TaxTMI 
TaxTMI 
2025 (12) TMI 1278
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....22 (received by the Appellant on 28 July 2022) passed by Learned Assessing officer ("Ld.AG") u/s. 143(3) r.ws 144C(13) read with section 144C of the Income-tax Act pursuant to the directions dated 14 June 2022 by Dispute Resolution Panel, Bangalore (DRP) u/s. 144C(5) of the Act, is bad in law and void ab initio so far as it is prejudicial to the Appellant. Transfer Pricing Adjustment 2. That on the facts and circumstances of the case and in law, the Lid. TPO/Ld, AO erred in making transfer pricing adjustment of Rs. 47,92,29,000 on account of adjustment towards purchases of raw material. 3. That on the facts and circumstances of the case and in law, the Ld. TPO/Ld. AD failed to appreciate that the purchase price of raw material of Rs. 2,198 Lakhs was agreed between the Appellant and the AE on an arm's length basis. Incorrect Computation of Profit Level Indicator (PLI) 4. That on the facts and circumstances of the case and in law, the Ld. TPO/Ld. AO failed to appreciate that the Appellant had incurred losses mainly due to the fact that it curtailed operations due to business reasons and announced VRS scheme. 5. That on the fac....
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.... of the case and in law, the Ld. TPO/Ld. AO erred in considering the following companies as comparables: a. ORO Tuff Glasses Pvt. Ltd. b. Dadakrupa Tuff Glass Private Limited c. Emerge Glass India Private Limited d. Sisecam Flat Glass India Private Limited e. Gold Plus Glass Industry Umited f. Gobind Glass and Industries Limited 15. That on the facts and circumstances of the case and in law, the Ld. TPO/Ld. AO erred in including companies disregarding the functionally dissimilarity 16. That on the facts and circumstances of the case and in law, the Ld. TPO/Ld. AO ought to have appreciated that the aforesaid companies did not have any extra-ordinary events as such of the Appellant. Rejection of comparable companies 17. That on the facts and circumstances of the case and in law, the Ld. TPO/Ld. AO erred by not including following companies as comparable: a. Chandra Lakshmi Safety Glass Ltd. b. Goldstar Glasswares Pvt Ltd. Shri Balkishan Agarwal Glass Industries Ltd. 18. That on the facts and circumstances of the case and in law, the Ld. TPO/Ld. AO erred in not....
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....d 17.08.2021. 5. During the course of assessment proceedings, the A.O. made a reference to the Transfer Pricing Officer under Section 92CA of the Act to determine the arm's length price of the international transactions entered into by the assessee with its Associated Enterprises. The assessee, in Form 3CEB, reported various international transactions including purchases and royalty payments. The TPO, after considering the Transfer Pricing documentation and other details filed by the assessee, passed an order under Section 92CA(3) dated 31.07.2021, proposing an adjustment of Rs. 60,16,24,752/-, comprising (i) purchase-related adjustment of Rs. 53,21,46,000/-, and (ii) royalty adjustment of Rs. 6,94,78,752/-. Subsequently, a rectification order under Section 154 was passed on 19.08.2021, revising the purchase adjustment to Rs. 49,86,32,000/-. 6. Thereafter, the A.O. passed a draft assessment order under Section 143(3) r.w.s. 144C(1) of the Act on 21.09.2021, determining the total income at Rs. 69,97,35,729/-, by incorporating the above transfer pricing adjustments. Aggrieved, the assessee filed objections before the Hon'ble Dispute Resolution Panel, DRP-1, Bengaluru, challengi....
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....ly opposed the admission of the additional ground and submitted that, the assessee should not be permitted to raise a new ground at this stage. She further submitted that, the issue relating to DIN compliance is factual in nature and ought not to be entertained as an additional ground. Therefore, she prayed that the application filed by the assessee may be rejected. 11. We have heard both the parties and perused the material available on record. The additional ground raised by the assessee pertains to the validity of DRP directions on account of alleged non-compliance with the mandatory requirement of quoting a computer-generated DIN as prescribed under CBDT Circular No. 19/2019. Since the ground raised is a pure legal ground going to the root of the validity of the proceedings, and does not require fresh facts beyond those already on record, the same is liable to be admitted in view of the ratio laid down by the Hon'ble Supreme Court in the case of NTPC Ltd. v. CIT, 229 ITR 383 (SC). Accordingly, the additional ground raised by the assessee is admitted for adjudication. 12. The learned counsel for the assessee, Shri SP Chidambaram, Advocate, referring to the final assess....
