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Facts
The assessee, a private limited company and subsidiary of LS Cable & System Limited, Korea, filed its return declaring a total loss. The case was taken up for scrutiny, and the Assessing Officer (AO) passed a final assessment order based on the directions of the Dispute Resolution Panel (DRP). The assessee appealed against this order.
Held
The Tribunal held that the final assessment order passed by the AO was barred by limitation as it was passed beyond the statutory time limit prescribed under Section 144C(13) of the Income Tax Act, 1961. Therefore, the order was quashed.
Key Issues
Whether the final assessment order passed by the Assessing Officer is barred by limitation as per the provisions of Section 144C(13) of the Income Tax Act, 1961.
Sections Cited
143(3), 144C, 144C(13), 144C(5), 143(2), 92CA(3), 92CA(4), 153, 153B, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI “H” BENCH: NEW DELHI
Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL
ORDER
PER MANISH AGARWAL, AM:
This appeal is filed by the assessee against the final assessment order passed by the ld. Assessing officer (“Ld.AO”) u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (“the Act”) dated 24.08.2022 for A.Y. 2018-19 in terms of the directions given by the ld. Dispute Resolution Panel (“Ld. DRP”) vide its order dt. 23.06.2022 passed u/s 144C(5) of the Act.
Brief facts of the case are that assessee is a private limited company and is a wholly owned subsidiary of LS Cable & System Limited, Korea engaged in the business of manufacturing cables mainly used for infrastructure network. The return of income for the year under appeal was filed on 30.03.2019, declaring total loss Rs. 6,33,09,115/-. The case was taken up for scrutiny by way of issue of notice u/s 143(2) of the Act dated 22.09.2019. The assessee in the report in Form 3CEB has reported following transactions as international transactions:
S.No. Name of the AE Description of Transfer Pricing Amount in International Method INR Transactions 1. LS Cable & System Ltd. Purchase of raw TNMM 61504914 materials 2. LS Cable & System Ltd. Purchase of raw TNMM 6528553 India Project Office materials 3. LS Vina Cable & System Purchase of raw TNMM 8611687 material 4. LS Global Co.Ltd. Purchase of raw TNMM 279045817 material TNMM 5. LS Metal Co.Ltd. Purchase of raw 46458376 material TNMM 6. LS Cable & System Ltd. Sale of manufactured 313634879 goods TNMM 7. LS Cable & System Ltd. Sale of manufactured 129455015 India Project Office goods 8. LS Cable & System Ltd. Sale of manufactured Other Method 3809602 India Project Office goods Purchase of machinery 9. LS Cable & System Ltd. Other Method 49861799 10. LS Cable & System Ltd. Receipt of services TNMM 110194344 India Project Office 11. LS Cable & System Ltd. Corporate guarantee Other Method 0 12. LS Cable & System Ltd. Issue of share capital Other Method 868455000 13. LS Global Inc. Allocation of SAP and Other Method 4575166 IT maintenance expenses 3. The AO made a reference u/s 92CA(3) of the Act to TPO for determination of the Arm’s Length Price (“ALP”) of the International Transaction carried out by the assessee. The TPO vide its order dated 31.07.2021 passed u/s 92CA(3) of the Act has proposed adjustment of Rs. 13,12,50,050/- on such international transactions. Thereafter, draft assessment order u/s 144C of the Act was passed by the ld.AO on 17.09.2021 proposing the variations to the total income as advised by TPO. The assessee filed objections against such draft order before the Hon’ble DRP. The Page | 2 Hon’ble DRP-1, New Delhi vide its order passed u/s 144C(5) dated 23.06.2022 had rejected all the objections raised by the assessee. Finally, the Assessing Officer has passed the final assessment order u/s 143(3) r.w.s. 144C(13) of the Act on 24.08.2022 by making addition of Rs. 13,12,50,050/- as proposed by TPO in its order u/s 92CA(3) of the Act and the total income of the assessee was assessed at Rs. 6,79,40,935/-.
