TaxTMI 
TaxTMI 
2022 (6) TMI 848
X X X X Extracts X X X X
X X X X Extracts X X X X
....10 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 income of Rs.21,44,96,661/-. Similarly, for the assessment year 2010-2011, they filed their return on 30.09.2010....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icer 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 separate notices dated 06.01.2020 from the Dispute Resolution Panel (in short, "the DRP") calling upon them to appear for....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 153 of the Act would not be applicable to the present case, inasmuch as the DRP is not an authority within the purview of Se....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 DRP a high powered and specialised body set up for dealing with matters of transfer pricing. Having set time limits every step of the way, it does not stand to re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lhi 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 as long as what results from the remand is a fresh assessment of the issue. Clearly, therefore, the time limit for completing that exercise was governed by Section 153 (2A) of the Act." 23. It is brought to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 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. Firstly, the marginal note to Section 144-C states that "Reference to dispute resolution panel"and secondly, sub-section 12 specifies the time limit which the DRP shall give suggestions. Though under sub-section (5), the DRP can issue directions only u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 limitation prescribed under Section 153 of the Act applies only to a draft assessment order and not final assessment order passed under Section 144C and that is the reason why the draft assessment orders are passed within a period of 33 months from the expiry o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt 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 Section 153 of the Act. The order passed by the learned Judge, in effect, would mean prescribing a limitation of one month prior to the date on which the period specified in Section 153(2A) expires for completion of proceedings by the DRP, when such limitation has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 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 in case where no limitation is prescribed for discharge of certain acts or duties, the authority expected to discharge such duty, has to conclude the proceedings within a reasonable time and the person against whom such proceedings are initiated, will also have a legi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g 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, the Assessing Officer has to complete the assessment by passing a draft assessment order in terms of Section 144C(1) of the Act. The expression used in Section 144C(1) 'at the first instance' would only mean that the Assessing Officer, before passing the final order ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 assessment order pursuant to the directions of the Tribunal and hence, the proceedings are time barred as it was not initiated within a reasonable period. At the same time, it cannot be said that no limitation would apply to DRP and the assessment or re-assessment proceedings can....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 transaction referred under sub-section (1) comes to the notice of the Transfer Pricing Officer during the course of the proceedings before him, the provisions of this Chapter shall apply, as if such other international transaction is an international transaction referred to him under sub-section (1). 2B. Where in respect of an international transaction the assessee has not furnished the report under Section 92E and such transaction comes to the notice of the Transfer Pri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 purpose of determining the arm's length price under this section, exercise all or any of the powers specified in clauses (a) to (d) of sub-section (1) of section 131 or sub-section (6) of section 133 or section 133A Explanation:- For the purposes of this section, Transfer Pricing Officer means a Joint Commissioner or Deputy Commissioner or Assistant Commissioner authorised by the Board to perform all or any of the functions of the Assessing Officer specified in sections 92C and 92D in respect of any person or class of pers....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ame 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) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (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, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 92CA is made, the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words "two years", the words "three years" had been substituted. (1A) No order of assessment shall be made under section 115WE or section 115WF at any time after the expiry of twenty-one months from the end of the assessment year in which the fringe benefits were first assessable. (1B) No order of assessment or reassessment shall be made under section 115WG after the expiry of nine months from the end of the financial year in which the notice under section 115WH was served. (2) No order of assessment, reassessment or re-computation shall be made under section 147 after the expiry of one year from the end of the financial year in which the notice under section 148 was served : Provided that where the notice under section 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sioner 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-one months from the end of the assessment year in which the income was first assessable. (2) No order of assessment, reassessment or re-computation shall be made under section 147 after the expiry of nine months from the end of the financial year in which the notice under section 148 was served. (3) Notwithstanding anything contained in sub-sections (1) and (2), an order of fresh assessment in pursuance of an order under section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of nine months from the end of the financial year in which 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. Provided that where the order under section 254 is received by the Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 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 partner of the firm in consequence of an assessment made on the firm under section 147, on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed. (7) Where effect to any order, finding or direction referred to in subsection (5) or sub-section (6) is to be given by the Assessing Officer, within the time specified in the said sub-sections, and such order has been received or passed, as the case may be, by the income-tax authority specified therein before the 1st day of June, 2016, the Assessing Officer shall give effect to such order, finding or direction, or assess, reassess or recompute the income of the assessee, on or before the 31st day of March, 2017. (B) Timelines under sections 92CA, 144C and 153 of the Act. After an international transaction is noticed subject to satisfaction of section 92B, a reference is made to the TPO under sub-Section (1) of Section 92CA of the Act. Though the provision does not state as to wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ining 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 in the proviso referred above also automatically extends the period