Transfer Pricing Order quashed for invalid signature beyond limitation period under Section 92CA

Karnataka HC quashed a Transfer Pricing Order (TPO) for lack of valid signature within the limitation period. The court held that the TPO order dated 31.07.2021 was neither digitally nor physically signed by the deadline, with physical signature only occurring on 12.08.2021 and portal upload on 16.08.2021. Despite generation of DIN number, the unsigned order on the limitation date rendered it invalid and legally non-existent. The subsequent draft assessment order was also quashed as illegal and arbitrary.

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Issues:
Challenging transfer pricing order and draft assessment order for assessment year 2018-19 due to lack of digital and physical signatures within the prescribed period.

Analysis:
The petitioner, a private limited company, challenged an unsigned transfer pricing order and draft assessment order issued by the Transfer Pricing Officer (TPO) for the assessment year 2018-19. The petitioner contended that the TPO order was not digitally or physically signed on the last date of limitation, 31.07.2021, as evidenced by emails from the respondents. The respondents argued that a technical glitch caused the order to be generated without a digital signature but was later manually signed and provided to the petitioner. The court noted that the TPO order was not legally valid as it was not digitally signed as required by law. The physically signed order was uploaded after the limitation period, leading to the conclusion that the orders were illegal and non-est.

The court highlighted the sequence of events showing that the TPO order was not passed on the last date of limitation, was not digitally or physically signed on that date, and was uploaded after the deadline. The respondents' acknowledgment of the lack of digital signature on the order and subsequent manual signing indicated the order's invalidity. The court emphasized that digital and physical signatures were mandatory requirements for the TPO order to be valid. The mere generation of a Document Identification Number (DIN) was insufficient to rectify the order's defects. Consequently, the court deemed the transfer pricing order and draft assessment order as illegal and arbitrary, warranting their quashing.

In the final order, the court allowed the petition, quashing the impugned Transfer Pricing Order and draft assessment order for assessment year 2018-19.

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