TaxTMI 
TaxTMI 
2025 (12) TMI 1276
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....to have never been issued in view of para 4 of the said CBDT circular. 2. That on the facts and circumstances of the case and in law, the Appellant is unable to verify the authenticity of the DIN quoted on the directions dated 30 June 2023 issued by the Ld, Panel on the income tax e-filing portal and thus rendering such directions as invalid, non-est in law and deemed to have never been issued. 3. That on the facts and circumstances of the case and in law, the final assessment order dated 07 July 2023 passed by the Ld. AO under section 143(3) read with section 144C(13) of the Act pursuant to invalid and non-est directions issued by the Ld. Panel, is bad in law, null and void and liable to be quashed. 4. Without prejudice to the above Ground No. 1, 2 and 3, on the facts and circumstances of the case and in law, the I.d. AO erred in passing the final assessment order dated 07 July 2023, by treating the additions made in the final assessment order as 'Business Income' instead of 'Fees for Technical Services' (FTS), which is not only contrary and in clear violation of the directions of the L.d. Panel but also contrary to the draft assessment o....
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....ded for 'Interest' in the Article 11 of India-Ireland tax treaty. 10. Without prejudice to the above, the levy of interest under section 234A and 234B of the Act shall stand deleted/reduced on giving effect to the above-mentioned grounds. 11. That on the facts and circumstances of the case and in law, the Ld. AO erred in initiating penalty proceedings under section 270A of the Act for under reporting and mis-reporting of income and section 272A(1)(d) of the Act for non-compliance to the notice issued under section 142(1) of the Act. The Appellant prays that directions be given to grant all such relief arising from the Grounds of Appeal mentioned supra and all consequential efforts relief thereto. The Appellant craves leave to alter, amend, rescind, modify or withdraw all or any of the Grounds of Appeal contained herein or add any further grounds as may be discussed necessary either before or during the hearing of this Appeal. 3. The assessee has raised the following additional grounds of appeal: "12. On the facts and circumstances of the case and in law, the final assessment order dated 07 July 2023 passed by the Ld. AO under ....
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....e Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 ("TOLA"), the limitation still remained at 30.09.2021. Accordingly, he argued that since the final assessment order was passed on 07.07.2023, which is much after 30.09.2021, it is barred by limitation. In this regard, the Ld. AR relied on the decision of the Hon'ble Madras High Court in the case of CIT vs. Roca Bathroom Products Pvt. Ltd. (445 ITR 537) and the decision of the Hon'ble Bombay High Court in the case of Shelf Drilling Ron Tappmeyer Ltd. vs. ACIT (International Taxation) (457 ITR 161) to contend that the limitation under section 153 of the Act prevails over section 144C of the Act. He further submitted that the overall limitation for passing the final assessment order cannot exceed the limit prescribed under section 153(1) read with section 153(4) of the Act. He further argued that the limitation under section 144C(13) of the Act is only a restriction on the Ld. AO to pass the final assessment order within one month of receipt of directions of the Ld. DRP but does not enlarge the statutory limitation prescribed under section 153 of the Act. The Ld. AR emphasized that both the Ho....
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....as passed on 30.09.2022, and the directions of Ld. DRP under section 144C(5) of the Act were issued on 30.06.2023. The only issue before us is whether the limitation period for passing the final assessment order is (a) 30.09.2021, as per the provisions of section 153(1) read with section 153(4) of the Act, or (b) 31.07.2023, i.e., one month from the end of the month in which directions of the Ld. DRP were passed, as per the provisions of section 144C(13) of the Act. In this regard, we note that an identical issue has been considered by this Tribunal in the case of Aveva Solutions India LLP, Hyderabad vs. ITO, Ward-8(1), Hyderabad in ITA.No. 1170/Hyd./2024 vide Order dated 19.11.2025 in Paras-7 to 14 as under : "7. We have considered the rival submissions as well as relevant material on record. In the case in hand, the assessee has challenged the validity of the assessment order passed u/sec. 143(3) r.w.s. 144C(13) of the Act dated 18.10.2024 being barred by limitation as provided u/sec. 153 of the Act. At the outset, it is noted that the limitation for passing the assessment orders is provided u/sec. 153 of the Act and the relevant provisions are in sub-sec.(1) and sub-sec....
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....icer, as the case may be], wholly or partly, otherwise than by making a fresh assessment or reassessment [or fresh order under section 92CA, as the case may be], such effect shall be given within a period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be. Provided that where it is not possible for the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer [or the Transfer Pricing Officer, as the case may be], if satisfied, may allow an additional period of six months to give effect to the order. Provided further that where an order under section 250 or section 254 or section 260 or s....
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....d by limitation. Per contra, it has been contended by the learned senior counsels appearing for the respondent(s)/ assessees that the outer time limit under Section 153 is applicable to every proceedings on remand and the department having slept over the issue for several years, cannot now redo the proceedings afresh, after certain rights have vested with the assessees. Even if specific provisions are not there to deal with this situation, the proceedings must be concluded within a reasonable time and hence the impugned proceedings are liable to be struck down and rightly done so by the learned Judge. 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 notific....
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....ns have to be filed, the DRP has to issue the directions and the final order is to be passed. The provisions under section 144C and section 153 are not mutually exclusive as both contain provisions relating to Section 92CA and are inter-dependant and overlapping. On remand, prior to amendment as per Section 153 (2A), the Assessing officer is given 12 months to pass a fresh assessment order. Therefore, it is incumbent on him to do so, irrespective of the fact that DRP has completed the hearing and issued the directions or not. As rightly held by the learned judge, we are of the view that the DRP ought to 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,....
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....courts have also to keep in mind that an interpretation which reduces one of the provisions as a "dead letter" or "useless lumber" is not harmonious construction. (5) To harmonise is not to destroy any statutory provision or to render it otiose." (ii) CIT v. Hindustan Bulk Carriers [2003] 126 Taxman 321/259 ITR 449: "16. The courts will have to reject that construction which will defeat the plain intention of the legislature even though there may be some inexactitude in the language used. (See Salmon v. Duncombe [(1886) 11 AC 627 : 55 LJPC 69 : 55 LT 446 (PC)] AC at p. 634, 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 whic....
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.... prescribed under the statute is for the assessing officer and therefore, it is his duty to pass order in time irrespective of whether the directions are received from DRP or not. As held by us above, the DRP will have no authority to issue directions after nine months and a further period of one month as per section 144C (13) and three months under section 153 (2A) is available, within which period no orders have been passed in the present cases. The reference made by the learned senior counsels on the judgments in Nokia India (P.) Ltd. (supra) and Vedanta Ltd. (Supra) is well founded. The timeline given 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 ....
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....ted, the dues of the State can be conveniently ascertained and collected. Delay in completion of assessment often creates problems. The assessee would be required to keep up all the evidence in support of his transactions. Where evidence is necessary, with the lapse of time, there is scope for its being lost. Oral evidence as and when required to be produced by the assessing authority may not be available if a long period intervenes between the transactions and the consideration of the matter by the assessing authority. Long delay thus is not in the interest of either the assessee or the State. In view of the fact that a period of limitation has been prescribed 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 exp....
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....of the said Act. In any event, the same should not exceed the period of five years. The view of the High Court, thus, cannot be said to be unreasonable. Reasonable period, keeping in view the discussions made hereinbefore, must be found out from the statutory scheme. As indicated hereinbefore, maximum period of limitation provided for in sub-section (6) of Section 11 of the Act is five years. 21. In S.B. Gurbaksh Singh v. Union of India [(1976) 2 SCC 181 : 1976 SCC (Tax) 177 : (1976) 37 STC 425] Untwalia, J., speaking for the Bench, opined : (SCC p. 188, para 15) "15. Apropos the fourth and the last submission of the appellant, suffice it to say that even assuming that the revisional power cannot be exercised suo 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-....
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....dings and issues directions or not, within 9 months, the Assessing officer is to pass orders within the stipulated time, (d) In matter involving transfer pricing, upon remand to DRP, the Assessing officer is to pass a denova draft order and the entire proceedings as in the original assessment, would have to be completed within 12 months, as the very purpose of extension is to ensure that orders are passed within the extended period, as otherwise the extension becomes meaningless. (e) The outer time limit of 33 months in case of reference to TPO under Section 153, would not refer to draft order, but only to final order and hence, the entire proceedings would have to be concluded within the time limits prescribed, (f) The non-obstante clause would not exclude the operation of Section 153 as a whole. It only implies 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,....
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....licable. It would also mean that the time prescribed in section 153 (1) of the Act cannot apply where section 144C of the Act is applicable in the case of an eligible assessee. If Mr. Suresh Kumar was correct, then in our view, it would have been specifically so provided in section 153 of the Act. We would agree with Mr. Mistri that wherever the legislature intended extra time to be provided, it is expressly provided in section 153 of the Act. Sub-section (3) of section 153 of the Act also applies to fresh order under section 92 CA of the Act being passed in pursuance to an order under section 254 of the Act. Sub-section (4) of section 153 of the Act specifically provides that notwithstanding anything contained in sub-sections (1), (1-A), (2), (3) and (3-A) of the Act, where a reference under sub-section (1) of section 92 CA of the Act is made during the course of the proceeding for assessment or re-assessment, the period available for completion of assessment or re-assessment, as the case may be, under the said sub- sections (1), (1-A), (2), (3) and (3-A) of the Act shall be extended by twelve months. 25. Moreover, Explanation-1 below section 153 of the Act also provides ....
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....e has to be commenced and concluded within the twelve months period provided under section 153(3) of the Act. This is because, the procedure under section 144C(1) of the Act also has to be followed by the Assessing Officer only if he proposes to make any variation which is prejudicial to the interest of the eligible assessee. If the Assessing Officer did not wish to make any variation which is prejudicial to the interest of the eligible assessee, he need not go through the procedure prescribed under section 144C of the Act. 29. In our view, the assessment has to be concluded within twelve months as provided in section 153(3) of the Act when there has been remand to the AO by the ITAT under section 254 of the Act. Within this twelve months prescribed, the AO has to ensure that the entire procedure prescribed under section 144C is completed and pass a final assessment order. For this the AO has to be prompt in passing an order contemplated under section 144C(1) of the Act and not wait to be reminded like in this case and still take almost two years to start the process. Sub-section (13) of section 144C provides that an assessment officer shall, upon receipt of the directions....
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....owing the Judgments of Hon'ble Madras High Court as well as Hon'ble Bombay High Court cited (surpa), we hold that the assessment order passed by the Assessing Officer on 18.10.2024 is barred by limitation and consequently, the same is liable to be quashed. We order accordingly. 12. Since the issue is pending adjudication before the Hon'ble Supreme Court in the case of ACIT-[International Taxation] vs., Shelf Drilling Ron Tappmeyer Ltd., [2025] 177 taxmann.com 262 (SC) and the first attempt to resolve the dispute by the Hon'ble Supreme Court is not successful due to divergent views of the Division Bench of the Hon'ble Supreme Court and, therefore, the matter is required to be resolved by the Larger Bench of the Hon'ble Supreme Court. Since the matter is yet to be resolved by the Hon'ble Supreme Court, therefore, we allow 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 o....
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....le, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically. 37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of jurisdiction, we are not inclined to proceed further and 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 Revenu....