TaxTMI 
TaxTMI 
2025 (5) TMI 811
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....held in favour of the assessee then the main grounds and rest of the additional grounds would become academic. The ld AR also submitted that to adjudicate the additional grounds no new facts need to be examined and the issue involved is purely legal. The effective additional grounds raised by the assessee reads as under: "13. erred in not passing the final assessment order within one month from the end of the month in which the DRP Directions were received as per the Section 144C(13) of the Act and thereby the order passed by the Ld. AO is time barred and liable to be quashed. 14. without prejudice to the ground no.21, erred in not appreciating the fact that the DRP directions are issued beyond time limit provided under Section 144C of the Act and thus, the DRP proceedings are time barred and bad in law thereby resulting subsequent assessment proceedings should also be bad in law." 3. The brief facts in this case is that the assessee is a company incorporated in India and tax resident of USA and is engaged in the business of Credit Information Services in multiple jurisdictions across the Globe. The assessee acts as the Investment Holding Company for the group ....
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.... records. We notice that the additional grounds raised are pure legal issue, which does not require investigation of new facts. Hence, placing reliance on the judgment of the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC), we admit these additional grounds for adjudication first. 5. The ld. AR at the outset submitted that the final assessment order dated 24.08.2022 is barred by limitation in this regard, the ld. AR drew our attention to the order of DRP which is dated 30.06.2022 and is digitally signed at 9.43 p.m on 30.06.2022. The ld. AR submitted that as per the provisions of section 144C(13) of the Act. The AO is required to pass the final assessment order within one month from the end of the month in which the DRP order is received. The ld. AR further submitted that since the order of the DRP is digitally signed on 30.06.2022 and that the DIN is generated on the same date, it is received by the AO on 30.06.2022 and accordingly the final order of assessment should have been passed by 31.07.2022. The ld. AR therefore argued that the final assessment order dated 24.08.2022 is passed beyond the time limit specified under section....
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....ubmissions alternatively argued that if the Department's contention that the DRP directions were actually issued i.e. received by the AO only through email on 01.07.2022 then the directions of the DRP is beyond the time limit of 9 months from the end of the month in which the draft assessment order was issued as per the provisions of section 144C(12). The ld. AR further argued that the draft assessment order in assessee's case was passed on 29.09.2021 and therefore, the DRP order should have been issued by 30.06.2022 and that if the same is issued as claimed by the Revenue on 01.07.2022 then the same would be barred by limitation. The ld. AR also relied on the various judicial pronouncements in this regard. 9. The ld. Departmental Representative (DR) on the other hand submitted that the judicial pronouncements relied on by the ld. AR are factually distinguishable for the reason that the time gap between the date of the DRP directions and the date of final order was wider in those cases whereas in assessee's case, the DRP directions were dated 30.06.2022 which was sent by email to the AO on 01.07.2022. Accordingly, the ld. DR argued that the final assessment order dated 24.08.202....
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....O (FAO) as well as JAO. It was contended by the revenue in the said case that when the DRP user has initiated the DRP proceedings by using an option of manually entering the details of the Section 144C order in the screen, the DRP order does not reflect automatically in the case history notings (CHN) of the assessment proceedings. However, the Hon'ble High Court rejected the said contentions by holding that - "26. According to the Report, the second option has been availed by the DRP user and hence though the order was uploaded by the DRP user in the ITBA on 31.01.2022 itself, such uploading was not noticed by the Assessing Officer. However, as far the Assessing Officer is concerned, an Advisory issued by the ITBA team on 'Visibility of orders passed by DRPs to other ITBA users, is relevant. The Advisory reads thus: Visibility of orders passed by DRPs to other ITBA users Kind Attn. All ITBA Users Sub: Visibility of orders passed by DRPs to other ITBA users - Reg. This is to inform that on passing order by the DRP in ITBA(DRP Module) [either through online system mode or through Manual to system mode], the DRP Directions/Order wou....
