2025 (12) TMI 1582 - AT - Income Tax

Transfer pricing reference timing and assessment deadline u/s153(1): belated TPO referral made order time-barred, voided assessment.

The dominant issue was whether the assessment order was time-barred under s.153(1) due to an allegedly belated reference to the TPO. The Tribunal held ... Validity of assessment proceedings as barred by limitation u/s 153(1) - Date of reference to the Ld. TPO - HELD THAT:- Assessment Year 2019-20, the assessment ought to have been completed before 30.09.2021. Ld. TPO passed order in reference to letter dated 28.01.2022. Therefore, the assessment order under Section 143(3) r.w.s. 144B dated 28.03.2022 being barred by limitation is invalid. Reference to ratio of judgment in Virtusa Consulting Services (P) Ltd. vs. Dispute Resolution Panel [2022 (7) TMI 497 - MADRAS HIGH COURT] is important. Decided in favour of assessee. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the reference to the Transfer Pricing Officer under section 92CA(1) was made after expiry of the assessment time-limit under section 153(1), rendering the reference invalid and void. (ii) Whether, as a consequence of an invalid/belated transfer pricing reference, the assessment order passed under section 143(3) read with section 144B was barred by limitation under section 153 and liable to be quashed. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Validity of transfer pricing reference vis-à-vis limitation Legal framework: The Tribunal examined the limitation for completing assessment under section 153(1) (as extended up to 30.09.2021 on account of COVID-related extensions) and the requirement that a reference under section 92CA(1) must be made during the subsistence of valid assessment proceedings. Interpretation and reasoning: On examination of the record, the Tribunal found that for the relevant assessment year, the assessment ought to have been completed by 30.09.2021. The Transfer Pricing Officer's order was found to have been passed in reference to the Assessing Officer's letter dated 28.01.2022. The Tribunal treated this as demonstrating that the transfer pricing reference was made after the assessment proceedings had already become time-barred. Conclusion: The reference made after expiry of the limitation period was held to be beyond permissible time and therefore invalid in law. Issue (ii): Whether the assessment order was time-barred and invalid Legal framework: The Tribunal applied the principle that if the foundational transfer pricing reference is invalid for being time-barred, the consequential proceedings cannot be sustained; and the assessment must comply with the limitation prescribed by section 153. Interpretation and reasoning: The Tribunal rejected the departmental contention that limitation stood extended due to a valid, earlier reference, because the record before it indicated the relevant reference letter was dated 28.01.2022, i.e., after 30.09.2021. The Tribunal expressly relied on the ratio that a time-barred reference vitiates subsequent proceedings and that levy/collection must be within statutory time limits. Conclusion: The assessment order dated 28.03.2022 was held barred by limitation and therefore invalid, leading to its annulment. Other grounds were not adjudicated on merits as they were not pressed and were left open.