TaxTMI 
TaxTMI 
2021 (9) TMI 178
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....9 days and condonation petition has been filed. After considering the same and upon hearing both the sides, we condone the delay and admit the appeal for hearing. 2. At the outset, the Ld. A.R. for the assessee Shri Akkal Dudhwewala submitted that ITA No. 2652/Kol/2019 is preferred by the Revenue against the order of the Ld. CIT(A) for AY 2012-13 dated 24.07.2019, wherein the Revenue has challenged the action of the Ld. CIT(A) to have decided the appeal in favour of the assessee by upholding the legal issue raised by the assessee i.e. that since the AO's final assessment order u/s. 143(3) r.w.s. 144C(3) of the Act dated 28.12.2018 has been passed beyond the limitation time prescribed by the statute u/s. 153 of the Act, therefore, is non-est in the eyes of law. Against this action of the Ld. CIT(A) the Revenue has preferred the appeal numbered as ITA No. 2652/Kol/2019 and the assessee has filed a Cross Objection (C.O. No. 15/Kol/2020) against the merit of the addition made by the AO vide assessment order dated 28.12.2018. 3. Further the Ld. AR submitted that ITA No. 112/Kol/2021 has been preferred by the assessee against the order of the Ld. Pr. CIT passed u/s. 263 of the Act ....
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....rading of PSC sleepers. The assessee has two foreign branches situated in Abu Dhabi and Saudi Arabia. For the relevant AY 2012-13, the assessee had filed the return of income on 31.10.2013. The assessee did not file any Form 3CEB, since it had claimed that it did not have any international transactions u/s 92B of the Act with its foreign branches. The AO, vide order sheet entry dated 11.03.2015, stated that the assessee had entered into international transactions with its foreign branches and therefore proposed that the case may be referred for transfer pricing scrutiny u/s 92CA of the Act. The assessee by letter dated 24.03.2015 contended that the transfer pricing provisions were not applicable and therefore no reference ought to be made to the TPO. It is however noted that the AO referred the case to the TPO u/s 92CA of the Act. Thereafter, the TPO by notice dated 15.04.2015 issued u/s 92CA(2) of the Act calling upon the assessee company to furnish several details/information in connection with transfer pricing proceedings for the relevant AY 2012-13. Before the TPO, the assessee again objected to the reference made u/s 92CA of the Act on the same ground that it did not had carri....
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....as come into being subsequent to the decision of the assessing officer to refer the matter to the TPO. As noted above, the assessing officer had invoked the provisions of Section 92CA of the Income Tax Act, 1961 in issuing the show cause notice. Section 92CA (1) of the Act of 1961 is as follows : ....... By the circular dated March 10, 2016, the department is of the view that, the transactions noted in clause 3.3 thereof if involved, would give rise to a jurisdictional requirement. The assessing officer is required to record his satisfaction that, there is an income or a potential of an income arising and/or being affected on determination of the arm's length pricing of an international transaction or specified domestic transaction. The circular in clause 3.4 goes on to say that the assessing officer must provide an opportunity of hearing to the assessee before recording his satisfaction or otherwise. He should also pass an speaking order so as to comply with the principles of natural justice. In the facts of the present case, although the circular was not in vogue at the material point of time, the applicability of the principles of natural justice and t....
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.....11.2017 wherein he stated that it was his prerogative to make reference to the TPO for determination of Arms Length Price (ALP) u/s 92CA of the Act. The TPO accordingly issued fresh notices u/s 92CA(2) of the Act and thereafter completed the Transfer Pricing assessment u/s 92CA(3) by order dated 31.10.2018 wherein he proposed an adjustment of Rs. 4,57,20,215/-. Upon receipt of the transfer pricing order, the AO issued notice u/s 142(1) of the Act dated 26.11.2018 calling for several information/details and thereafter completed the assessment u/s 143(3)/144C by order dated 28.12.2018. 9. Before the Ld. CIT(A), the assessee had objected to the validity of the order dated 28.12.2018 passed by the AO and also the merits of the transfer pricing adjustment of Rs. 4,57,20,215/-made therein. The Ld. CIT(A) found merit in the preliminary ground of the assessee that the order impugned was barred by limitation and therefore held the order dated 28.12.2018 to be bad in law and thus ab initio void. The Ld. CIT(A) also found merit in the assessee's contention that it did not have any international transactions with its foreign branches and therefore the reference made by the AO u/s 92CA(2) o....
