KINGFA SCIENCE & TECHNOLOGY (INDIA) LIMITED,CHENNAI vs. ASST. COMMISSIONER/DEPUTY COMMISSIONER OF INCOME TAX, CHENNAI

PDF · subscribers
ITTPA 13/CHNY/2025Status: DisposedITAT Chennai05 August 2026AY 2020-217 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee's legal issue regarding the final assessment order being barred by limitation is devoid of merit. The assessee had chosen to file objections with the DRP and informed the AO accordingly on 25.10.2023. By choosing this route, the assessee cannot now argue that the AO failed to pass the final assessment order as envisaged under Section 144C(4). The Tribunal found that the DRP rightly refused to condone the delay in filing objections. Following the decision in Inno Estates Pvt Ltd. V. DRP-2, the Tribunal held that the impugned order, though stated to be under Section 143(3) r.w.s. 144C(13), is not an order pursuant to a DRP direction but an assessment order simpliciter under Section 143(3). Therefore, an appeal would lie before the CIT(A). The Tribunal held the instant appeal before it as not maintainable. However, for the interest of justice, the assessee was granted liberty to file an appeal before the CIT(A) within four weeks, and the CIT(A) was directed not to raise the question of limitation and to decide the appeal on merits.

What were the facts?

The assessee, Kingfa Science & Technology (India) Ltd., engaged in manufacturing polypropylene based compounds, filed its return of income for AY 2020-21 on 15.02.2021, declaring an income of Rs.39,35,57,670/-. The Assessing Officer (AO) referred international transactions to the Transfer Pricing Officer (TPO) under section 92CA. The TPO proposed an adjustment of Rs.1,75,12,825/-. The AO passed a draft assessment order on 26.09.2023. The assessee informed the AO on 25.10.2023 about filing objections before the Dispute Resolution Panel (DRP) and enclosed grounds of objection. The DRP, vide order dated 09.07.2024, refused to condone the delay in filing objections. Subsequently, the AO passed the final assessment order on 26.09.2024, making additions of Rs.1,75,12,825/- and disallowing Rs.1,25,90,513/- for R&D, computing total income at Rs.42,36,61,008/-. The assessee appealed to the ITAT, challenging the validity of the final assessment order as time-barred.

What were the issues?

1. Whether the final assessment order passed by the Assessing Officer (AO) dated 26.09.2024 for Assessment Year 2020-21 is barred by limitation under Section 144C of the Income Tax Act, 1961? Assessee's Contention: The assessee argued that the draft assessment order was passed on 26.09.2023. As the assessee did not file objections before the DRP within 30 days, the AO ought to have passed the final assessment order under Section 144C(4) on or before 31.11.2023. Therefore, the final order dated 26.09.2024 is time-barred. Revenue's Contention: The revenue contended that the assessee had chosen to file objections before the DRP, as communicated on 25.10.2023. Therefore, the time limit prescribed under Section 144C(4) does not apply. The revenue further argued that the DRP rightly refused to condone the delay, and the AO had to pass the final order after receiving the DRP's order. The revenue relied on the case of Inno Estates Pvt Ltd. V. DRP-2 [406 ITR 553(Mad)] to argue that an order of the DRP rejecting objections on grounds of limitation is not a direction under Section 144C(5) read with 144C(6), making the assessment order simpliciter under Section 143(3).

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144C(4),Section 144C(2),Section 144C(5),Section 144C(6),Section 92B,Section 92CA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY. S

Hearing: 30.06.2026Pronounced: 05.08.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Assessing Officer (hereinafter referred to as the ‘AO’), dated 26.09.2024 for the Assessment Year (hereinafter referred to as the ‘AY’) 2020-21 passed u/s.143(3) r.w.s. 144C (13)/144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. At the outset, Ld. AR of the assessee have assailed the validity of the assessment order passed by the AO dated 26.09.2024. As per the assessee, the impugned order was passed beyond the time prescribed

IT (TP) A 13 /Chny/2025 (AY 2020-21) KINGFA SCIENCE & TECHNOLOGY (INDIA) LIMITED :: 2 :: u/s.144C (2) r.w.s. 144C (4) of the Act and hence bad in law being time- barred.

3.

Relevant facts are that the assessee is a Company engaged in the business of manufacturing of polypropylene based compounds, engineering plastics compounds and thermoplastic elastomers compounds. Assessee had filed its return of income (ITR/RoI) for the relevant assessment year admitting income of Rs.39,35,57,670/- on 15.02.2021 which ITR was selected for scrutiny. The AO observing that the assessee had international transactions to the tune of Rs.59,78,13,921/- within the meaning of section 92B of the Act, made a reference to the TPO u/s.92CA of the Act. The TPO vide its order dated 30.03.2023 passed the order directing adjustment of Rs.1,75,12,825/-. Pursuant to TPO order, AO passed draft assessment order on 26.09.2023. Assessee thereupon submitted before the AO, by communication dated 25.10.2023, informing him that it was moving a petition before Dispute Resolution Panel (DRP) and also enclosing the grounds of objection before DRP assailing inter-alia the downward adjustment of Rs 1,75,12, 825/- in the sale & purchase of goods proposed in the TPO order and as adopted by AO in the draft assessment order dated 25.10.2023, which fact/communication has been taken note by the AO, who reproduced the same at Page 4 of the impugned Order. Pursuant to the ibid response from Assessee, the AO asked the assessee to furnish copy of Form 35A i.e. objection filed before DRP, which assessee didn’t respond. The AO issued letters on 07.02.2024 & 24.02.2024, which was replied by Assessee on 24.02.2024, wherein assessee inter alia submitted that they have filed hard copies of the same physically before the DRP – Bangalore. Thereafter, the AO notes that the DRP vide order dated 09.07.2024 refused to condone the delay in filing of the objections before it within the time prescribed. Thereafter, the AO is noted to have passed the final

