TaxTMI 
TaxTMI 
2023 (10) TMI 1468
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....ssued by the Hon'ble Dispute Resolution Panel thereinafter referred to as DRP) under 144C(13) read with Section 254 and 144B of the Income-tax Act, 1961 (hereinafter referred to as the Act) on the following grounds: 1. On the facts and circumstances of the case and in law, the assessment order/directions passed by id AO/ Transfer Pricing Officer (TPO)/ DRP are bad in law. 2. On the facts and circumstances of the case and in law, the final assessment order is bad in law as the AO/TPO have not followed the DRP directions. 3 On the facts and circumstances of the case and in law, the final assessment order is bad in law as the AO/ TPO have exceeding their jurisdiction by going beyond DRP's directions 4. On the facts and circumstances of the case and in law, the assessment proceedings are time barred as the same have not been completed within prescribed timelines. 5. On the facts and circumstances of the case and in law, the final assessment order is bad in law since it violates the order of Hon'ble High Court in Appellant's own case by making an adjustment using Brightline Test and enforcing demand on the same. 6. Withou....
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....on with the main business in the same order. 16. The TPO /AO erred on facts and in law by ignoring that the AMP function is already subsumed in net profits earned by the company and hence, appropriately benchmarked using Transactional Net Margin Method. 17. The TPO /AO erred on facts and in law by making incorrect adjustments under garb of intensity adjustment which is not as per prescribed Rules for application of Transactional Net Margin Method (TNMM) and that in absence of availability of adequate and accurate data in public domain, ad-hoc adjustment is not permissible under provision of Act and Rules. 18. The TPO /AO erred on facts and in law by not appreciating that AMP/Sales ratio is not measure of intensity of AMP function. 19. Without prejudice to any other grounds. Intensity adjustment used to adjust net profit margin of comparable companies purportedly to equalise functions, appears to be mere mirror image of already invalidated Bright Line Test (BLT) adopting same ratio, rationale and parameters 20. Without prejudice to any other contentions, the AMP transaction can be benchmarked using the adjusted Resale Price Method (RPM) w....
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....fy or delete such other objections before or during the course of hearing before the Hon'ble Income Tax Appellate Tribunal (ITAT"), so as to enable the Hon'ble ITAT to decide on the grounds raised by the Appellant, as per law." 3. The substantive ground argued before us is Ground No. 4 which reads as under: "4. On the facts and circumstances of the case and in law, the assessment proceedings are time barred as the same have not been completed within prescribed timelines." 4. Briefly stated, the facts of the case are that the assessee is primarily engaged in distribution of various home appliances, products which, mainly includes freezers, refrigerators, color televisions, washing machine, air conditioners, water heaters, microwave ovens, etc. Return of income was electronically filed on 30.11.2017 declaring an income of Rs. 43,97,33,630/-. 5. TP adjustment was completed vide order dated 28.01.2021. Draft assessment order was framed on 31.03.2021. The DRP disposed the objections of the assessee vide letter dated 26.11.2021. The order giving effect to the directions is dated 27.01.2022 and final assessment order was passed on 31.01.2022. 6. The entire qua....
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.... 10.06.2022 which is enclosed as "Annexure A" to these submissions for kind perusal. The reply of the DRP is reproduced as under for clarity sake: "In the mail sent on 2nd June 2022, an inadvertent mistake was made whereby the DRP mentioned to have been "delivered" instead of "issued" on 30.11.2021. The DRP Secretarial can only confirm the issuance of the DRP directions via the ITBA portal on 30.11 2021 (DIN no: ITBA/DRP/S/91/2020-21/1037373340(1). The Secretarial cannot confirm the date of receipt of the DRP order by the A0 as there is no option on ITBA to confirm the same. The receipt of the DRP order by the AO can only be confirmed by the AO or NeFAC, as the case maybe." 13. Further clarification by the Revenue reads as under An e-mail communication was also sent to the jurisdictional Assessing Officer i.e. ACIT, Circle 10(1) in order to confirm the date of receipt of the direction of the DRP. The reply received from the jurisdictional Assessing Officer is being reproduced as under- "In this regard, it is informed that as per ITBA case history noting, the Direction of DRP was never received in this office. On receiving the request from Ne FAC, the s....
