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Facts
The appeals were filed by the assessee against the order of the CIT(A) for Assessment Years 2011-12 to 2014-15. The assessee raised a legal ground regarding the non-disposal of objections to reassessment proceedings initiated under Section 148. For AY 2014-15, the grievance was about the TPO applying LIBOR plus 400 basis points for interest on a loan.
Held
The Tribunal held that if an illegality occurs during proceedings, the clock starts from that point. It directed the AO to dispose of the assessee's objections filed on 08.11.2016 and pass the final order within the original limitation period, also examining the applicability of Section 153C. For AY 2014-15, the TPO was directed to apply LIBOR plus 200 basis points for computing interest.
Key Issues
Whether reassessment proceedings initiated under Section 148 were null and void due to non-disposal of objections. Whether the rate applied by the TPO for interest calculation on a loan was correct.
Sections Cited
148, 153C, 147
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Income Tax Appellate Tribunal, DELHI BENCH ‘H’: NEW DELHI
Before: SHRI PRAKASH CHAND YADAV & SHRI MANISH AGARWAL
(ASSESSMENT YEAR 2013-14) (ASSESSMENT YEAR 2014-15) M/s S.A. Propcon Pvt. Ltd., ACIT, C-10 Block-C Main Market, Central Circle-30, Vasant Vihar, Vs. New Delhi. New Delhi-110057 PAN-AAKCS1777M (Appellant) (Respondent) Assessee by None Department by Shri Mukesh Verma, Sr. DR Date of Hearing 21/07/2025 Date of Pronouncement 25/07/2025 O R D E R PER PRAKASH CHAND YADAV, JM: All these appeals of the assessee are arising from the order of Ld. Commissioner of Income Tax (Appeals)-30, New Delhi dated 30th July. 2018 in Appeal Nos239-242/17-18/2902-2905 for Asst. Years 2021-12 to 2014-15.
All these appeals were filed by the assessee somewhere in 2018 and already listed 26th time before the Bench. On every occasion, either the assessee or the Revenue has sought adjournment. Today, when this matters were called for, no body appeared from the side of the assessee, despite proper service of the notice of hearing.
2 ITA N0. 5618 & Ors. /Del/2018 S.A. Propcon P. Ltd. vs. ACIT 3. Perusal of the grounds of appeal filed by the assessee would so that the assessee has raised one legal ground, i.e., non-disposal of the objection filed by the assessee before the AO in response to the reassessment proceedings for Assessment Years 2011-12, 2012-13 and 2013-14, initiated by the AO u/s 148 of the Act. Hence, the assessment proceedings are null and void.
4. The Ld. DR Relied upon the orders of the authorities below.
5. In these cases, notice u/s 148 has been issued by the Assessing Officer on 11th August, 2016 and the assessee has filed its return of income on 12th September, 2016. Thereafter the reasons recorded were provided to the assessee and the assessee has filed its objections on 08.11.2016. Time limit for completing the assessment was 31st December, 2017 and the Assessing Officer has passed the reassessment order on 23rd October, 2017 and on 17.11.2017 in some years. therefore, there was time left with the Assessing Officer in terms of the limitation. It is settled position of law that if any illegality supervened during the course of proceedings and not at the initial stage, then, clock will start from that point where such illegality occurred as held by the Apex Court in Gududhar Brothers repored in 40 ITR 298(SC). Therefore, in our view the proceedings would start again from the date when the assessee has filed its objection before the AO that is 08.11.2016. It is made clear that AO will dispose-off the objections and passed the final order within such period of limitation which was available with him originally. It is further directed to the Assessing Officer that he will examine as to whether provisions of 153C are to be invoked in this case or provisions of 147 are to be invoked in this case.
So far as Assessment Year 2014-15 is concern, the grievance of the assessee is that the TPO has applied the LIBOR plus 400 basis point with respect to the interest applicable to the loan advance by the assessee to its Hongkong AE. Considering the facts and circumstances, and recent judicial pronouncements, as applicable in transfer pricing proceedings, we hereby direct the TPO to apply libor+ 200 basis point for computing interest attributable to the 3 ITA N0. 5618 & Ors. /Del/2018 S.A. Propcon P. Ltd. vs. ACIT amount of loan advanced by the assessee of its AE and then compute the Arm’s Length Price of the transactions. With these observations, the appeals filed by the assessee are allowed for statistical purposes.
In the result, all the appeals of the assessee stands allowed. Order pronounced in the open court on 25/07/2025.