TaxTMI 
TaxTMI 
2025 (3) TMI 715
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....39;Ld. AO') is contrary to the provisions of the of the Income-tax Act, 1961 ('the Act') and is therefore void-ab-initio, bad in law and liable to be quashed 1.2. On the facts and circumstances of the case & in law, the final assessment Ld. AO dated February 28, 2023 passed by Ld. AO in contravention of the provisions of Section 144B(1)(xxix) of the Act which states that such order mandatorily to be passed by the National Faceless Assessment Centre and therefore, the order is without jurisdiction and liable to be quashed. 1.3. On the facts and circumstances of the case & in law, the final assessment Ld. AO dated February 28, 2023 is invalid and barred by limitation in view of the provisions of Section 144C(13) r.w.s. 144B(1) (xxix) of the Act, and is therefore liable to be quashed. Transfer Pricing ('TP') Grounds TP adjustment with respect to Advertisement, Marketing and Promotion ('AMP') expenditure 2. On the facts and circumstances of the case, & in law, the Ld. Ld. AO/ Learned Transfer Pricing Officer ('Ld. TPO') [in pursuance to the directions of the Dispute Resolution Panel ('Ld. DRP')]. e....
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....y based on fallacious assumptions and not in accordance with the provision of section 92C of the Act read with Rule 108(1)(d) of the Income-tax Rules, 1962: 4.2. applying profit split ratio of 25:75 to allocate profits between the AE and the Appellant on an arbitrary basis and without giving any basis. Protective Adjustment 5. Without prejudice to the Ground 2 and 3, on the facts and in the circumstances of the case, & in law, the Ld. DRP/Ld. AO/TPO erred in proposing an addition of Rs. 31,27,93,371 on protective basis by holding that alleged excessive AMP expenses is an international transaction and in doing so have grossly erred in: 5.1. proposing use of bright line test ("BLT) (AMP/Sales) for establishing the existence of international transaction and computing the value of adjustment on account of AMP adjustment in complete disregard of the binding decisions of the Jurisdictional High Court: and 5.2. imputing a mark-up of 17.58% (being operating profit ('OP')/ operating cost ('OC')) earned by the companies rendering marketing support services (MSS) on the alleged AMP expenses, without providing any cogent reason and s....
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....teness of the benchmarking analysis. TP adjustment with respect to payment of Intra Group Services (Payment of buying commission) 8. On the facts and circumstances of the case, & in law, the Ld. AO/Ld. TPO [in pursuance to the directions of the Ld. DRP) erred in enhancing the income of the Appellant by INR 10,06,01,977/-while holding that the international transaction pertaining to payment of buying commission does not satisfy the arm's length principle envisaged under the Act, and in doing so have grossly erred in: 8.1. disregarding the arm length's price (ALP) as determined by the Appellant in the TP documentation maintained by it in terms of Section 92D of the Act read with rule 10D of the Income Tax Rules, 1962 and arbitrarily applying the CUP method without any cogent basis; 8.2. holding that Appellant did not receive any tangible benefit in lieu of the services availed thereby challenging the commercial wisdom of the Appellant in making payment for services availed; and 8.3. disregarding the elaborate documentary evidence submitted as part of assessment proceedings to erroneously assume that 'no benefit' has been co....
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.... Since in grounds of appeal Nos. 1 to 1.3, assessee has raised legal issues of jurisdiction and limitation thus the same are taken up first for consideration. 4. Brief facts of the case are that the draft Assessment Order was passed on 06/09/2021 by National Faceless Assessment Centre. The assessee filed objections before ld. DRP on 05.10.2021 i.e. within the permissible time limit allowed for filing the objections before the ld. DRP. The ld. DRP has given directions in terms of its order passed u/s 144C(5) of the Act dt. 03.06.2022 wherein certain direction were given to the TPO. In compliance to the directions given by the ld. DRP, the TPO has passed the effect order on 14.07.2022 with a copy to the Jurisdictional assessing officer. Accordingly, the due date for passing of the final Assessment Order was 31.08.2022 as the effect order as per directions given by ld. DRP stood passed by TPO and served upon the Assessing officer i.e. the DCIT, Circle 1(1) Delhi on 14.07.2022. Since the final Assessment Order has been passed on 28.02.2023 which is in divergence to due date prescribed u/s144C (13) of the Act, the assessee submits that the final order passed by the Assessing Officer ....
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....e his objections, if any, to such variation with,- (i) the Dispute Resolution Panel; and (ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if- (a) the assessee intimates to the Assessing Officer the acceptance of the variation; or (b) no objections are received within the period specified in sub-section (2). (4) The Assessing officer shall, notwithstanding anything contained in section 153, pass the assessment order under sub-section (3) within one month from the end of the month in which,- (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in sub-section (5), after considering the following, namely:- (a) draft order; (b) objections filed by the assessee; ....
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....missioners of income-tax constituted by the Board for this purpose; (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 92-CA; and (ii) any foreign company.' A reference is also made to the provisions of section 144B relating to the faceless assessment pertaining to the assessment completed in case of eligible assessee u/s 144C of the Act, the relevant provisions are as under: 144B.Faceless Assessment. (1) Notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or recomputation under sub-section (3) of section 143 or under section 144 or under section 147, as the case may be, with respect to the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure, namely:- (i) the National Faceless Assessment Centre shall assign the case selected for the purposes of faceless assessment under this section to a specific assessment unit through an automated allocation system;....