4. Aggrieved with the final assessment order, the assessee is in appeal before this Tribunal on the strength of following grounds of appeal:-
1. On the facts and circumstances of the case and in law, the assessment order/directions passed by the Id. AO / Transfer Pricing Officer ("TPO") / DRP are bad in law.
2. That the Ld. AO/TPO/DRP has erred in the facts and circumstances of the case and in law in rejecting the economic analysis undertaken by the appellant in accordance with the provisions of the Act read with the Rules and making an upward adjustment of INR 13,12,50,050 to the total income of the appellant by re- determining the arm's length price of international transaction of sale of manufacturing goods.
3. That the impugned AO/TPO order are invalid due to delay in reference of the case by the Ld. AO to Ld. TPO.
4. That the Ld. AO/TO/DRP has erred in the facts and circumstances of the case and in law, in treating the impairment loss incurred as an operating item while computing the net operating margin of the Appellant. The lower authorities failed to appreciate the fact that impairment loss is an extra-ordinary and non-recurring loss and hence, must be excluded while computing the operating margin of the Appellant.
5. That the Ld. AO/TPO/DRP has erred in the facts and in circumstances of the case and in law, in not allowing the Depreciation/capacity adjustment carried out by Appellant for improving comparability analysis based on his own conjectures and Income tax Act.
6. That the Ld. AO/TPO/DRP has erred in the facts and in circumstances of the case and in law, in rejecting the custom duty adjustment undertaken by Appellant for improving comparability analysis based on his own conjectures and summaries even though the same is allowed under the Income tax Act.
7. That the Ld. AO/TPO/DRP has erred in the facts and in circumstances of the case and in law in rejecting cash profit level indicator without appreciating the fact that there were significant differences between the depreciation of comparable companies vis- à-vis the appellant.
8. That the Ld. AO/TPO/DRP has erred in the facts and in circumstances of the case and in law in not making appropriate adjustments to account for differences in working capital employed by the Appellant vis-a-vis the comparable while computing margins of comparable companies.
9. That on facts and in laws, the AO erred in holding that the Appellant has furnished inaccurate particulars of income in respect of each item of disallowance/ additions and in initiating penalty proceedings under section 271(1)(c) of the Act. The Appellant craves leave to add, alter, modify or delete such other objections before or during the course of hearing before the Hon'ble Income Tax Appellate Tribunal (ITAT'), so as to enable the Hon'ble ITAT to decide on the grounds raised by the Appellant, as per law.
5. Further, the assessee vide letter dt. 20.02.2025 has raised additional ground of appeal which is as under:
10. That the impugned Final Order passed by AO under section 143(3) of the Income Tax Act, 1961 read with section 144C(13) is time barred and invalid.
6. The ld. AR further placed reliance on the following case laws for the admission of additional ground of appeal: - NTPC Ltd. Vs. CIT [1998] 229 ITR 383 (SC)
Max Life Insurance Co. Ltd. [2025] 170 Taxmann.com 466 (ITAT Delhi) 7. From the perusal of the additional ground taken by the assessee, it is seen that the assessee is challenging the very validity of the assessment made u/s 143(3) r.w.s. 144C(13) of the Act as being barred by limitations. The assessee’s contention is that since the assessment was made pursuant to the order of ld. DRP, the same should be completed within one month from the receipt of the order of ld. DRP however, the same was passed beyond one month and therefore, the assessment made u/s 143(3) r.w.s. 144C(13) is beyond the statutory time limit.
The additional ground raised
by the assessee is purely a legal ground and going to the very validity of the assessment made u/s 143(3) r.w.s.144C(13) of the Act and thus, by respectfully following the decision of the Hon’ble Supreme Court in the cases of NTPC Vs. CIT (supra), the additional ground filed by the assessee is admitted.
9. Since assessee has raised legal issue in additional ground of appeal, thus the same is taken first for consideration. As observed above, in additional ground of appeal, assessee has challenged that the final assessment order passed u/s 143(3) r.w.s. 144C(13) of the Act, dt 24.08.2022 is barred by limitation.