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....ses. For the relevant year AY 2012-13 the appellant filed its income-tax return declaring loss of Rs. 1,15,215/-. The case was selected for scrutiny u/s 143(3) of the Act, Along with the return of income, the company furnished tax audit report in Form 3CD as well. Since the Indian HQ of the company did not have 'international transactions' with the foreign branches within the meaning of Section 92B of the Act, the company did not file Form 3CEB, In the course of original assessment the appellant was show caused as to why it's case should not be referred for transfer pricing scrutiny. The appellant company vide letter dated 24.03.2015 Objected to the proposed reference u/s 92CA of the Act. It was contended that the company did not have any international transactions in terms of Section 92B of the Act and therefore no reference u/s 92CA was legally permissible. It was also explained that merely because the company had foreign branches did not ipso facto warrant transfer pricing scrutiny. The AO however without disposing off the objections raised by the appellant straightaway referred it's case for transfer pricing scrutiny without even spelling out the specific "internati....
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....o the first petitioner on the jurisdictional issue raised, it ought not to have transferred the matter to the TPO. The assessing officer has acted in the breach of the principles of natural Justice in doing so. The assumption of the jurisdiction by the TPO and subsequently the ultimate reference to the dispute resolution panel are therefore at fault, in the facts of the present case. In the facts of the present case, interest of justice would be sub served by setting aside the writing dated April 16, 2015 of the TPO and the dispute resolution panel subsequent thereto. The assumption of jurisdiction by the TPO is set aside. The assessing officer is requested to proceed on the basis of show cause issued by him dated March 11, 2015 and the reply given thereto by the assessing concerned contained in the writing dated March 24, 2015,in accordance with the law, and in consonance with the circular of the department dated March 10, 2016. " The certified true copy of the order of the Hon'ble Calcutta High Nigh Court was served on the Department on 25.08.2017, evidence thereof is enclosed at Page 134-138 of the paper book. Subsequent to receipt of the said order, the AO....
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....he end of the month of August 2017. Hence the period of limitation ended on 31st August, 2018. The AO however passed the final assessment order on 28th December 2018. As a consequence and in terms of the extent provisions of Section 153(6), the impugned order was barred by limitation and hence bad in law. The appellant thus submits that the impugned order being passed beyond the period of limitation deserves to be cancelled and be held ab initio void." 10. On the aforesaid submissions of the Ld. AR in respect of the legal issue raised by the assessee, the Ld. CIT(A) has decided in favour of the assessee by holding as under: "I have carefully considered the submission of the Ld. ARs of the appellant and also perused the findings of the Ld. AO in the impugned order. I have also gone through the material placed in the paper book and true factual background of the case. The issues involved in these grounds being interlinked and interconnected are dealt together. In Ground No.1 the appellant has objected to the validity of the Ld. AO's order dated 28.12.2018 on the ground of being barred by limitation. From the facts of the case and the sequence of events as narrated in ....
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.... as follows: (5) Where effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 is to be given by the Assessing Officer, wholly or partly, otherwise than by making a fresh assessment or reassessment, such effect shall be given within a period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner : Provided that where it is not possible for the Assessing Officer to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer, if satisfied, may allow an additional period of six months to give effect to the order : Provided further that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by ....