of assessment to 60 days as per the second proviso to Section 153. That apart, but for the reference to the TPO, the time limit for completing the assessment would only be 21 months from the end of the assessment year. It is only if a reference has been made during the course of assessment and is pending, the department gets another 12 months as per second proviso to Section 153 (1) and under Section 153(4) after amendment. In Section 153(2A), a time limit is prescribed to the Assessing officer to complete the fresh assessment within one year prior to amendment and after amendment, as per section 153 (3), the time limit has been reduced to 9 months. As per the proviso to section 153 (3) if the order is received after 1st April 2019, the time limit is one year. From the above provisions, it is very clear that various time limits have been prescribed to various mechanisms which form part of assessment proceedings, either original or on remand to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssment 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 prescribed, within which, directions are to be issued by the DRP, failing which any directions are to be treated as otiose. As seen from the timeline discussed in the earlier paragraphs, the original assessment proceedings are to be completed within 21 months and the additional time of 12 months is granted when proceedings before TPO is pending. The TPO has to pass orders before 60 days prior to the last date. Then 30 days time is given to the assessee to file their objection before the DRP and the DRP is given 9 months time and thereafter, within one month from the end of the month of receipt of directions from DRP, the final order is to be passed. This court is not in consonance with the contention of the learned senior panel counsel for the appellants/ revenue that the time period of 33 months, provided initially is for the draft order and not for the final order. A careful perusal of the timeline would indicate that the time limit is for the final assessment and not for the draft order. The anomaly in the argument is th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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 intentions. At this juncture it would be useful to refer to the following decisions: (i) Sultana Begum v. Prem Chand Jain, (1997) 1 SCC 373 at page 381: "11. The statute has to be read as a whole to find out the real intention of the legislature. 12. In Canada Sugar Refining Co. v. R. [1898 AC 735 : 67 LJPC 126] , Lord Davy observed: "Every clause of a statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject-matter." .......... 14. This rule of construction which is also spoken of as "ex visceribus actus" helps in avoiding any inconsistency either within a section or between two different sections or provisions of the same statute. 15. On a conspectus of the case-law indicated above, the following principles are clearly discernible: (1) It is the duty of the courts to avoid a head-on clash between two sections of the Act and to construe the provisions which....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "17. The concept of "absurdity" in the context of interpretation of statutes is construed to include any result which is unworkable, impracticable, illogical, futile or pointless, artificial, or productive of a disproportionate counter-mischief [ See Bennion on Statutory Interpretation, 5th Edn., p. 969.] . Logic referred to herein is not formal or syllogistic logic, but acceptance that enacted law would not set a standard which is palpably unjust, unfair, unreasonable or does not make any sense. [Bennion on Statutory Interpretation, 5th Edn., p. 986.] When an interpretation is beset with practical difficulties, the courts have not shied from turning sides to accept an interpretation that offers a pragmatic solution that will serve the needs of society [Id, p. 971, quoting Griffiths, L.J.] . Therefore, when there is choice between two interpretations, we would avoid a "construction" which would reduce the legislation to futility, and should rather accept the "construction" based on the view that draftsmen would legislate only for the purpose of bringing about an effective result. We must strive as far as possible to give meaningful life to enactment or rule and avoid cadaveric con....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and for other two issues, it was passed on 23.09.2016 after the amendment, by which time, the time limit was brought down to 9 months. As such, fresh orders ought to have been passed before 31.03.2017 for the assessment year 2009-10 and for one issue relating to the assessment year 2010-11 reckoning the 12 months from the financial year 2015-16 and on or before 31.12.2017 reckoning 9 months from the financial year 2016-17. Therefore, the Assessing officer ought to have passed a draft assessment order immediately and asked the assessee to file their objections with the DRP. For the mistake and the lapse of the Assessing officer, the vested right of the Assessee cannot be taken away. 26. We are not oblivious of the fact that any finding on the aspect of reasonableness in time in passing orders when no time is provided would be superfluous in view of our decision in earlier paragraphs. It is necessary to decide on the issue as in this case, the revenue has taken more than 5 years in one appeal and 4 years in other appeals, which is unacceptable as rightly held by the learned judge. We are not alone on this issue and are fortified by the following judgments of the Hon'ble Supreme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny duty as contemplated by the rule is to be made, but that by itself does not render the rule unreasonable or violative of Article 14 of the Constitution. In the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period, would depend upon the facts of each case. Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the assesee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice of demand for recovery was made within reasonable period. No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case." (iii) State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd., [(2007) 11 SCC 363 : 2007 SCC OnLine SC 1254 at page 367] "17. A bare reading of Section 21 of the Act would reveal that although no period of limitation has been prescribed therefor, the same would not mean that the suo motu power can be exercised at any time. 18. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... same to the notice of this Court. Furthermore, from a perusal of the impugned notice dated 4-9- 2006, it is apparent that the revisional authority did not assign any reason as to why such a notice was being issued after a period of 5½ years." Generally, no hard and fast rule can be laid down to indicate what is a reasonable time. It though depends upon the facts of the each case, drawing a clue from Article 113 of the Limitation Act, the residual entry, it would be reasonable to conclude that in such cases, action is to be concluded within 3 years. Needless to say, if the statute prescribes shorter period, the doctrine of reasonable time will not be applicable and the timeline under the statute is to be strictly followed. 27. For the reasons set out herein before, we conclude as under: (a) The provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually inclusive. The period of limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders. (b) Even in case of remand, the TPO....