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....at officer. This feature has evidently been provided to ensure that an officer can access/receive the directions of the DRP as soon as it is uploaded by the Secretariat of the DRP and the pending proceedings would be completed within the statutory limitation provided. 30. Hence, there is no protection available to the Department by the DRP user having selected the second manual option, as, an assessing officer, in order to ensure that the assessment proceedings are strictly in accordance with statutory limitation, has been given full and complete access to all inputs required for completion of the assessment including the directions of the DRP immediately on their uploading into the ITBA portal by the DRP. 31. Clearly, limitation cannot be dependent on varying user functionalities which are nothing but internal processes. If this argument were to be accepted, the commencement of limitation would vary depending on the option exercised by the user which would defeat the purpose of statutory limitation apart from being an acceptable proposition. 32. The starting point of limitation has thus to be reckoned from the earliest instance when the directions of the....
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....th December 2019 under section 144C(1) of the Act for the relevant AY and proposed various additions/disallowances. Petitioner filed objections under section 144C(2)(b) of the Act before the Dispute Resolution Panel ("DRP") on 27th January 2020. A notice was issued by the DRP and Petitioner responded by filing relevant documents/evidence in support of objections raised by it. Finally the DRP issued directions dated 25th March 2021 under section 144C(5) of the Act. The directions of DRP were uploaded on the Income-tax Business Application ("ITBA") portal on the same date and the said directions were served on Petitioner vide e-mail dated 6th April 2021. The grievance of Petitioner essentially is that the AO failed to pass the final order in terms of the directions of DRP within 30 days, the period of limitation prescribed by Section 144C(13) of the Act and consequently prays that the ROI as filed originally has to be accepted and excess tax paid be refunded with interest. 6. After the petition was filed on 8th June 2023, the AO passed the assessment order dated 31st August 2023. The same has been placed on record as an additional document. 7. Mr. Mistri for Petitio....
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....for dismissal of the petition. 9. Therefore, admittedly, the DRP issued the directions on 25th March 2021 whereas the assessment was completed and an order came to be passed on 31st August 2023. 10. At the outset it is important to note that the entire assessment proceedings are governed by the Faceless Assessment Mechanism under the scheme known as the e-Assessment Scheme ("eAS"), 2019 as notified by the Ministry of Finance (Department of Revenue) on 12th September 2019. The salient features of the scheme include defining the scope of scheme, jurisdiction of e-Assessment Centre, procedure for assessment, penalty proceedings for non-compliance amongst other features. The Central Government amended the FAS of 2019 and the first amendment came into effect on 17th February 2021. Paragraph 5(1) of the original scheme was substituted by the amendment. The amended paragraph 5(1) reads thus : "In the said Scheme, for sub-paragraph (1) of paragraph 5, the following sub- paragraph shall be substituted, namely,- (1) The assessment under this Scheme shall be made as per the following procedure, namely:- (i) the National e-Assessment Centre shall se....
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....Centre ("NeAC") set up to conduct e-assessment proceedings in a centralized manner. Paragraph 4(2) of the eAS provides as under : "4(2). All communication among the assessment unit, review unit, verification unit or technical unit or with the assessee or with any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making an assessment under the scheme shall be through the National e-Assessment Centre." Thus, any notice, summons, order is deemed to have been received by the FAO once it is available to the NeAC. 12. On 1st August 2023, when the matter was listed before this Court, a statement was made by Mr. Singh that because of the commencement of the Faceless Assessment Regime, the directions given by DRP were not received by the FAO and therefore, the FAO did not pass order under section 144C(13) of the Act and DRP had forwarded the order to the Jurisdictional Assessing Officer ("JAO"). Per contra, Mr. Mistri showed us an e-mail dated 6th April 2021 addressed to Petitioner by "ITO HQ TO DRP2 WZ" forwarding a copy of the directions issued by the DRP. The said directions of DR....
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.... be the same officer who was in that post when the directions were received and not any successor, shall file an affidavit explaining why he/she did not forward the directions of DRP to the concerned Faceless Assessing Officer particularly when, as Mr. Singh states, the Faceless Assessment Regime had begun. These affidavits shall be filed and copy served by 10th August 2023. 5. Stand over to 22nd August 2023." 13. Pursuant to our directions of 1st August 2023, two affidavits were filed, one by Mr. Satish Sharma, the Chief Commissioner of Income-tax (International Taxation and Transfer Pricing) West Zone, Mumbai and another by Ms. Anne Varghese, JCIT, Ratlam on 10th August 2023. The relevant portion of the affidavit of Mr. Satish Sharma reads thus : "4. I respectfully say that I have called the factual position and the relevant records from the DRP and perused them in connection with the directions of the Hon'ble Bombay High Court in the aforesaid order dated 1-8-2023 and accordingly, based on the record, I am conversant with the facts of the issue and I am able to depose the same. I respectfully say that I am filing this affidavit on the direction of ....