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....h this issue is in favour of the assessee by the decisions of various High Courts, including the decision of Hon'ble Madras High Court in the case of CIT Vs. Roca Bathroom Products Private Limited (supra) and also the Hon'ble Bombay High Court in the case of Shelf Drilling Ron Tappmeyer Limited Vs. ACIT, International Taxation (supra), but fact remains that the Revenue has challenged the order of the Hon'ble Bombay High Court in the case of Shelf Drilling Ron Tappmeyer Limited Vs. ACIT, International Taxation (supra) and the same has been stayed by the Hon'ble Supreme Court. Further, the Hon'ble Supreme Court in the case of Shelf Drilling Ron Tappmeyer Limited Vs. ACIT, International Taxation (supra) has delivered a split verdict where one Hon'ble Judge has decided the issue in favour of the Revenue and another Hon'ble Judge has decided the issue in favour of the assessee and the matter is still pending for adjudication before a Larger Bench. Therefore, she submitted that, since the matter has not attained finality at the level of Hon'ble Supreme Court, either the matter may be kept pending on this issue or decided in favour of the Revenue. 14. We....
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....udge. 19. Admittedly, the facts including the dates are not under dispute. As regards the appeal in W.A.No.1854 of 2021, even though the remand was on 24-1-2013 and the assessee had received the order on 8-2-2013, the first notice by the DRP was issued on 19-2-2014 and the first hearing in the Chennai office was on 10-3-2014. Therefore, it is lucid that the DRP had the knowledge of the order before 19-2-2014. The matter was heard on various dates in Chennai office and written submissions were also filed. Thereafter, the files have been transferred to Bengaluru by the CBDT notification dated 31.12.2014. The Learned Judge relying upon the findings in the batch of cases which was decided first and rendered additional findings, which have been extracted in paragraphs 10 and 11 above, has allowed the writ petitions holding that the time limit under Section 153(2A) was not adhered to and in any case, the proceedings have not been concluded within a reasonable time. 20. As rightly contended by the learned senior counsels and affirmed by the Learned Judge, the DRP proceedings is a continuation of assessment proceedings. To put it further, it is a part of assessment procee....
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....o have concluded the proceedings within 9 months from the date of receipt of the Tribunal's order, when it had issued a notice on 19-2-2014 and conducted the hearing as early as on 10-3-2014 and on several dates. The DRP at Chennai, in fact ought to have passed orders before 19-11-2014, even if the date of receipt of the notice is taken as 19-2-2014. In that event, the assessing officer ought to have passed the order before 31-12-2014 or at the latest before 31-3-2015 considering that the order was received during the Financial year 2013-14. The transfer of the files to Bengaluru, after the lapse of the time, will not indefinitely extend the time and can have no impact on the time lines. It is an inter-department arrangement and it cannot defeat the rights of the assessee. 22. Insofar as the non-obstante clause in Section 144C(13) is concerned, we concur with the view of the Learned Judge. The exclusion of applicability of Section 153 or Section 153B is for a limited purpose to ensure that dehors larger time is available, an order based on the directions of the DRP has to be passed within 30 days from the end of the month of receipt of such directions. The section and ....
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....4, Curtis v. Stovin [(1889) 22 QBD 513: 58 LJQB 174:60 LT 772 (CA)] referred to in S. Teja Singh case [AIR 1959 SC 352: (1959) 35 ITR 408]). 18. The statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make a consistent enactment of the whole statute. 19. The court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with other parts of the law and the setting in which the clause to be interpreted occurs. (See RS. Raghunath v. State of Karnataka [(1992) 1 SCC 335: 1992 SCC (L&S) 286: (1992) 19 ATC 507: AIR 1992 SC 81]) Such a construction has the merit of avoiding any inconsistency or repugnancy either within a section or between two different sections or provisions of the same statute. It is the duty of the court to avoid a head-on clash between two sections of the same Act. (See Sultana Begum v. Prem Chand Jain [(1997) 1 SCC 373: AIR 1997 SC 1006])." (iii) Franklin Templeton Trustee Services (P.) Lid. v. Amruta Garg [2021] 124 taxmann.com 326/164 SCL ....
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....under the Act is to be strictly followed. 24. Insofar as the challenge to the show cause notice issued is concerned, though generally, the High Court will be circumspected to interfere at the stage of show cause notice, the law on the point is well settled with exceptions carved in the following cases; a. when the notice is issued beyond the period of limitation, b. when the notice is without authority, c. when notice is issued without following the procedures under the applicable Act or the rules framed thereunder and d. when the notice is issued with a prejudiced mind. The challenge must be available ex-facic leaving no room for the court to peruse or discuss intricate facts. In the present case, the challenge is on the ground of limitation and hence, we hold that the proceedings under Article 226 of the constitution are maintainable, 25. As regards the relief sought in other appeals viz., W.A.No.1517/2021 etc. batch, the findings rendered above are equally applicable. In these cases, for the assessment year 2009-10, the order of remand to the Assessing officer was passed on 18-12-2015 and insofar as the assessment ye....