10. Ld.AR of the assessee submitted that in the instant case, the ld. DRP has rejected the objections taken by the assessee vide its order dt. 23.06.2022 and the appellant has received the intimation letter vide DIN No. ITBA/DRP/S/91/2022-23/1043577555(1) on 27.06.2022. This means the same would have been uploaded on portal on this date and thus, being made available to the appellant, TPO, NFAC and thus available to AO as well. Ld. AR further argued that the AO has mentioned in its final order that the DRP directions were issued on 29.06.2022. Thus, taking the date of DRP directions as mentioned in the AO Order, the due date to pass the AO final order would also be 31.07.2022. Since the final Assessment Order has been passed on 24.08.2022 which is in divergence to due date prescribed u/s144C (13) of the Act, the ld. AR of the assessee submits that the final order passed by the Assessing Officer is barred by limitation, and hence, should be treated as void.
11. On the other hand, the ld. CIT DR vehemently supported the order of the lower authorities and argued that in the present case though the ld. DRP has passed the order on 27.06.2022 but it is possible that the said order was received by the AO in the month of July, 2022 and thus the final order passed by the Jurisdictional Assessing officer on 24.08.2022 is well within the period of limitations as provided in section 144C (13) of the Act. He thus prayed that this ground of appeal
of the assessee is devoid of any merits.
12. We have heard the parties and perused the material available on record. For the sake of ready reference, the Provisions of section 144C are reproduced as under:" “144C. Reference to dispute resolution panel. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as Page | 6 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order- (a) file his acceptance of the variations to the Assessing Officer; or (b) file 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; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),- (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it.
(8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub- section (5) for further enquiry and passing of the assessment order. (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued 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. (14) The Board may make rules for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee. (15) For the purposes of this section,- (a) "Dispute Resolution Panel" means a collegium comprising of three Commissioners 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.’ 13. From the perusal of sub-section (13) of section 144C of the Act, 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. In the present case, the ld. DRP vide intimation letter for order u/s 144C(5) dt. 27.06.2022 inform the assessee about the DIN of the order passed u/s 144C(5) of the Act dt. 23.06.2022 thus the said order is served upon the assessee through online mode on 27.06.2022. Further in the said intimation, a seal of receipt of the order by the office of TPO is affixed according to which the same was physically delivered to the office of TPO on 28.06.2022. Further the ld. AO at page 2 of the final assessment order has observed as under: “Aggrieved by the above adjustments, the assessee went before the Hon’ble DRP, who vide order, dated 29.06.2022 has dismissed the objections of the assessee and retained the order of the TPO.”
From the perusal of the observation of the AO, it is clear that the order of ld. DRP rejecting the objections of the assessee was served on the AO on 29.06.2022. Thus the final assessment order so passed by the ld. AO is barred by limitations as the timeline of one month for completion of the final assessment order starts from 29.06.2022 i.e. the month in which the order passed by ld. DRP was received by the AO and expired on 31.07.2022. However undisputedly, the final assessment order was passed on 24.08.2022 which is beyond the period of one month as allowed in section Page | 9 144C(13) of the Act. Thus the final order passed u/s 143(3) r.w.s. 144C(13) is barred by limitations and is void and invalid order. The Hon’ble Jurisdictional High Court in the case of PCIT Vs. M/s Fibrehome India Pvt. Ltd. in of 2024 vide order dt. 05.02.2024 has held as under:- “3. We note that an identical question has been answered by us in W.P.(C) 15381 of 2022 titled as "Louis Dreyfus Company India Private Limited vs. Deputy Commissioner of Income Tax Circle 13(1), Delhi & Ors." in favour of the assessee / petitioner. While dealing with this question, we had observed as follows:- "14. The determination which the AO makes in the first instance is recognized to be a draft of the proposed order of assessment by virtue of section 144C(1) of the Act. If the assessee be aggrieved by the proposed order of assessment, it is entitled to file objections before the DRP in accordance with Section 144C(2) of the Act. The power of the AO to complete the assessment on the basis of the draft order stands interdicted in case objections have come to be preferred within the 30 day period as contemplated in Section 144C(2) of the Act. It is the DRP which thereafter proceeds to decide the objections and frame directions to enable the AO to complete the assessment in accordance with Section 144C(5) of the Act.