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.... Mumbai. 4. I respectfully say that Physical copy/offline order of the Dispute Resolution Panel (D.R.P.) dated 25-3-2021 was received in tapal/inward register by the Jurisdictional Assessing Officer in its office on 30-3-2021 in the case of "Vodafone Mobile Services Limited". 5. I respectfully say that the physical copy of the D.R.P. order was not forwarded to the Faceless Assessing Officer since it was ascertained that the said direction dated 25-3-2021 of the D.R.P. was available under the "View Download - Order/Letter/Notices Tab" Functionality of the Income-tax Business Application (I.T.B.A.). I say that the documents which are visible under the "View Download - Order/Letter/Notices Tab" Functionality of the Income-tax Business Application (I.T.B.A.) are also available to other officers (AO of Faceless Assessment Unit (F.A.U.) in this case) having jurisdiction over the PAN. 6. I respectfully say that Document Identification Number (D.I.N.) had been duly generated for the directions of the D.R.P. which is visible on the first page of the hard copy of the D.R.P. directions received by the undersigned which clearly indicated that the directions by D.R.P.....
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.... on 23rd August 2023 that the same were received by the FAO. We cannot accept this because, the E-assessment Scheme itself provides that all communication is deemed to have been received by the assessment units concerned once received through the NeAC. Thus, once the E-assessment Centre is in receipt of the DRP directions, the period of limitation runs from that day. There is no requirement of a deep dive in an analysis of the phrase 'upon receipt of directions' as it appears in Section 144C(13) of the Act. The fundamental principle of interpretation is to assign words their natural, original and precise meaning, provided that the words are clear and take into account the purpose of the Statute. It is settled law that a provision should be interpreted in its literal sense and given its natural effect. This is the elementary golden rule of interpretation of Statutes. Since there is no ambiguity pertaining to the phrase 'upon receipt of the directions issued under Sub-section 5 of 144C of the Act, the AO shall .....' there is no requirement of delving in a further in-depth analysis of the clear provision. 18. Another important aspect is that the FAO himself h....
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....'s case in our order dated 5th September 2023, no attempt has been made to clarify. It is thus very difficult to agree with the proposition advanced by Mr. Singh that as per the CHN the DRP direction was received by the FAO only on 23rd August 2023. There is no whisper of any explanation as to why the FAO, who was seized with the pending assessment of Petitioner, remained inactive and silent for two long years and swung into action only when information about filing of this writ petition was uploaded on the CHN. Strangely enough a noting pertaining to this writ petition filed on 8th June 2023 appears on the CHN of 11th July 2023, but still the DRP directions of 25th March 2021 appear only on 23rd August 2023. No explanation on behalf of the department is forthcoming. We have to draw adverse inference. 20. Section 144C of the Act is a self contained provision which carves out a separate class of assessees, i.e., 'eligible assessee'. Section 144C of the Act was inserted in the Finance Act of 2009 and came into effect from 1st 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 un....
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....44C of the Act?", is no longer res integra and any order passed contrary to Section 144C of the Act cannot be sustained. 23. In a decision cited by Mr. Mistri in the matter of Shell India Markets (P.) Ltd. (supra), this Court has also held as follows : "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 directions is received." 24. In view of the aforesaid discussion, we have no hesitation in holding that the assessment or....
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....ssued 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." "Section 282: Service of notice generally:- (1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this section referred to as "communication") may be made by delivering or transmitting a copy thereof, to the person therein named,-- (a) and (b)... (c) in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000); or" "Section 13: Time and place of despatch and receipt of electronic record.:- (1) Save as otherwise agreed to between the originator and the addressee, the despatch of an electronic record occurs when it enters a computer resource outside the control of the originator. (2) Save as otherwise agreed between the originator and the addressee, the ti....
