TaxTMI 
TaxTMI 
2023 (5) TMI 1410
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....ACIT-TP-II(6)] erred in passing the Transfer pricing Order under section 92CA(3) dated 30.01.2014, beyond the time limit prescribed under section 92CA(3A). The Appellants submit that the Transfer Pricing Order is barred by limitations and, therefore, void ab initio. The Appellant pray that the same be quashed. 2. The Assessing Officer erred in passing the final order dated 27.05.2014, beyond the period of limitation prescribed under section 153 of the Act. The Appellants submit that the Assessment Order is barred by limitations and, therefore, void ab initio. The Appellant pray that the same be quashed. In the Additional Ground No.2, due to typographical error instead of 153B only 153 have been mentioned." 3. Even though, the Ld. CIT-DR objected to the admission of the afore-stated additional grounds, the same are admitted being purely legal issues; and for doing that, we rely on the decision of the Hon'ble Supreme Court in the case of NTPC Vs. CIT (229 ITR 383) (SC). 4. Relevant facts pertaining to the legal issue are that the assessee had filed original return of income u/s 139(1) of the Income Tax Act, 1961 (hereinafter "the Act") on 30.09.2009 declaring ....
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....f the authorization for search u/s 132 or for requisition u/s 132A was executed during the financial year commencing on the 1st day of April, 2009 or any subsequent financial year and during the course of the proceeding for the assessment or reassessment of total income, a reference under sub-section (1) of section 92CA is made, the provisions of clause (a) or clause (b) of this sub-section shall notwithstanding anything contained in clause (i) of the second proviso, have effect as if for the words "two years". The words "three years" had been substituted." 6. Thereafter, the Ld. AR drew our attention to section 92CA(3A) of the Act which prescribes the time limit (the relevant provision) are reproduced below: Reference to Transfer Pricing Officer. 92CA.(1)................. (2)................... (3A) where a reference was made under sub-section (1) before the 1st day of June, 2007 but the order under sub- section (3) has not been made by the Transfer Pricing Officer before the said date, or a reference under sub-section (1) is made on or after the 1st day of June, 2007, an order under sub-section (3) may be made at any time before sixty days p....
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....'ble Madras High Court and this Tribunal have been held that the TP order which is not passed with the time limit prescribed under the Act is bad in law and liable to be quashed; and in view of the above factual and legal position, it was urged that the order passed by TPO u/s 92CA of the Act be quashed being barred by limitation. 10. And regarding Additional Ground No. 2, the Ld. AR submitted that the AO passed the draft assessment order u/s 144C(1) of the Act on 25.03.2014, and thereafter passed the final order on 27.05.2014, which was bad in law being barred by limitation. According to Ld. AR, as per section 144C(1) of the Act, the draft assessment order need to be passed only if the assessee is an 'Eligible Assessee' and drew our attention to section 144C(1) of the Act (relevant provision) are extracted as under: - "(1) The AO shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if the proposes to make, on or after the 1st day of Oct, 2009, any variation in the income or loss returned which i....
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....s beyond the period of limitation it is not a valid order. Therefore, there is no "eligible assessee" in terms of the definition provided in sub-section (15) to section 144C of the Act. If there is no eligible assessee, no reference to DRP could have been made. Once the substratum for making the assessment under transfer pricing mechanism erodes the subsequent proceedings emanating from flawed foundation is without jurisdiction. 17. In the light of facts of the case and decisions referred above, we find merit in the additional grounds of appeal No.48 & 49. The assessee succeeds on the aforesaid legal grounds." 13. Therefore, the Ld AR urged us to allow the legal issue and quash the TPO/AO order. Per Contra, the Ld DR supports the action of TPO and AO and submitted that the department has already preferred appeal against the Hon'ble Madras High Court in Hon'ble Supreme Court and is awaiting its outcome. Till that time, the Ld DR doesn't want us to interfere with the impugned action of TPO/AO. 14. Having heard both the parties and after perusal of the records and case-laws cited before us, we find that the legal issue raised before us are, no longer res-integra. For ad....
