Transfer Pricing Officer's order invalid for exceeding 60-day limit under Section 92CA(3A) and Section 153

ITAT Ahmedabad held that the Transfer Pricing Officer's order dated 1st November 2019 was invalid as it was issued beyond the mandatory 60-day limitation period prescribed under Section 92CA(3A) read with Section 153 of the Income Tax Act. The TPO was required to issue the order by 31st October 2019, being 60 days prior to the assessment completion due date. The tribunal ruled that this limitation is mandatory and cannot be breached, rendering the belated TP order unenforceable. Consequently, the Assessing Officer was not entitled to extended time under Section 153(4) for completing the assessment. The case was decided in favor of the assessee.

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Issues Involved:

1. Validity of the Transfer Pricing Officer's (TPO) order due to alleged time-barred issuance.
2. Consequences on the draft assessment order and final assessment order if the TPO's order is invalid.

Detailed Analysis:

1. Validity of the TPO's Order:

The primary issue in this case was whether the TPO's order dated 1st November 2019 was issued beyond the statutory time limit prescribed under Section 92CA(3A) read with Section 153(4) of the Income Tax Act, 1961. The provision mandates that the TPO's order must be passed at least 60 days before the date on which the period of limitation for completing the assessment under Section 153 expires. In this case, the due date for completing the assessment was 31st December 2019, which means the TPO's order should have been passed on or before 31st October 2019. The Tribunal found that the TPO's order was indeed passed one day late, on 1st November 2019, thereby rendering it invalid and barred by limitation.

The Tribunal relied on several judicial precedents, including the judgment of the Madras High Court in the case of Pfizer Healthcare India Pvt. Ltd., which held that the computation of the 60-day period should exclude the last date for completing the assessment, i.e., 31st December 2019. Therefore, the period of 60 days expired on 1st November 2019, making the TPO's order passed on that date invalid.

2. Consequences on the Draft and Final Assessment Orders:

With the TPO's order being invalid, the draft assessment order, which was based on the TPO's findings, was also rendered invalid. The Tribunal observed that the draft assessment order could not have been passed without a valid TPO order, as the assessee would no longer qualify as an "eligible assessee" under Section 144C of the Act. This section requires a valid TPO order to treat an assessee as "eligible" for the purpose of issuing a draft assessment order.

The Tribunal further noted that the final assessment order dated 30th April 2021 was also beyond the prescribed time limit for completing the assessment. Since the TPO's order was invalid, the extended period of limitation under Section 153(4) was not available to the Assessing Officer. Consequently, the final assessment order was quashed as it was passed beyond the statutory time limit.

In conclusion, the Tribunal allowed the appeal filed by the assessee, quashing both the TPO's order and the subsequent assessment orders due to the time-barred issuance of the TPO's order, thereby rendering the entire assessment proceedings invalid.

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