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....scribed for bringing the escaped turnover into the net of taxation, such an eventuality cannot be grappled with appropriately unless timely assessment is completed. In several taxing statutes, even in a situation like this, where assessment under Section 11(3) or 28(3) of the respective Acts is contemplated, a period of limitation is provided. Until by statute, such a limitation is provided, it is proper for the State Governments to require, by statutory rules or appropriate instructions, to ensure completion of assessments with expedition and reasonable haste but subject to rules of natural justice." (ii) Govt. of India v. Citedal Fine Pharmaceuticals [1989] 3 SCC 483: "6. Learned counsel appearing for the respondents urged that Rule 12 is unreasonable and violative of Article 14 of the Constitution, as it does not provide for any period of limitation for the recovery of duty. He urged that in the absence of any prescribed period for recovery of the duty as contemplated by Rule 12, the officer may act arbitrarily in recovering the amount after lapse of long period of time. We find no substance in the submission. While it is true that Rule 12 does not prescribe an....
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....motu after an unduly long delay, on the facts of this case it is plain that it was not so done. Within a few months of the passing of the appellate order by the Assistant Commissioner, the Commissioner proceeded to revise and revised the said order. There was no undue or unreasonable delay made by the Commissioner. It may be stated here that an appeal has to be filed by an assessee within the prescribed time and so also a time-limit has been prescribed for the assessee to move in revision. The appellate or the revisional powers in an appeal or revision filed by an assessee can be exercised in due course. No time-limit has been prescribed for it. It may well be that for an exercise of the suo motu power of revision also, the revisional authority has to initiate the proceeding within a reasonable time. Any unreasonable delay in exercise may affect its validity. What is a reasonable time, however, will depend upon the facts of each case." 23. The question as to what would be the reasonable period did not fall for consideration therein. The binding precedent of this Court, some of which had been referred to us hereto before, had not been considered. The counsel appearing for t....
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....plies that irrespective of availability of larger time to conclude the proceedings, final orders are to be passed within one month in line with the scheme of the Act, g) When no period of limitation is prescribed, orders are to be passed within a reasonable time, which in any case cannot be beyond 3 years. However, when the statute prescribes a particular period within which orders are to be passed, then such period, irrespective of whether it is short or long. shall be applicable. 28. With the above directions, all the writ appeals are dismissed. However, there will be no order as to costs. Consequently, connected miscellaneous petitions are closed." 15. A similar view has been taken by the Hon'ble Bombay High Court in the case of Shelf Drilling Ron Tappmeyer Limited Vs. ACIT, International Taxation (supra) and after considering the relevant facts in paragraphs 23 to 34 of the order, it has been held as under : "23. No doubt, section 144C of the Act is a self contained code of assessment and time limits are inbuilt at each stage of the procedure contemplated. Section 144C envisions a special assessment, one which includes the determination of Arms....
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....tion 153(3) of the Act. For example - it provides for exclusion of the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited or inventory valued under sub-section (2-A) of section 142 of the Act or in a case where an application made before the Income-tax Settlement Commission is rejected by it or is not allowed to be proceeded with by it, the period commencing from the date on which an application was made before the Settlement Commission and ending with the date on which the order is received by the Principal Commissioner or Commissioner or where the period commencing from the date on which an application made before the Authority for Advance Rulings or before the Board for Advance Rulings under sub-section of section 245C of the Act and ending with the date on which the Advance Ruling pronounced by it is received by the Commissioner or where reference for exchange for information is made by an authority competent under an agreement referred to in section 90 or section 90-A of the Act or where a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissione....
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....the contrary contained in section 153, the assessment without providing any further opportunity of being head to the assessee, within one month from the end of the month in which such direction is received. What is contemplated under section 144C(13) is the passing of the final assessment order. Twelve months as provided under section 153(3) would start from the end of the financial year in which the Principal Commissioner received the order under section 254 from the ITAT. The assessing officer should have taken steps to pass the final order under sub-section (13) of section 144C within 12 months period. 30. The exclusion of applicability of section 153, in so far as non-obstante clause in sub-section (13) of section 144C is concerned, it is for limited purpose to ensure that debers larger time available, an order based on the directions of the DRP has to be passed within 30 days from the end of the receipt of such directions The section and sub-section have to be read as a whole with connected provisions to decipher the meaning and intentions. 31. We would also observe that a similar non-obstante clause is also used in section 144C(4) of the Act with the same li....
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....llow the parties to get this appeal revived if the decision of the Hon'ble Supreme Court on this issue necessitates modification of this order. 13. The Hon'ble jurisdictional High Court in the case of Kotha Kantaiah vs., Income Tax Officer in WP.No.344 of 2025 vide order dated 24.04.2025 while dealing with the issue of validity of the notice issued u/sec. 148 issued by the Jurisdictional Assessing Officer [in short "JAO" instead of Faceless Assessing Officer (in short "FAO" as per the Faceless Assessment Scheme has quashed the notice issued u/sec. 148 by the JAO and consequently, re-assessment order, but, granted the liberty to the parties to get the petition revived as per the outcome of the Judgment of the Hon'ble Supreme Court on the identical issue. The relevant part of the Judgment of Hon'ble Jurisdictional High Court of Telangana in the case of Kotha Kantaiah vs., Income Tax Officer (supra) in Parus-15 to 18 of the said judgement is as under: "15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of ....
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....nd decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings. 38. Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of India, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra." 18. We would only further like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (1 supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra ....