TaxTMI 
TaxTMI 
2022 (6) TMI 848
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....T R. MAHADEVAN, J. The Revenue is the appellant(s) in all the appeals. WA.Nos.1517, 1519, 1609 and 1610 of 2021 have been filed against a common order dated 23.12.2020 passed by the learned Judge in the respective WP Nos.1068, 1070, 922 and 919 of 2020, whereas WA.No.1854 of 2021 arises from the order dated 16.02.2021 made in WP No.6202 of 2019. 2. The issues raised in all these writ appeals are identical and interrelated to each other as the order in one batch has been relied and followed in the other case. The learned counsel on either side have putforth common arguments in all the appeals. Therefore, all the writ appeals were taken up for hearing together and disposed of by this common judgment. 3. The respondent in these writ appeals namely WA Nos. 1517, 1519, 1609 & 1610 of 2021 / M/s. Roca Bathroom Products Private Limited is a private limited company incorporated during August 1983 and a subsidiary of Roca Sanitario S.A., Spain. They are engaged in the business of manufacturing and marketing of bathroom products, such as, sanitary ware, tap fittings and other allied products. For the assessment year 2009-2010, they filed their return on 26.09.2009, declaring an i....
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....llowed the appeals by setting aside the orders of the assessing officer and remanding the matter to the assessing officer to refer the same to the DRP for fresh examination, after giving sufficient opportunity to the assessee. In respect of the assessment year 2010-2011, the respondent/assessee filed Miscellaneous Petition No. 71/Mds/2016 stating that certain grounds raised by them have not been adjudicated. By order dated 10.08.2016, the Tribunal allowed the Miscellaneous Petition and reopened the appeal in respect of grounds 4 to 7 for fresh adjudication. Pursuant to the same, the Tribunal by order dated 23.09.2016, allowed the appeal and directed the assessing officer to reexamine the issue afresh, after providing reasonable opportunity to the assessee. 7. According to the respondent, they did not receive any notice, pursuant to the orders of the Tribunal and therefore, they sent a letter dated 21.08.2019 to the second appellant stating that the remand proceedings have become time barred under Section 153 of the Act and hence, requested for refund of the tax already paid by them for the assessment years 2009-2010 and 2010-2011 along with interest. Thereafter, they received se....
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....of 2019 to quash the final assessment order dated 29.10.2020 passed under Section 143 (3) read with Section 144-C (13) of the Act and consequently direct the appellants to grant refund of Rs.4,72,88,068/- along with interest. 9. Opposing the relief (s) sought for in the writ petitions, a counter affidavit was filed by the appellants contending that the writ petition was filed on misconception that the proceedings initiated by the department are barred by limitation in respect of the assessment year 2009-2010. It is well settled that the challenge made to show cause notice is not maintainable inasmuch as it is only a proposal to initiate action and it has not finally determined the rights and liabilities of the parties to the writ. The respondent/assessee ought to have submitted their objections to the show cause notice and it is for the appellants to decide as to whether the proceedings are barred by limitation or not. Therefore, it was submitted that the writ petitions have been filed hastily and the reliefs sought for need not be granted. It was also submitted that the Assessing Officer was directed by the DRP to re-examine the issues and therefore, the provisions of Section 1....
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.... communication seeking a refund that the Department has woken up, with the DRP issuing notices to the petitioner for both years, though for AY 2010~11, the matter was remanded to the file of the Assessing Officer. .... 15. No doubt, Section 144C is a self contained code of assessment and time limits are inbuilt each stage of the procedure contemplated. Section 144C envisions a special assessment, one which includes the determination of Arms Length Price (ALP) of international transactions engaged in by the assessee. The DRP was constituted bearing in mind the necessity for an expert body to look into intricate matters concerning valuation and transfer pricing and it is for this reason that specific timelines have been drawn within the framework of Section 144C to ensure prompt and expeditious finalisation of this special assessment. 16. The purpose is to fast-track a specific type of assessment. This does not however lead to the conclusion that overall time limits have been eschewed in the process. In fact, the argument to the effect that proceedings before the DRP are unfettered by limitation would run counter to the avowed object of setting up of the DR....
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....d had been to the TPO or the DRP, thus indicating that the provisions of Section 144C were also governed by the limitation of time set out in Section 153 of the Act. 22. The issue before the Delhi High Court concerned the effect of Section 153(2A) in a matter where the Tribunal had remanded the assessment in respect of five out of seven issues to the Assessing Officer. Upon receipt of the order of the Tribunal, the Assessing Officer referred the transfer pricing issues to the TPO. The assessee took a stand that the TPO would be bound by the limitation prescribed under Section 153(2A) and requested the TPO to take the provision into consideration in the proceedings before him. The time limits under Section 153(2A) were however violated by the Department leading to Writ Petitions being filed by Nokia. In that context, the Court, while accepting the stand of the assessee that the time limits specified in Section 153(2A) would apply, states as follows: "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 ....
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....rishnan, learned senior panel counsel appearing for the appellants would submit that the DRP is entirely governed by the provisions contained under Section 144-C of the Act. As per Section 144- C, the Assessing Officer shall forward a draft order of assessment to the eligible assessee, if he proposes to make any variation in the income or loss returned, which is prejudicial to the interest of such assessee. On receipt of such draft order, the assessee shall file his acceptance or objections and thereafter the Assessing Officer shall complete the assessment on the basis of such draft order, if no objections are filed and based on the directions issued by DRP, if objections are filed. The Assessing Officer, notwithstanding anything contained in Section 153 or Section 153B, shall pass assessment order under Section 144C(3) within a month from the end of the month in which the period for filing objections under sub-section (2) of Section 144C expires. Therefore, it is contended that Section 144-C has to be considered independently as far as DRP is concerned. Adding further, the learned counsel submitted that section 153 is a genus and section 144C is a specie which is independent. Firs....
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....assessment on the basis of the order passed by the Commissioner under Section 263 or 264 of the Act or in compliance with the order of the Appellate Authorities or Tribunal or the Court. Section 153 of the Act is silent with respect to the period of limitation, within which time, the assessment has to be made by the assessing officer on the basis of the directions of the DRP. The time limit is specifically excluded because the proceedings before the DRP as well as the proceedings initiated on the basis of the directions issued by DRP are separate and distinct. In this context, reliance was placed on Section 144C (13) of the Act, which reads as follows:- "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 opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received." (iii) By pointing out Section 144 C (13) of the Act, it is submitted by the learned senior standing counsel for the appellants that the li....
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....73] has no application to the facts of the present case. In that case, the Bombay High Court did not consider the effect of Section 144C (13) which specifically uses the words "notwithstanding anything to the contrary contained in Sec.153 or Sec.153B" but the Court had an occasion to consider whether the Assessing Officer could, by issuance of a Corrigendum, convert a final assessment order into that of a draft assessment order. Similarly, the decision of the Delhi High Court in Nokia India Private Limited v. DCI [2018 (407) ITR 20] is not applicable to the case on hand, where the Court has not considered the effect of Section 144C (13). Therefore, the reliance placed by the learned Judge on the aforesaid two decisions is improper. In any event, when Section 153 of the Act does not apply to DRP and the Assessing Officer has no control over DRP, it has to be construed that there is no time limit prescribed in the Act for the DRP to complete the proceedings. Therefore, Section 153 of the Act cannot be interpreted as if it imposes limitation to the Assessing Officer to pass orders upon remand of the matter by the Tribunal by obtaining order from DRP within the time prescribed under Se....
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....ired on 31.03.2015 within which date, a final order in the remand proceedings ought to have been passed. (ii) The learned Senior counsel for the respondent invited the attention of this court to the decision of the Delhi High Court in Nokia India Private Limited v. DCIT [(2018) 407 ITR 20] and submitted that the provisions contained under Section 152 (3A) of the Act are applicable even to a remand proceedings passed by the Tribunal, directing the DRP to adjudicate the issues afresh. In this case, pursuant to the order passed by the Tribunal, remand proceedings were initiated by the DRP, Chennai and subsequently, by notification dated 31.12.2014, the jurisdiction vested with DRP, Bengaluru. However, it cannot be said that DRP, Chennai which initiated the remand proceedings, has no jurisdiction to adjudicate the issue or in the alternative, should have passed orders even earlier. While so, the appellants ought to have passed an order on or before 31.03.2015 and any order passed subsequent thereto is hit by Section 153 (2A) of the Act. (iii) The learned Senior counsel also submitted that even assuming that Section 153(2A) does not provide any limitation, it is a settled law that....
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....he learned senior counsel also relied upon the Judgment in Vedanta Ltd v. DCIT [(2020) 114 taxman.com 686] to buttress the contention that the very object of DRP mechanism is to expedite the assessment proceedings involving transfer pricing and foreign companies. By placing reliance on the aforesaid decision and other decisions, which emphasize the strict adherence to the period of limitation for assessment or revision of assessment, it is submitted by the learned Senior counsel that there is enormous delay in passing a final order pursuant to the order of remand passed by the Tribunal on 24.01.2013. The learned Judge, on appreciation of the said aspects has rightly allowed the writ petition filed by the respondent and it calls for no interference by this court. 14. (i) Mr. Kamal Sawhney, learned senior counsel appearing for the respondent in WA Nos. 1517, 1519, 1609 & 1610 of 2021 would contend that the appellants are not legally justified in not passing a final order in the remand proceedings within a reasonable time. According to him, the order passed by the TPO is binding on the Assessing Officer in terms of Section 92CA (4) of the Act. On receipt of an order passed by TPO, ....
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....ut any set of limitation. In the present case, for more than five years from the date of order of remand passed by the Tribunal, no order has been passed by the appellants, while so, the notice dated 06.01.2020 issued for continuing the remand proceedings is illegal and it is barred by limitation under Section 153(2A) of the Act. (iii) The learned Senior counsel also placed reliance on the decision of the Delhi High Court in Nokia India (P) Ltd case (supra) and contended that whether the remand was made to the TPO or the DRP would not make a difference as long as what results from the remand is a fresh assessment of the issue and therefore, the time limit for completing the exercise of assessment is governed by Section 153 (2A) of the Act. According to the learned Senior counsel, the legislature was cautious and well aware of the limitations, which are applicable for completing the assessment under Section 153 and even completing an assessment pursuant to an order of remand. The legislature has provided specific timelines under Section 144C within which the DRP has to act and complete the proceedings. However, in the present case, the Assessing Officer has not issued any draft a....
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....ions under the Income Tax Act and the timelines under the Transfer Pricing. (A) Provisions of law. Section 92CA - Reference to the Transfer Pricing Officer. "Section 92CA. (1) Where any person, being the assessee, has entered into an international transaction or specified domestic transaction in any previous year, and the Assessing Officer considers it necessary or expedient so to do, he may, with the previous approval of the Principal Commissioner or Commissioner refer the computation of the arm's length price in relation to the said international transaction or specified domestic transaction under Section 92C to the Transfer Pricing Officer (2) Where a reference is made under sub-section (1), the Transfer Pricing Officer shall serve a notice on the assessee requiring him to produce or cause to be produced on a date to be specified therein, any evidence on which the assessee may rely in support of the computation made by him of the arm's length price in relation to the international transaction or specified domestic transaction referred to in sub-section (1). 2A. Where any other international transaction other than an international transact....
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....n the circumstances referred to in clause (ii) or clause (x) of Explanation 1 to Section 153, if the period of limitation available to the Transfer Pricing Officer for making an order is less than sixty days, such remaining period shall be extended by sixty days and the aforesaid period of limitation shall be deemed to have been extended accordingly (4) On receipt of the order under sub-section (3), the Assessing Officer shall proceed to compute the total income of the assessee under sub-section (4) of Section 92C in conformity with the arm's length price as so determined by the Transfer Pricing Officer (5) With a view to rectifying any mistake apparent from the record, the Transfer Pricing Officer may amend any order passed by him under subsection (3), and the provisions of section 154 shall, so far as may be, apply accordingly (6) Where any amendments is made by the Transfer Pricing Officer under sub-section (5), he shall send a copy of his order to the Assessing Officer who shall thereafter proceed to amend the order of assessment in conformity with such order of the Transfer Pricing Officer (7) The Transfer Pricing Officer may, for the pu....
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.... (a) draft order; (b) objections filed by the assessee; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),- (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) E....
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....0, the provisions of clause (a) shall have effect as if for the words "two years", the words "twenty-one months" had been substituted : Provided further that in case the assessment year in which the income was first assessable is the assessment year commencing on or after the 1st day of April, 2005 but before the 1st day of April, 2009 and during the course of the proceeding for the assessment of total income, a reference under subsection (1) of section 92CA- 1. (i) Was made before the 1st day of June, 2007 but an order under subsection (3) of that section has not been made before such date; or 2. (ii) Is made on or after the 1st day of June, 2007, The provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words "two years", the words "thirtythree months" had been substituted: Provided also that in case the assessment year in which the income was first assessable is the assessment year commencing on the 1st day of April, 2009 or any subsequent assessment year and during the course of the proceeding for the assessment of total income, a reference under sub-section (1) of section ....
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....is 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 (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 order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year in which the order under section 250 or section 254 is received by the [Principal Chief Commissioner orChief 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 Chief Commissioner or]Chief Commissioner or [Principal Commissioner or]Commissioner: Section 153 after 01.06.2016. 153. Time limit for completion of assessment, reassessment and re-computation.-(1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-....
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....ded 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. (6) Nothing contained in sub-sections (1) and (2) shall apply to the following classes of assessments, reassessments and re-computation which may, subject to the provisions of sub-sections (3) and (5), be completed- i. 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, section 254, section 260, section 262, section 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, on or before the expiry of twelve months from the end of the month in which such order is received or passed by the Principal Commissioner or Commissioner, as the case may be; or ii. where, in the case of a firm, an assessment is made on a....
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.... in Clauses (A) to (G) thereof. As per sub-section (12), the DRP has no authority to issue any directions under subsection (5) from the end of the month in which the draft order is forwarded to the eligible assessee and not from the date when the assessee submits the objections. Sub-section (13) of section 144C of the Act provides that upon receipt of directions issued under sub-section (5) of section 144C of the Act, the Assessing Officer shall in conformity with the directions complete the assessment proceedings within one month from the end of the month in which the directions are received. It goes without saying that if no objections are filed by the Assessee to the draft order, the assessing officer has to pass the final assessment order based on the draft order within one month from the end of the month in which the period for filing the objection had expired as per section 144C(4). As per the proviso to Section 92CA (3A), if the time limit for the TPO to pass an order is less than 60 days, then the remaining period shall be extended to 60 days. This implies that not only the time frame is mandatory but also the TPO has to pass an order within 60 days. Further, the extension ....
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....he appeal in W.A.No.1854 of 2021, even though the remand was on 24.01.2013 and the assessee had received the order on 08.02.2013, the first notice by the DRP was issued on 19.02.2014 and the first hearing in the Chennai office was on 10.03.2014. Therefore, it is lucid that the DRP had the knowledge of the order before 19.02.2014. The matter was heard on various dates in Chennai office and written submissions were also filed. Thereafter, the files have been transferred to Bengaluru by the CBDT notification dated 31.12.2014. The Learned Judge relying upon the findings in the batch of cases which was decided first and rendered additional findings, which have been extracted in paragraphs 10 and 11 above, has allowed the writ petitions holding that the time limit under Section 153 (2A) was not adhered to and in any case, the proceedings have not been concluded within a reasonable time. 20. As rightly contended by the learned senior counsels and affirmed by the Learned Judge, the DRP proceedings is a continuation of assessment proceedings. To put it further, it is a part of assessment proceedings, once the objections are filed and under section 144C (12) a period of 9 months is prescr....
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....r, when it had issued a notice on 19.02.2014 and conducted the hearing as early as on 10.03.2014 and on several dates. The DRP at Chennai, in fact ought to have passed orders before 19.11.2014, even if the date of receipt of the notice is taken as 19.02.2014. In that event, the assessing officer ought to have passed the order before 31.12.2014 or at the latest before 31.03.2015 considering that the order was received during the Financial year 2013-14. The transfer of the files to Bengaluru, after the lapse of the time, will not indefinitely extend the time and can have no impact on the time lines. It is an inter-department arrangement and it cannot defeat the rights of the assessee. 22. Insofar as the non-obstante clause in Section 144C(13) is concerned, we concur with the view of the Learned Judge. The exclusion of applicability of Section 153 or Section 153 B is for a limited purpose to ensure that dehors larger time is available, an order based on the directions of the DRP has to be passed within 30 days from the end of the month of receipt of such directions. The section and the sub-section have to be read as a whole with connected provisions to decipher the meaning and inte....
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....rred to in S. Teja Singh case [AIR 1959 SC 352 : (1959) 35 ITR 408]). 18. The statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make a consistent enactment of the whole statute. 19. The court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with other parts of the law and the setting in which the clause to be interpreted occurs. (See R.S. Raghunath v. State of Karnataka [(1992) 1 SCC 335 : 1992 SCC (L&S) 286 : (1992) 19 ATC 507 : AIR 1992 SC 81] .) Such a construction has the merit of avoiding any inconsistency or repugnancy either within a section or between two different sections or provisions of the same statute. It is the duty of the court to avoid a head-on clash between two sections of the same Act. (See Sultana Begum v. Prem Chand Jain [(1997) 1 SCC 373 : AIR 1997 SC 1006])." (iii) Franklin Templeton Trustee Services (P) Ltd. v. Amruta Garg, (2021) 6 SCC 736 : 2021 SCC OnLine SC 88 at page 752: "17. The concept of "absurdity" in t....
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....nsofar as the challenge to the show cause notice issued is concerned, though generally, the High Court will be circumspected to interfere at the stage of show cause notice, the law on the point is well settled with exceptions carved in the following cases; a. when the notice is issued beyond the period of limitation, b. when the notice is without authority, c. when notice is issued without following the procedures under the applicable Act or the rules framed thereunder and d. when the notice is issued with a prejudiced mind. The challenge must be available ex-facie leaving no room for the court to peruse or discuss intricate facts. In the present case, the challenge is on the ground of limitation and hence, we hold that the proceedings under Article 226 of the constitution are maintainable. 25. As regards the relief sought in other appeals viz., W.A.No.1517/2021 etc. batch, the findings rendered above are equally applicable. In these cases, for the assessment year 2009-10, the order of remand to the Assessing officer was passed on 18.12.2015 and insofar as the assessment year 2010-11 is concerned, for one issue, it was passed on 18.12.2015 ....
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....o the net of taxation, such an eventuality cannot be grappled with appropriately unless timely assessment is completed. In several taxing statutes, even in a situation like this, where assessment under Section 11(3) or 28(3) of the respective Acts is contemplated, a period of limitation is provided. Until by statute, such a limitation is provided, it is proper for the State Governments to require, by statutory rules or appropriate instructions, to ensure completion of assessments with expedition and reasonable haste but subject to rules of natural justice." (ii) Govt. of India v. Citedal Fine Pharmaceuticals, [(1989) 3 SCC 483 : 1989 SCC (Tax) 464 at page 487] "6. Learned counsel appearing for the respondents urged that Rule 12 is unreasonable and violative of Article 14 of the Constitution, as it does not provide for any period of limitation for the recovery of duty. He urged that in the absence of any prescribed period for recovery of the duty as contemplated by Rule 12, the officer may act arbitrarily in recovering the amount after lapse of long period of time. We find no substance in the submission. While it is true that Rule 12 does not prescribe any period within ....
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....r cannot be exercised suo motu after an unduly long delay, on the facts of this case it is plain that it was not so done. Within a few months of the passing of the appellate order by the Assistant Commissioner, the Commissioner proceeded to revise and revised the said order. There was no undue or unreasonable delay made by the Commissioner. It may be stated here that an appeal has to be filed by an assessee within the prescribed time and so also a time-limit has been prescribed for the assessee to move in revision. The appellate or the revisional powers in an appeal or revision filed by an assessee can be exercised in due course. No time-limit has been prescribed for it. It may well be that for an exercise of the suo motu power of revision also, the revisional authority has to initiate the proceeding within a reasonable time. Any unreasonable delay in exercise may affect its validity. What is a reasonable time, however, will depend upon the facts of each case." 23. The question as to what would be the reasonable period did not fall for consideration therein. The binding precedent of this Court, some of which had been referred to us heretobefore, had not been considered. Th....