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....by the AO to give effect to the orders of the specified authorities who are given powers to adjudicate appeals or revision applications preferred under the provisions of the I.T.Act. The period of limitation prescribed in sub-section (5) of Section 153 cannot therefore be pressed into service in deciding the issue where the Ld. AO has passed the order pursuant to the directions contained in the order of High Court passed on the Writ petition of the assessee, In the circumstances therefore no fault can be found with the Ld. AO's order with regard to period of limitation prescribed in sub-section (5) of Section 153 of the Act. 4. Coming to provisions of clause (i) of sub-section (6) of Section 153, I observe that this deals with assessment, reassessment, re-computation to be made on the assessee or any person in consequence of or to give effect to any finding or directions contained in an order under Section 250, 254, 260, 262, 263, 264 or in order of any Court in a proceedings otherwise than by way of appeal or reference under this Act. In such case order of assessment, reassessment or re-computation is required to be made on or before the expiry of twelve months from t....
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.... therefore, to have a bird's eye view to know the events which happened in this case, let us take the assistance of a chart which is reproduced as under:- Chronology of Events Sr. No. Particulars Date 1. Return of Income in ITR 6 for AY 2012-13 filed on 31.10.2013 2. Notice u/s. 143(2) issued by the AO on 02.09.2014 3. Notice u/s. 142(1) issued by the AO on 06.08.2015 4. Transfer Pricing Order passed u/s. 92CA(3) on 29.01.2016 5. Draft Assessment order passed u/s. 144C on 10.03.2016 6. Objections filed before the Dispute Resolution Panel 11.04.2016 7. Order passed by the Hon'ble Calcutta HC in WP No. 214 of 2016 11.08.2017 8. Intimation given to the AO regarding the above WP order on 29.08.2017 9. Order passed by DRP disposing off appeal 26.09.2017 10. Show Cause Notice issued by the AO on 06.10.2017 11. Order passed by the AO disposing off objections on 20.11.2017 12. Transfer Pricing Order passed u/s. 92CA(3) on 30.10.2018 13. Notice u/s. 142(1) issued by the AO on 26.11.2018 14. Order passed u/s. 14393) by the AO on 28.12.2018 13. Before we....
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....he provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted.] (4) Notwithstanding anything contained in sub-sections (1), (2) and (3), where a reference under sub-section (1) of section 92CA is made during the course of the proceeding for the assessment or reassessment, the period available for completion of assessment or reassessment, as the case may be, under the said sub-sections (1), (2) and (3) shall be extended by twelve months. (5) Where effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 is to be given by the Assessing Officer, wholly or partly, otherwise than by making a fresh assessment or reassessment, such effect shall be given within a period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner : Provided that where ....
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....e assessee, on or before the 31st day of March, 2017. (8) Notwithstanding anything contained in the foregoing provisions of this section, sub-section (2) of section 153A or sub-section (1) of section 153B, the order of assessment or reassessment, relating to any assessment year, which stands revived under sub-section (2) of section 153A, shall be made within a period of one year from the end of the month of such revival or within the period specified in this section or sub-section (1) of section 153B, whichever is later. (9) The provisions of this section as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment, reassessment or Re-computation made before the 1st day of June, 2016: 86a[Provided that where a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 has been issued prior to the 1st day of June, 2016 and the assessment or reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of this section as it sto....
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....section 245C and ending with the date on which the order under sub-section (1) of section 245D is received by the Principal Commissioner or Commissioner under sub-section (2) of that section; or (viii) the period commencing from the date on which an application is made before the Authority for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the order rejecting the application is received by the Principal Commissioner or Commissioner under sub-section (3) of section 245R; or (ix) the period commencing from the date on which an application is made before the Authority for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Principal Commissioner or Commissioner under sub-section (7) of section 245R; or (x) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner....
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....sment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order; or (b) any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, if such other person was given an opportunity of being heard before the said order was passed.]" 14. We note that section 153 of the Act contains the statutory time limits prescribed by the Parliament for the completion of assessment, reassessment and re-computation. It is noted that the provisions of Section 153 of the Act was amended by the Finance Act 2016. The earlier time limits for completion of assessment, reassessment or computation were substituted. The time limits prescribed there-under are as follows: − Clause (1) of Section 153 provides that the time limit for completion of assessment und....