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....ase of M/s Pfizer Healthcare India (P) Ltd. vs. JCIT (supra) has explained as to how period of limitation for making the order u/s. 92CA(3) of the Act has to be worked out. The relevant extract of the same is reproduced herein below: "30. Now, coming to the question of how the 60 day period is to be computed, the critical question would be whether the period of 60 days would be computed including the 31st of December or excluding it. Section 153 states that no order of assessment shall be made at any time after the expiry of 21 months from the end of the assessment year in which the income was first assessable. The submission of the revenue is to the effect that limitation expires only on 12 am of 1-1-2020. However, this would mean that an order of assessment can be passed at 12 am on 1-1-2020, whereas, in my view, such an order would be held to be barred by limitation as proceedings for assessment should be completed before 11.59.59 of 31-12-2019. The period of 21 months therefore, expires on 31-12- 2019 that must stand excluded since section 92CA(3A) states 'before 60 days prior to the date on which the period of limitation referred to section 153 expires'. Exclu....
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....y provisions. Wherever the language is clear the intention of the legislature is to be gathered from the language used. While doing so, what has been said in the statute as also what has not been said has to be noted. The construction which requires for its support addition or substitution of words or which results in rejection of words has to be avoided. As stated by the Privy Council in Crawford v. Spooner [(1846) 6 Moore PC 1: 4 MIA 179] "we cannot aid the legislature's defective phrasing of an Act, we cannot add or mend and, by construction make up deficiencies which are left there". In case of an ordinary word there should be no attempt to substitute or paraphrase of general application. Attention should be confined to what is necessary for deciding the particular case. This principle is too well settled and reference to a few decisions of this Court would suffice. (See: Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests [1990 Supp SCC 785: AIR 1990 SC 1747] , Union of India v. Deoki Nandan Aggarwal [1992 Supp (1) SCC 323 : 1992 SCC (L&S) 248 : (1992) 19 ATC 219 : AIR 1992 SC 96] , Institute of Chartered Accountants of India v. Price Waterhouse [(1997)....
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....or to the date on which the period of limitation under section 153 expires. As per 92CA(4), the assessing officer has to pass an order in conformity with the order of the TPO. After receipt of the order from the TPO determining ALP, the assessing officer is to forward a draft assessment order to the assessee, who has an option either to file his acceptance of the variation of the assessment or file his objection to any such variation with the Dispute Resolution Panel and also the Assessing Officer. Sub-section (5) of section 144C of the Act provides that if any objections are raised by the assessee before the Dispute Resolution Panel, the Panel is empowered to issue such direction as it thinks fit for the guidance of the Assessing Officer after considering various details provided in Clauses (A) to (G) thereof. 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. It goes without saying that if no objections are filed by the Assessee either before the DRP or the assessing officer to the determinati....
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....ent in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed. This formulation later received the approval of the Supreme Court and was called the "cardinal principle of construction".' 38. In case of assessments involving transfer pricing, fixing of time limits at various stages sets forth that the object of the provisions is to facilitate faster assessment involving such determination. In the present case, as rightly held by the learned Judge in paragraphs 22 to 29 of the order dated 7-9-2020, the order of the TPO or the failure to pass an order before 60 days will have an impact in the order to be passed by the Assessing Officer, for which an outer time limit has been prescribed under sections 144C and 153 and is hence mandatory. What is also not to be forgotten, considering the scheme of the Act, the inter-relatability and inter-dependency of the provisions to conclude the assessment, is the consequence or the effect that follows, if an order is not passed in time. When an order is passed in time, the procedures under 144C and 92CA(4) are to be followed. When the determination is not in time,....
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....ute cannot be substituted in Explanatory notes or Board Circulars. If the limitation period is mentioned in days in the Act, the same expression has to be necessarily used in Circulars. Since delegated power of Board, cannot over-ride the Act passed by the Parliament/Legislature. Therefore, "Two months" as mentioned in Circular can be more or even less than sixty days. Therefore, expression stipulated in Act to calculate limitation period has to be scrupulously adhered to. 20. Assailing the action of AO in this case to frame draft assessment order, when the TPO order was bad in law, the Ld. AR pointed out that assessee is not qualifying as eligible assessee as per the definition given in sub-section (15) to section 144C of the Act. For convenience the definition of eligible assessee is reproduced herein below: "(b) "eligible assessee" means - (i) Any person in whose case the variation referred to in sub- section(1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) (ii) any non-resident not being a company, or any foreign company" 21. It is admitted position that assessee would....