15. In terms of sub-section (13) of Section 144C of the Act, the AO is mandated to complete the assessment "in conformity with the directions" as framed by the DRP. That very provision commands the AO to complete the assessment within one month from the end of the month in which such a direction is received.
16. This is evident from Section 144C of the Act which is extracted herein below:- ……..
17. As is manifest from a reading of sub-section (13) of Section 144C of the Act, the AO is not accorded any discretion in the framing of an order of assessment once directions have come to be framed by the DRP. In fact, the provision requires the AO to frame an order of 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 & Ors. 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 the DRP within one month from the end of the month in which such direction is received."
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 Page | 11 Bombay High Court.
Further, the procedure of assessment as provided under Section 144C does not envisage or contemplate the interdiction or involvement of the TPO once a directive has been framed by the DRP. The role of the TPO comes to an end once an order as contemplated under Section 92 CA(4) of the Act has come to be framed and remitted to the AO. There was thus no occasion for the TPO having resumed proceedings post the passing of the direction by the DRP on 20 June 2022.
Undisputedly, the directive of the DRP came to be uploaded on the ITBA portal on 24 June 2022. It is additionally stated to have been dispatched through Speed Post to the third respondent (TPO) and the fourth respondent (Additional/ Joint/ Deputy/ Assistant Commissioner of Income Tax, National Faceless Assessment Centre, New Delhi) on 27 June 2022. It is thereafter that the TPO appears to have passed the order dated 25 July 2022. XXX XXX XXX 22. It is thus manifest that as per the provisions of E- as, 2019, all orders, notices and decisions have to be necessarily uploaded on the ITBA portal and as part of the larger faceless assessment regime which now holds the field. The uploading of the directive of the DRP on the ITBA portal would thus constitute valid and sufficient service and the period of limitation as prescribed in Section 144C(13) of the Act would be liable to be computed bearing that crucial date in mind. Once the aforesaid position becomes clear, it is evident that the order of assessment, if at all could have been framed lastly by 31 July 2022. There has thus been an abject failure on the part of the first respondent to comply with the mandatory timelines as incorporated Page | 12 in the aforenoted provisions. Accordingly, the writ petition is liable to be allowed and the impugned order of assessment and the consequential penalty proceedings are thus liable to be set aside on this short score alone."
We, consequently, find no merit in the instant appeal and the same shall stand dismissed.”
In the case of Vodafone Idea Limited V. CPC, Benglauru, Writ Petition No.15398 of 2023 (Bombay High Court) vide order dated 8.11.2023 has held as under: “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 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."
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 in the Act. Page | 13 Section 144C(10) of the Act provide that the directions of DRP are binding on the AO. By failing to pass any order in terms of the provision, the AO cannot be permitted to defeat the entire exercise and render the same futile. When a Statute prescribes the power to do a certain thing in a certain way, then the thing must be done in that way and other methods of performance are forbidden. Once the statute has prescribed a limitation period for passing the final order, it is expected that the internal procedure of the department should mould itself to give meaning 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 assessee. Hence, the FAO cannot be believed that the DRP direction was received by him only on 23rd August 2023 despite being uploaded on the ITBA portal on 25th March 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.
In a decision in the matter of Turner International India Private Limited v. Deputy Commissioner of Income Tax, Circle-25(2), New Delhi, the Delhi High Court has held that the question "whether the final assessment order stands vitiated for failure to adhere to the mandatory requirements of Section 144C of the Act?", is no longer res integra and any order passed contrary to Section 144C of the Act cannot be sustained.
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 Page | 14 (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."
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.”
Further the decision of Hon’ble Madras High Court in the case of M/s Taeyang Metal India Private Limited vs. DCIT in Writ Petition No.12159 of 2023 and W.M.P. No.11989 of 2023 vide order dated 23.02.2024 has held as under: “6. The interpretation of sub-section 13 of Section 144C takes centre stage in the adjudication of this dispute. The said sub-section is set out below: "(13) Upon receipt of the directions issued 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, Page | 15 within one month from the end of the month in which such direction is received." From the above provision, it is evident that the specified time limit is one month from the end of the month in which directions are received. It is also clear that the time limit should be computed from the date of receipt of directions issued under sub-section (5) thereof. Sub-section (5) of Section 144C deals with the issuance of directions by the DRP. The admitted position is that the DRP issued directions on 16.06.2022 and this fact is borne out by examining the proceedings of the DRP, which is contained at page Nos. 122 to 130 of the typed set of papers. The said proceedings also record that the copy of the directions of the DRP is being forwarded to the assessee, the assessing 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.
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 purpose. Indeed, as contended by learned counsel for the petitioner, the communication dated 12.04.2022 from the PCCIT of the National Faceless Assessment Centre seeking approval for Page | 16 transfer so as to complete assessment within the period of limitation underscores the fact that the income tax authorities were mindful of the fact that assessment would be barred by limitation unless such assessment is proceeded with and completed expeditiously.
8. All that remains is to examine whether the assessment proceedings would be barred by limitation if computed from the end of June 2022. If so computed, the period of one month expired on 31.07.2022, whereas the assessment order came to be issued on 25.03.2023. Hence, the assessment order was issued beyond the time limit specified in sub-section (13) of Section 144C. By taking into account not only statutory prescription but also the interpretation thereof by the Division Bench of this Court in Roca and that of the Division Bench of the Delhi High Court in Louis Dreyfus, I conclude that the assessment order cannot be sustained.
In view of the conclusion that the assessment proceedings are barred by limitation, it is unnecessary to examine as to whether the assessing officer was duly authorized to exercise jurisdiction either under the WhatsApp message issued on 13.04.2022 or upon the physical file being signed on 21.04.2022.”
Further the decision of the ITAT, Chennai Bench ‘D” in the case of M/s Cognizant Technology Solutions India Private Limited (as successor-in-interest of M/s KBACE Technologies Private Limited) vs. ACIT in IT(TP)A 61/CHNY/2023 vide order dated 29.05.2024 has held has under: “10. We have heard rival submissions in the light of facts of the case, evidence placed on record and judicial citations relied upon. Ground of appeal
no.1 is general in nature and hence bereft of any meritorious adjudication. Coming to grounds of appeal Nos. 2 to 6 whereby the assesse has Page |
17. AO dated 18.05.2023 is barred by limitations, we find considerable force in the arguments put forth by the assesse. Facts on records indicate that the DRP Bangalore had given its directions on 01.12.2022. Within the meanings of section 144C(13) was incumbent on the AO to have passed his order on or before 31.01.2023. The DR could not controvert the said timeline by placing any evidence suggesting different service dates upon the AO. The Law prescribed u/s. 144C(13) unequivocally postulates that pursuant to the receipt of directions in a calendar month, the AO is mandated to pass his final order before the end of following calendar month. Statutory stipulations prescribed in 144C(13) do not make any difference as to whether a set aside assessments would be given different timelines. The argument of CIT(DR) have accordingly been found to be not in consonance with statutory regulations governing the matter.
The case law relied upon by the assessee of 18/05/2023 Adobe system supra supports its case. Accordingly, the order u/s 143(3) r.w.s 1440 F.W.S 920A r.w.s 254 of the Income Tax Act dated 18.05.2023 is held to be barred by limitation and hence quashed. The grounds of appeal
numbers 2-6 thus stands allowed.”
18. In the light of the above discussion, we are of the considered view that the final order passed by the ld. AO on 24.08.2022 is invalid as barred by limitation in terms of the provisions of section 144C(13) of the Act. Accordingly, the same is hereby quashed. As a consequence, additional Grounds appeal No. 10 taken by the assessee is allowed.
19. Since we have already allowed the legal ground taken by the assessee, the other grounds of appeal taken on merits become academic and thus not adjudicated.
20. In the result, appeal of the assessee is allowed.