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....sessments & re-computations. The said sub-section provides that nothing contained in sub-section (1) & (2) shall apply to this residuary class of assessments, re-assessments & re-computations subject to the provisions of sub-sections (3) & (5) of the section. Sub-clause (i) of Clause (6) of Section 153 of the Act states that, where the assessment, re-assessment or re-computation is to be made on (a) the assessee or (b)any other person, in consequence of or to give effect to any finding or direction contained in,(i) order u/s 250 passed by CIT(A) or (ii) order u/s 254 passed by Tribunal or (iii) order u/s 260 passed by High Court or (iv) order u/s 262 passed by Supreme Court or (v) Revision order u/s 263/264 passed by Pr.CIT or (vi) in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, then such order has to be passed before the expiry of twelve months from the end of the month in which such order is received or passed by the CIT. − Sub-clause (ii) of Clause (6) of Section 153 of the Act states that where in case of a Firm, an assessment is to be made on its partner in consequence of an assessment made on the firm u/s 14....
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.... 3 months from the end of the month in which order of Tribunal u/s 254 or order of High Court u/s 260 or order of Supreme Court u/s 262 is received by CIT or the order u/s 263/264 is passed by CIT (6)(i) Any assessment, re-assessment or re-computation either of the assessee or any person in pursuance to finding or direction contained in order u/s 250/254/260/ 262/263/264 or an order of any Court in a proceeding other than appeal or reference under this Act [subject to provisions of sub-section (3) & (5)] 12 months from the end of the month in which order of Tribunal u/s 254 or order of High Court u/s 260 or order of Supreme Court u/s 262 or any order of the Court in a proceeding other than appeal or reference is received by CIT or the order u/s 263/264 is passed by CIT (6)(ii) Assessment of partner in consequence to an order of assessment made on firm u/s 147 of the Act 12 months from the end of the month in which the assessment order is passed in the case of the firm (7) Any order to be passed in terms of sub-section (5) & (6) in relation to such order which was received or passed prior to 01.06.2016 Applicable only to orders which were passed before 01.....
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....e found mentioned both in sub-section (5) and (6) of Section 153 of the Act. Plain reading of sub-section (6) shows that, if any order is covered by sub-section (5), then the period of limitation set out in the latter would prevail. Meaning thereby, only if the finding or direction contained in the aforesaid orders u/s 250/254/260/262/263/264 is not covered by the scope of sub-section (5) that the period of limitation set out in sub-section (6) shall come into play. As noted earlier, in the facts of the present case, the order impugned has not been passed in consequence of any order u/s 250/254/260/ 262/263/264 of the Act. It is noted that apart from the aforesaid orders, there is another class of order covered by sub-section (6) of Section 153 viz., an order passed by the AO in consequence of any finding or direction contained in an order by any Court in a proceeding other than appeal or reference under this Act. In such a case, the AO is required to pass the order within twelve months from the end of the month in which the order has been received by the CIT. As rightly observed by the Ld. CIT(A), the case of the assessee falls under this sub-category contained in clause (i) of Se....
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..... The facts of the case are thus altogether different and the aforesaid provision relied upon by the Ld. DR has no relevance whatsoever. 21. For the reasons set out above, we thus uphold the order of the Ld. CIT(A) on the legal issue and confirm the action of the Ld CIT(A) holding that the AO did not had the jurisdiction to frame assessment after the limitation period has set in and therefore the assessment order passed by AO on 28.12.2018 was barred by limitation and therefore it is null in the eyes of law. and accordingly dismiss the appeal of the Revenue. 22. Coming to the Cross Objection of the assessee which is against the merit of the addition made by the AO, we are not inclined to decide the Cross Objection since it has become infructuous being academic in nature. 23. Coming to the appeal preferred by the assessee against the impugned order of the Ld. Pr. CIT passed u/s. 263 of the Act dated 23.03.2021 in AY 2012-13 (ITA No. 112/Kol/2020), we find that the Ld. Pr. CIT has interdicted with the assessment order passed by the AO dated 28.12.2018 u/s. 143(3) read with section 144C of the Act, which has been held to be non-est in the eyes of law by the Ld. CIT(A), which ....