitation periods specified in days cannot be substituted by circular references to months, as delegated Board powers cannot override parliamentary legislation. The final assessment order dated 27/05/2014 was consequently barred by limitation.

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Issues Involved:

1. Whether the Transfer Pricing Officer's (TPO) order and the Assessing Officer's (AO) final order were barred by limitation and thus void ab initio.
2. Whether the assessee qualifies as an "Eligible Assessee" under section 144C of the Income Tax Act, 1961.

Detailed Analysis:

1. Limitation on Transfer Pricing Officer's and Assessing Officer's Orders:

The primary issue was whether the TPO's order dated 30.01.2014 and the AO's final assessment order dated 27.05.2014 were passed beyond the statutory time limits, rendering them void ab initio. The assessee argued that the TPO's order should have been passed by 29.01.2014, as per section 92CA(3A) of the Act, which mandates that the order must be made at least sixty days before the expiration of the period of limitation under section 153B. The tribunal accepted this argument, noting that the TPO's order was indeed delayed by one day, making it barred by limitation and non-est in the eyes of law. This conclusion was supported by judicial precedents from the Madras High Court and various ITAT benches, which have consistently held that orders passed beyond the statutory time limits are invalid.

2. Eligibility as an "Eligible Assessee":

The second issue was whether the assessee qualified as an "Eligible Assessee" under section 144C(15) of the Act, which would necessitate the issuance of a draft assessment order. The tribunal found that since the TPO's order was invalid due to being time-barred, the assessee could not be considered an "Eligible Assessee" as defined under section 144C(15). The definition requires a valid TPO order under section 92CA(3), which was absent in this case. Consequently, the AO should not have issued a draft assessment order but instead should have completed the assessment by 31.03.2014. The final assessment order dated 27.05.2014 was thus also deemed to be barred by limitation and invalid.

Conclusion:

The tribunal allowed the assessee's cross-objection, quashing the TPO's and AO's orders as barred by limitation. The department's appeal was dismissed as academic. The tribunal's decision was based on a thorough interpretation of the statutory provisions and supported by relevant judicial precedents, emphasizing the mandatory nature of the time limits prescribed in the Act. The tribunal also noted that no arguments were made regarding other grounds of appeal, leaving them open for future adjudication if necessary.

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