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....f assessment in conformity with those directions and without providing any further opportunity of hearing to the assessee. This principle of law has been affirmed by the Bombay High Court in the aforenoted paragraphs of Vodafone Idea and in Shell India Markets Private Limited v. Additional Commissioner of Income Tax Officer, National Faceless Assessment Centre & Ors10. The relevant paragraph of the decision in Shell India are extracted hereinbelow: '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 ....
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....ication portal. A perusal of the screenshot of Case History Notings of the Dispute Resolution Panel read with the affidavit filed by Mr. Satish Sharma, the Chief Commissioner of Income-tax and Ms. Anne Varghese, the Joint Commissioner of Income-tax, clearly indicate that once the DRP directions are uploaded and the Document Identification Number ("DIN") is generated, which is also visible on the first page of the hard copy of the DRP directions, the said document is visible to the AO of the Faceless Assessment Unit ("FAU") having jurisdiction over the permanent account number of the assessee concerned. Thus, both the affiants agree that the Dispute Resolution Panel directions once uploaded on the Income-tax Business Application portal are automatically visible to the Faceless Assessing Officer, if any assessment work item is pending related to a particular permanent account number. Admittedly assessment proceedings of the petitioner were pending. Thus, undoubtedly the Dispute Resolution Panel directions uploaded on the Income-tax Business Application portal were readily and clearly visible and accessible to the Faceless Assessing Officer of the assessee. 16. .. 17....
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....eaning to and act in aid of the provision. Any procedural defect (there is none in this case) in the internal mechanism of the working of E- assessment Scheme, cannot operate against the interest of the assessee. Hence, the Faceless Assessing Officer cannot be believed that the Dispute Resolution Panel direction was received by him only on August 23, 2023 despite being uploaded on the Income-tax Business Application portal on March 25, 2021. The failure on the part of Department to follow the procedure under section 144C of the Act is not merely a procedural irregularity, but is an illegality and vitiates the entire proceeding." 17. The Madras High Court in Taeyang Metal India (P) Ltd. (supra) followed the principle laid down by the Delhi High Court in the aforesaid judgment. 18. The common string traveling through the judgments of the aforesaid three High Courts leaves no room for any doubt that the Courts have taken a uniform view that Section 144C(13) mandates the assessing officer to complete the assessment within one month from the end of the month in which such a direction is issued. Interestingly, the Bombay High Court considered paragraph No.4(2) of Scheme....
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....fitable to note that in the said case, the Supreme Court considered Section 263(2) of the Income Tax Act, in the said Section the word used is 'made' and not 'receipt of the order'. The Supreme Court emphasized the cardinal principle of the law that provision of statute is to be read as it is and nothing is to be added or taken away from the provision of the statute. In other words, this is well settled that when language of statute is clear and unambiguous, it has to be given effect to irrespective of its consequences (see Nelson Motis vs. Union of India 10). 23. The pivotal question is whether in view of the language employed in Section 144C(13) whether directions of DRP can be said to be received by the assessing officer on 30.06.2022. A conjoint reading of Section 144C (5) and (13) makes it clear that upon receipt of directions issued under Section 144C(5), it is imperative for assessing officer to complete the proceedings within one month from end of the month in which such a direction is received. Thus, key words used in Section 144C(13) are 'upon receipt of directions issued under Sub-Section (5)' 24. Although, Delhi, Bombay and Madr....
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....ch' and similarly, 'receipt' takes place when said electronic record enters the computer resource. 29. Section 282 of the Income Tax Act on which reliance was placed by Sri Vijhay K Punna, learned Standing Counsel for revenue makes it clear that in Sub-Section 1(c) of Section 282, the communication through electronic record as per Chapter IV of the I.T. Act was recognized and treated to be service of notice generally. Chapter IV of the I.T. Act contains Section 13, which envisages time, place of 'despatch' and 'receipt' of electronic record. 30. In order to meticulously examine the aspect of 'despatch' and 'receipt', in the present case, it is apt to quote the relevant SP,J & Dr. GRR,J Wps_44891 & 44915 of 2022 portion of letter dated 05.03.2024 filed along with I.A.No.1 of 2024 in the present matter, which reads as under: "2. In this regard, it is hereby stated that the direction dated 30.06.2022 were uploaded on ITBA portal on 30.06.2022. Further, physical copy of the Directions was also sent to the Assessing Officer on 30.06.2022 through Speed Post." (Emphasis Supplied) 31. The Income Tax Departme....