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....ipt of the assessment order referred to in clause (xxvi) or clause (xxix), as the case may be, serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice, specifying the sum payable by, or the amount of refund due to, the assessee on the basis of such assessment; (xxxi) ...(xxxii) (2) ... 7. From the perusal of sub-section (13) of section 144C it is clear that the final assessment order has to be passed by the Assessing officer within a period of one month from the end of the month in which the directions from the DRP are received. Further as per clause (xxviii) and (xxix) of sub-section 1 to section 144B provides that the Faceless Assessment Centre after receiving the directions of the DRP, sent them to the Assessment unit who shall pass the final assessment order in accordance with section 144C(13). Thus in any case whether the assessment is completed by Jurisdictional Assessing officer or by Faceless assessing officer, the final order should be passed within the time prescribed u/s 144C(13) of the Act. 8. In the instant case one more facts is relevant to state that, the draft assessment ....
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....s noticed by the authorities, the TPO vide mail dt. 16.2.2023 intimated the Jurisdictional assessing officer about the effect order passed by this office on 14.07.2022. As per section 144C(13), the final assessment order passed by the Assessing Officer within a period of one month from the end of the month in which such direction is received. In the instant case the directions were given by Ld. DRP on 03/06/2022 which were received by AO/TPO on 07.06.2022 as is evident from the effect order passed by TPO dt. 14.07.2022. Further, the TPO's effect order was also passed on 14.07.2022 and uploaded on ITBA portal. Thus for the AO for passing the final order, the limitation expired on 31.07.2022. It is also relevant to state here that when DRP issued directions, TPO has no power to resume jurisdiction and the TPO could only pass the effect order which in no case extended the time limit for passing the Final Assessment Order available to Assessing Officer in terms of section 144C(13) of the Act. Accordingly, in the present case, the limitation for passing final order by AO expired on 31.07.2022, thus the final assessment order passed on 28.02.2023 is barred by limitations and is void and ....
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...."10. Sub-section (13) of Section 144C, therefore, is very clear inasmuch as the Assessing Officer shall, upon receipt of the directions issued under sub-section (5), in conformity with the directions, complete the assessment within one month from the end of the month in which such direction is received, Sub-section (13) also provides that the Assessing Officer can complete the assessment without providing any further opportunity of being heard to the assessee. This means that the moment the Assessing Officer receives the directions under sub-section (5), he has to straightaway complete the assessment and he does not even have to hear the assessee. The Assessing Officer shall simply comply with the directions received from the DRP within one month from the end of the month in which such direction is received." 18. In this backdrop, we note that both the judgments of the Bombay High Court in Shell India and Vodafone Idea construe the time lines as provided in Section 144C to be mandatory in character. In our considered opinion, this interpretation is in accord with the intent behind insertion of that provision and the bare text and spirit of that section. Thus, we accord our....
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...... 'eligible assessee Section 144C of the Act was inserted in the Finance Act of 2009 and came into effect from 1 October 2009. In the notes on clauses to the Finance Bill. 2009 (Budget 2009-2010), the reason for insertion of Section 144C is given as under: "The subjects of transfer pricing audit and the taxation of foreign company are at nascent stage in India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view. The correction of such view take very long time with the existing appellate structure. With a view to provide speedy disposal, it is proposed to amend the Income-tax Act so as to create an alternative dispute resolution mechanism within the income-tax department and accordingly, section 144C has been proposed to be inserted so as to provide inter alia the Dispute Resolution Panel as an alternative dispute resolution mechanism." 21. Thus, if the provisions of Section 144C as mandated by the Statute are not strictly adhered the entire object of providing for an alternate redressal mechanism in the form of DRP stand defeated. That is not the intention of the legislature when the provision was introduced i....
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....l simply comply with the directions received from the DRP within one month from the end of the month in which such directions is received." 24. In view of the aforesaid discussion, we have no hesitation in holding that the assessment order dated 31" August 2023 passed by FAO two years after the DRP directions, is time barred and cannot be sustained. Consequently, the ROI as filed has to be accepted. Petitioner is entitled to receive the refund together with interest, in accordance with law. The procedure to be completed within 30 days of this order being unloaded. This would, however, not preclude revenue, should the need arise, from reopening the assessment by following due process and in accordance with law. 25. Rule is thus made absolute in terms of prayer clause (A) which reads as under: "A. that this Hon'ble Court be pleased to issue a Writ of Mandamus or any other writ in the nature of Mandamus, order or direction under Article 226 of the Constitution of India calling for the records of the case so as to examine the failure of Respondent Nos. 1 and 2 to give refund of tax paid by the Petitioner for the assessment year 2016-2017 which is in exces....
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....ing officer and the TPO. The assessing officer referred to therein is the National Faceless Assessment Centre, Delhi. The petitioner has placed on record a communication from the Secretary and ACIT to the DRP. The said communication states that the assessing officer in the captioned case is the National Faceless Assessment Centre, Delhi and that a scanned copy of the proceedings was uploaded to the National Faceless Assessment Centre on 17.06.2022. 7. From the above discussion, the conclusion that emerges is that the directions of the DRP were forwarded to the assessing officer, i.e. National Faceless Assessment Centre, Delhi by uploading the same on 17.06.2022. Although learned senior standing counsel contends that the jurisdictional assessing officer received the directions only on 17.03.2023, for purposes of sub-section (13) of Section 144C, the date of receipt should be reckoned as B COREY date of receipt by the National Faceless Assessment Centre on 17.06.2022. The internal arrangement by which the assessment proceedings relating to the petitioner were purportedly transferred so as to ensure that the proceedings are not barred by limitation is not material for this pu....