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.... let us know if any further details are required in this matter." 17. The ld. DR also referred to the following mail received by the DDIT 4 Systems ITBA : "Please refer to your below email on the subject cited above. In this regard, I am directed to attach herewith the case history/noting of the case, as desired. Besides, I am also directed to provide the below details as provided by the technical team for taking necessary further action at your end:- 1. Order u/s 144C(5) for PAN AABCH3162L was passed as Manual to system with creation date (date of upload): 30.11.2021 2.19:47 PM and issue date (user entered): 26.11.2021 2:19:47 PM 2. Intimation entry of the document related to DIN was created on 30.11.2021 2:21:44 PM. Due to technical error, it was generated corrupt, so intimation was retriggered and issued on 01.12.2021 2:30:06 AM 3. Order u/s 144C(5) was not visible to the FAQ in his case/history/noting." 18. Based upon the aforementioned information/clarification/email, the ld. DR stated that the order of the DRP containing the directions was issued only on 30.11.2021. However, due to technical error, it got corrupted and so int....
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....26;्या / DIN & Document No.: ITBA/DRP/S/91/2021-22/1037373340(1) दिनांक/ Dated: 30/11/2021 Intimation Letter for Order u/s 144C(5) महोदय/ महोदया / मेसर्स, Sir/Madam/M/s. This is to inform you that Order u/s 144C(5) dated 26/11/2021 is having Document No. (DIN) ITBA/DRP/M/144C(5)/2021-22/1037373233(1). This is a system generated document and does not require any signature. 23. From the above, it can be seen that the order u/ 144C(5) of the Act is dated 26.11.2021 having a DIN Number manually generated which was intimated on 30.11.2021 having System Generated DIN Number. This has also been confirmed through email by the Secretary, DRP which reads as under: "The above referred case came up for hearing before the Hon'ble I- Bench, ITAT Delhi on 09.06.2022 The AR of the assessee stated that the assessment of the above case has been barred by the limitation as the last date of assessment was 31.12.2021 and the assessment of this case was completed u/s 143(3) sub sec. 144(C) on ....
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.... of receipt of an electronic record shall be determined as follows, namely- (a) if the addressee has designated a computer resource for the purpose of receiving electronic records,- (i) receipt occurs at the time when the electronic record enters the designated computer resource; or (ii) if the electronic record is sent to a computer resource of the addressee that is not the designated computer resource, receipt occurs at the time when the electronic record is retrieved by the addressee; (b) if the addressee has not designated a computer resource along with specified timings, if any, receipt occurs when the electronic record enters the computer resources of the addressee." (emphasis supplied) The dispatch of a record occurs when it enters a computer resource outside the control of the originator. The time of receipt of the electronic record is fixed by the provisions of sub-section (2) of Section 13. When the addressee has designated a computer resource, receipt occurs when the record enters the computer resource so designated. Otherwise, where no computer resource is designated, the receipt of the record is when it is retrieved by the a....
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....Adjustment (Brightline Test)]. 3. The TPO in its order vide DIN & Order No: ITBA/COM/F/17 /2021- 22/1039115464 (1) dated 27.01.2022 re-calculated the arm's length pr ice based upon the directions of the Hon'ble DRP. After including the effect of the direction of the Hon'ble DRP by the TPO, the total income of the assessee is computed as under: Income as per ITR Rs.43,97,33,630/- Additions:- 1. Substantive Adjustment as per directions of the DRP Rs.26,78,22,689/- 2. Protective Adjustment as per directions of the DRP Rs.43,76,04,795/- 1. Disallowance of Shares issued above book value Rs.1,50,66,205/- Total Assessed Income Rs.1,16,02,27,319/- Rounded off (u/s. 288A) Rs.1,16,02, 27,320/- Penalty proceedings u/s. 270A read with section 274 of the IT Act is initiated separately for under reporting of income of Rs.1,50,66,205/-. 4. Order Giving Effect dtd. 27.01.2022 has been received on 27.01.2022 from TPO - DC/ACIT-2 (1) (1), Delhi in case history notings and 360 * profile. However, on perusal of the 360* profile, case history notings, view/download notices/order, it is found that the copy of the DRP order has not been received by this office till 31.01.2022. However, consid....
