TaxTMI 
TaxTMI 
2017 (11) TMI 1373
X X X X Extracts X X X X
X X X X Extracts X X X X
....icer ("TPO") erred in assuming jurisdiction by enhancing the income of the Appellant by Rs. 10,34,34,962 on account of transfer pricing adjustment made in respect of the international transaction relating to provision of engineering design. 3. That on the facts and circumstances of the case and in law, the orders of the AO/TPO passed subsequently after the assessment was completed by the AO vide final assessment order dated 09.12.2013 are ex facie illegal, non-est, null and void. a. That the AO grossly erred in assuming jurisdiction and referring the case to the TPO in a matter wherein the AO himself had passed an assessment order dated 09.12.2013 under section 254 read with section 154, 143(3) and 144C of the Act and finalized the same assessment previously. b. That the order of the TPO under section 92CA(3) of the Act is void, since the assessment had already attained finality. c. Without prejudice to the above, the order passed by the AO is time barred by limitation and is bad in law, as it has been passed beyond the time frame prescribed under section 153(3) and 153(2A) of the Act. d. Without prejudice to the above, the corrigendum i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order of the Assessing Officer, the Tribunal restored the matter back to the file of the ld. AO/TPO to address the assessee's issues and pass a speaking order. 2.1 In second round of proceedings, the Assessing Officer first gave effect of the order of the Tribunal on 09/12/2013. Subsequently, the Ld. TPO passed an order under section 92CA(3) of the Act on 29/01/2016 in compliance to the order of the Tribunal. The Assessing Officer then passed a draft assessment order on 07/09/2016 incorporating the adjustment of Rs. 11,12,31,042/- proposed by the Ld. TPO. Aggrieved, the assessee filed objections before the Ld. DRP, who issued directions vide order dated 26/05/2017. After receipt of the order of the Ld. DRP, the Assessing Officer sent a letter to the learned TPO for the computation of the ALP. After receipt of recomputed arm's length price from the Ld. TPO, the Assessing Officer issued a final assessment order on 27/07/2017, incorporating adjustment of Rs. 10,34,34,962/- to the international transaction. Aggrieved with the said order of the Assessing Officer in second round of proceedings, the assessee is in appeal challenging the impugned order on the legality as well as on meri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Assessing Officer passed another assessment order under section 143(3) of the Act on 11/08/2016 for giving effect to the order of the learned TPO in pursuant to the decision of the ITAT. 3.5 He further submitted that no draft assessment order under section 144C was passed. The learned counsel further drawn our attention to pages 1 to 11 of the paper book and submitted that the ld. AO passed the final assessment order on 11.08.2016 and subsequently on 07/09/2016, the Ld. AO passed the corrigendum order stating that said order dt. 11.08.2016 was wrong & the mistake is being rectified. On the same date, the Ld. AO issued a draft assessment order and cancelled the final assessment order dated 11/08/2016. The Ld. counsel relied on the judgment of the Hon'ble Delhi High Court in the case of Pr. CIT Vs. City Financial, ITA 275/2015 wherein it is held that the assessment order under section 143(3) of the Act passed by the Assessing Officer can only be rectified/cancelled/modified under section 148/263/154 and without resorting to any of the provisions, subsequent orders are invalid and non-est. 3.5 He further submitted that non-issuance of draft assessment order and wrong assumptio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Hon'ble Delhi High Court in the case of Pr. CIT Vs. City Financial (supra) and submitted that in the case of the assessee issue of passing a final assessment order without draft assessment order, is involved, whereas in the case of city financial (supra) order under section 143(3) of the Act was cancelled. 4.5 The Ld. CIT(DR) submitted that, assessment order dated 11/08/2016 was cancelled by the Assessing Officer and ultimately the assessee challenged the draft assessment order dated 07/09/2016 before the Ld. DRP and Ld. DRP provided opportunity to the assessee, therefore it is not the case that assessee has been deprived of the opportunity. According to him, non-issuance of draft assessment order was a curable defect under section 292B of the Act. 4.6 In view of the submissions, the Ld. CIT(DR) submitted that the impugned assessment order was passed within limitation period and there is no illegality in assessment completed by the Assessing Officer. 5. We have heard the rival submissions and perused the material on record, particularly the orders passed in second round of proceedings and the paper book of the assessee containing pages 1 to 543. 5.1 The assessee has....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ustments back to the file of Transfer Pricing Officer to address these issues and pass a speaking order in accordance with law after hearing the assessee. These grounds are allowed for statistical purposes." 5.2.1 The appeal was finally allowed partly for statistical purposes by the Tribunal. 