TaxTMI 
TaxTMI 
2023 (10) TMI 1468
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....ereinafter 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. Without prejudice to the above, even if adjustment made using Brightline Test is help to be protecti....
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.... 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) which is preferred by the HC over segregation approach in Appellant's own case. 21. The TPO /AO erred on facts and in law by treating certain items of income as non-operating in nature, in complete ign....
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.... "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 quarrel revolves around the date of order of the DRP and final assessment order. The bone of contention is the provisions of section 144C clause (13) of the Act which says that : "Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding any....
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.... 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 same was obtained from the DCIT, TP 2(1)(1), New Delhi through e-mail in January, 2022. A perusal of the same shows that DRP order dated 26-11-2021 was sent to the assessee on 30-11-2021 by generating DIN No. ITBA/DRP/S/91/2021-22/1037373340(1). The DRP order was not marked to the JAO. It was endorsed to the CIT(TP)-2, Delhi, AC/DCIT (IT&TP)-2(1)( Delhi and National e-Assessment C....
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....echnical 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 intimation was retriggered and issued on 01.12.2021, which makes the directions of the DRP issued only on 01.12.2021 and, therefore, the same could not have been received by the Assessing Officer before 01.12.2021 and, therefore, the impugned assessment order is well within the period of limitation. 19. To buttress his submissions, the ld. DR referred to the provisions of section 144C(13) of the Act and pointed out that the provisio....
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.... 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 31.01.2022. The assessee has also enclosed the copy of the e-mail dated 02.06.2022 by the DRP-1. The content of the e-mail filed by the assessee during the course of hearing is reproduced as under: "From : delhi.secretay.drp I Sent : 02 June 2022 15:37 To : Priya Sharma Cc : amia. Singh: bsgusain: Rachit Arora Subject : inspection/request to confirm date of dispatch of Panel's order in the case of Haier Appliances India Private Limited (PAN AABCH31621) for the A.Y 2017-18 reg. Please refe....
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....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 addressee. These provisions have been incorporated in the law to enable the dispatch and receipt of a record in the electronic form to be defined with precision with reference to both time and place." 27. A perusal of the above shows that dispatch of electronic record [DRP in this case] occurs when it enters a computer resource outside the control of the originator [in this case order entered the computer resource on 30.11.2021] and as per section 13(2A)(i) of the Act, receipt occurs at the time when the electronic record enters the designated computer resource i.e. 30.11.2021 on facts of the case discussed hereinabove. 28. I....
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....ff (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, considering the limitation date of 31.01.2022 for the case under consideration it is pertinent that final order should be generated on 31.01.2022 itself. As DRP order is not received by this office till generation of final order u/s 144C (13) on 31.01.2022, final order is being generated based on TPO's order Giving Effect dtd. 27.01.2022 of DRP's Order. Further, for the purpose of calculation of time limitation on system on ITBA for passing order u/s 144C (13) of the Act in the case under consideration, date of TPO's Order Giving Effect of DRP i.e. 27.01.2022 is considered. (Emphasis by us) Signature: 31/01/2022 Documents /Response received from 'Upl....
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....ce 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 "issued" and "served" are used as inter- changeable terms both in dictionaries and in other statutes. The dictionary meaning of the word "issue" is "the act of sending out, put into circulation, deliver with authority or delivery". Section 27 of the General Clauses Act (Act X of 1897) reads thus: "27. Meaning of service by post - Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre- paying and posting ....
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....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 any order under that sub- section "if the order (sought to be revised) has been made more than one year previously". Construing this provision the High Court in Muthia Chettiar's case held that the power to call for the records and pass the order will cease with the lapse of one year from the date of the order by the subordinate authority and the ratio of date of the knowledge of the order applicable to an aggrieved party is not applicable for the purpose of exercising suo motu power. Similarly in another decision reported in Viswanathan Chettiar v. Commr, of Income Tax, Madras, 25 ITR 79 Mad, construing the time limit for completion of an assessment under Section 34(2) of the Income Tax Act, 1922, which provided that it shall be made....
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....tion 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 shall be read as commencing from the date of communication of the order. But if it is a limitation for a competent authority, to make an order the date of exercise of that power and in the case of exercise of suo motu power over the subordinate authorities' orders, the date, on which such power was exercised by making an order are the relevant dates for determining the limitation. The ratio of this distinction may also be founded on the principle that the Government is bound by the proceedings of its officers but persons affected are not concluded by the decision." (Emphasis by us) The said principle of the issue of a notice or communication has also come up for consideration before the Hon'ble Supreme Court in the context of the provisions of Section 4 of....
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....ecomes 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, thus, may go away from the given by him for service of such orders or may deliberately give a wrong address and thus prevent or delay is receipt and be able to defeat its service on him. Such a meaning of the word 'communication" ought not to be given unless the provision in question expressly so provides. Actually knowledge by him of an order where it is one of dial may perhaps, become necessary because of the consequence which the decision in The State of Punjab v Amar Singh Harika AIR 1966 SC 1313 contemplates. But such consequences would not occur in the ease of officer who has proceeded on leave and against whim an order of suspension is passed because, in his case there is no question of his doing any act or pasting any order and such act or order being challenged as invalid" Learned counsel for the petitioner has also....
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....ing 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 reasonable opportunity of being heard has been given. (ii) Issue of notice as prescribed in the Rules constitutes a part of reasonable opportunity of being heard. (iii) If prejudice has been caused by non-issue or invalid service of notice the proceeding would be vitiated. But irregular service of notice would not render the proceedings invalid; more so, if the assessee by his conduct has rendered service impracticable or impossible. (iv) In a given case when the principles of natural justice are stated to have been violated it is open to the Appellate Authority in appropriate cases to set aside the order and require the assessing officer to decide the case de novo," 36. The Hon'ble Supreme Court concluded as under: "In view of the said judgment, the date of receipt of notice by the addressee is not relevant to determine, as to whether the notice has been issued within th....