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....s to be used literally, so as to mean that actual physical receipt of notice by the assessee or the expression "served" is inter-changeable with the word "issue". 35. The relevant findings of the Hon'ble Supreme Court read as under: "We are of the opinion that the expressions 'serve' and 'issue' the opinion that are interchangeable, as has been noticed in Section 27 of the General Clauses Act, 1887 and also in a judgment of Hon'ble Supreme Court reported as Banarsi Devi Ys. The Income Tax Officer, District IV. Calcutta and others AIR 1964 SC 1742. In the aforesaid case, an argument was raised that Section 4 of the Amending Act (Act No.1 of 1959) only saves a notice issued after the prescribed time, but does not apply to a situation where notice is issued within but served out of time. The Court observed as under: "(10)......Section 4 of the Amending Act was enacted for saving the validity of notices issued under Section 34(1) of the Act. When that Section used a word interpreted by courts in the context of such notices, it would be reasonable to assume that the expression was designedly used in the same sense. That apart, the expressions....
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....power within the period of limitation. The decision of such authority comes into force and is operative from the date, it is signed by him. The Court held: "9. The words "from the date of decision or order" used with reference to the limitation for filing an appeal or revision under certain statutory provisions had come up for consideration in a number of cases, We may state that the ratio of the decisions uniformly is that in the case of a person aggrieved filing the appeal or revision, it shall mean the date of communication of the decision or order appealed against. However, we may note a few leading cases on this aspect. 11. The ratio of these judgments was applied in interpreting Sec. 33A(2) of the Indian Income Tax Act, 1922 in Muthia Chettiar v. C.I.T., ILR 1951 Mad 815 with reference to a right of revision provided to an aggrieved assessee. Section 33A(1) of the Act on the other hand authorised the Commissioner to suo motu call for the records of any proceedings under the Act in which an order has been passed by any authority subordinate to him and pass such order thereon as he thinks fit. The proviso, however, stated that the Commissioner shall not revise....
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....s from the date on which the order was communicated to him or the date on which it was pronounced or published under such circumstances that the parties affected by it have a reasonable opportunity of knowing of passing of the order and what it contains. The knowledge of the party affected by such a decision, either actual or constructive is thus an essential element which must be satisfied before the decision. can be said to have been concluded and binding on him. Otherwise the party affected by it will have no means of obeying the order of acting in conformity with it or of appealing against it or otherwise having it set. This is based upon, as observed by Rajamanner, CJ in Muthia Chettiar v. C.I.T. (supra) "a salutary and just principle". The application of this rule so far as the aggrieved party is concerned is not dependent on the provisions of the particular statute, but is so under the general law XXX XXX XXX 18 Thus if the intention or design of the statutory provision was to protect the interest of the person adversely affected, by providing a remedy against the order or decision any period of limitation prescribed with reference to invoking such remedy s....
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.... held to be essential and not its actual receipt by the officer concerned and such communication was held to be necessary because till the order is issued and actually sent out to the person concerned the authority making such order would be in a position to change its mind and modify it if it thought fit But once such an order is sent out, it goes out of the control of such an authority, and therefore, there would be no chance whatsoever of its changing its mind or modifying it. In our view, once an order is issued and it is sent out to the concerned government servant, it must be held to have been communicated to him, no matter when he actually received it. (Emphasis by us) We find it difficult to persuade ourselves to accept the view that it is only from the date of the actual receipt by him that the order becomes effective. If that be the true meaning of communication, it would be possible for a government servant to effectively thwart an order by avoiding receipt of it by one method or the other till after the date of his retirement even though such an order is passed and despatched to him before such date. An officer against whom action is sought to be takes....
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....x and others Vs. Subhash & Co. (2003) 3 SCC 454 observed as under: 12. Whether service of notice is valid or not is essentially a question of fact. In the instant case, learned Single Judge found that certain procedures were not followed while effecting service by affixture. There was no finding recorded that such service was non est in the eye of the law. In a given case, if the assessee knows about the proceedings and there is some irregularity in the service of notice, the direction for continuing proceedings cannot be faulted. It would depend upon the nature of irregularity and its effect and the question of prejudice which are to be adjudicated in each case on the basis of surrounding facts. If, however, the service of notice is treated as non est in the eye of the law, it would not be permissible to direct de novo assessment without considering the question of limitation. There also the question of prejudice has to be considered. xxx xxx xxx 22. The emerging principles are: (i) Non-issue of notice or mistake in the issue of notice or defective service of notice does not affect the jurisdiction of the assessing officer, if otherwise reasonab....