5.3 Before us, the Ld. counsel has contended that for complying the direction of the Tribunal by the Assessing Officer, the assessment was to be completed within two years from the end of the financial year, in which the order of the Tribunal was received by the Commissioner of Income Tax in terms of section 153(2A) of the Act. Whereas according to the Ld. CIT(DR), the Tribunal only issued limited direction and the assessment was not set aside for making fresh assessment de novo, and, therefore, section 153(3) of the Act was applicable and according to which there is no limitation period for making assessment by the Assessing Officer in complying the direction of the Tribunal. The ld. DRP adjudicated the issue-in-dispute as under: " 3.2.1 Decision Of The Panel The Panel has carefully examined the issue and the provisions of section lS3.The reliance on Sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n assessment and annulment of an assessment. In a case where the order of assessment is set aside, it is open to the Assessing Officer to make a fresh assessment in accordance with tow. in the case of annulment, the order becomes non-est. On a conjoint reading of Sections 143,144B, 251 and 153 of the Act, it becomes abundantly clear that if an assessment is set aside by the appellate authority, the extended time-limit is available for making a fresh assessment in pursuance of the direction of the appellate authority, but in the case of annulment, no such extended time is available." It may be mentioned that when the assessment is set aside by the appellate authority without ordering fresh assessment, such order would amount to annulment of assessment. In such case, the limitation provided under Section (2A) of Section 153 would not be available to make fresh assessment However, if the original time limit is available, the A.O. may proceed from the stage at which the illegality which resulted in annulment of assessment supervened and to make the assessment afresh, it may further be mentioned that when the appellate authority set aside the assessment and direct the Assessing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....014, the limitation for completion of the assessment in terms of section 153 (2A) of the Act would expire on 31/03/2016. Thus, both the draft assessment order dated 11/08/2016 and impugned assessment order dt. 27.07.2017 have been passed beyond this date of 31/03/2016 . 5.5 Ld. CIT(DR) has not disputed this date of limitation in terms of section 153 (2A) of the Act .Thus, the only issue in dispute before us is whether the Assessing Officer was required to pass order within the limitation period as provided in section 153(2A) of the Act or in accordance with section 153(3) of the Act. We feel it necessary to reproduce the relevant part of section 153(2A) and section 153(3) in existence during the period under consideration as under: "Time limit for completion of assessments and reassessments. 153. [(1) ............................................................................................................. [(2A) Notwithstanding anything contained in sub-sections (1) [, (1A), (1B)] and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ne months" had been substituted.] Provided also that where the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner on or after the 1st day of April, 2010, and during the course of the proceeding for the fresh assessment of total income, a reference under sub-section(1) of section 92CA is made, the provisions of this sub-section shall, notwithstanding anything contained in the second proviso, have effect as if for the words "one year", the words " two years" had been substituted. (3) The provisions of sub-sections (1), (1A), (1B) and (2) shall not apply to the following classes of assessments, reassessments and re-computations which may, subject to the provisions of sub-section (2A), be completed at any time- (i ) [***] (ii ) where the assessment, reassessment or re-computation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, 254, 260, 262, 263, or 264....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... aside and the matter remanded, with a direction that the issue has to be determined afresh, Section 153 (2A) of the Act would get attracted. 24. What is important to note is that, along with the insertion of sub-section (2A), sub-section (3) underwent a simultaneous change. It was expressly made "subject to the provisions of sub-section (2A)." This meant that Section 153 (3) would thereafter apply only to such cases where Section 153 (2A) did not apply. In other words, in all instances of an AO having to pass a fresh assessment order upon remand where Section 153 C2A) would apply, the AO would be bound to follow the time-limit imposed by sub-section (2A). Where the AO was only giving effect to an appellate order, then Section 153 (3) (ii) of the Act would apply. 25. In the present case, of the seven issues, the assessment in respect of five was set aside and the issues remanded for a fresh determination. Whether the remand was to the TPO or the DRP would not make a difference as long as w hat results from the remand is a fresh assessment of the issue. Clearly, therefore, the time limit for completing that exercise w as governed by Section 153 (2A) of the Act." ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onth of receipt of the direction of the Ld. DRP is concerned, the undisputed facts of the case are that Ld. DRP issued direction on 26/05/2017 and the final assessment order has been passed on 27/07/2017. The relevant provision of section 144C of the Act, specifying the time limit reads as under: "Reference to dispute resolution panel. 144C. (1) ........................... (2) ........................................ (3) .................................. (4...................................... (5) ................................... (6) ......................................... (7) ......................................... (8) ................................. (9) .............................. (10) ............................ (11) .......................... (12) ............................. (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 or section 153B, the assessment without providing any further....