IT (TP) A 13 /Chny/2025 (AY 2020-21) KINGFA SCIENCE & TECHNOLOGY (INDIA) LIMITED :: 3 :: assessment order on 26.09.2024 by making addition of on account of adjustment of Rs 1,75,12,825/- in the sale & purchase of goods as proposed by TPO; and disallowed claim on account of research and development to the tune of Rs.1,25,90,513/-; and thus, computed the total income at Rs.42,36,61,008/- in place of returned income of Rs.39,35,57,670/-. Aggrieved the assessee is before this Tribunal and has raised the legal issue challenging the final order passed by the AO to be barred by limitation.

4.

In this regard, the Ld. AR submitted that as per sub-section (2) of section 144C, the eligible assessee has an option to file, either his acceptance of the variation proposed in the draft assessment order of the AO, or if he objects to the proposal then he has to file objection before the DRP as well as before the AO. Thus, assessee has to choose one of the options either to file acceptance or file his objection before the DRP, which action he has to take within 30 days of the receipt of the draft assessment order. In case, if the assessee accepts the variations proposed by the draft assessment then AO has to pass the final assessment order within one month from the end of the month in which the acceptance is received or the period of filing objection before the DRP expires. In the light of the statutory scheme as envisaged u/s.144C of the Act, the Ld. AR pointed out that since the draft assessment order u/s.144C(1) has been passed on 26.09.2023, the assessee having not filed the objections before the DRP within 30 days of the receipt of the draft order, the AO ought to have passed the final assessment order u/s.144C(4) on or before 31.11.2023. Hence, according to the Ld. AR the final assessment order passed in this case dated 26.09.2024 is barred by limitation and pleaded to allow the legal issue.

IT (TP) A 13 /Chny/2025 (AY 2020-21) KINGFA SCIENCE & TECHNOLOGY (INDIA) LIMITED :: 4 :: 5. Per contra, the Ld. DR vehemently opposed the contention of the assessee and submitted that the assessee after receipt of the draft assessment order on 26.09.2023 had communicated to the AO vide letter dated 25.10.2023 that it was filing petition before the DRP and uploaded the grounds of appeal before the DRP and with a request to AO to treat the ibid communication as filing of objection before the DRP. Hence, according to the Ld. DR, since the assessee has chosen to file objection against the variation proposed by the AO, hence, the time limit prescribed under sub-section (4) of section 144C does not come into play; and therefore the legal issue raised by assessee is devoid of merits. He further pointed out that since there was delay in filing of objection before the DRP, rightly the DRP couldn’t condone the delay and hence, in the facts and circumstances of the case, the AO had to pass the final assessment order after receipt of the order of the DRP. Hence, the final assessment order passed in the facts of the case dated 26.09.2024 cannot be faulted and the assessee cannot take advantage of his own wrong. The Ld. DR also brought to our notice that in a similar case the Hon’ble Jurisdictional High Court in the case of Inno Estates Pvt Ltd. V. DRP-2 [406 ITR 553(Mad)] refused to allow the legal issue and held that an order of the DRP rejecting the objections on the ground being barred by limitation, is not a direction under sub-section (5) read with sub-section (6) to section 144C of the Act. Hence, held that the impugned assessment order though stated to be an order passed u/s.143(3) r.w.s. 144C (13) of the Act is not an order in pursuance of the direction of the DRP, but an order of assessment simplicitor u/s.143(3) of the Act, from which an appeal lies to CIT(A). And granted liberty to assessee to file appeal before the CIT(A) against the assessment order passed by the AO. Hence, the Ld. DR wants us to reject the legal issue raised by the assessee.

IT (TP) A 13 /Chny/2025 (AY 2020-21) KINGFA SCIENCE & TECHNOLOGY (INDIA) LIMITED :: 5 :: 6. Heard both the parties and perused the records. It is noted that the assessee is a Company engaged in the business of manufacturing of polypropylene based compounds, and had filed its return of income admitting income of Rs.39,35,57,670/- on 15.02.2021, which ITR was selected for scrutiny. The AO observing that the assessee had international transactions to the tune of Rs.59,78,13,921/- within the meaning of section 92B of the Act, made a reference to the TPO u/s.92CA of the Act. The TPO vide its order dated 30.03.2023 passed the order directing downward adjustment of Rs.1,75,12,825/-. Pursuant to TPO order, AO passed draft assessment order on 26.09.2023. Assessee thereupon submitted before the AO, by communication dated 25.10.2023, informing him that it was moving a petition before Dispute Resolution Panel (DRP) and also enclosing the grounds of objection before DRP assailing inter-alia the downward adjustment of Rs 1,75,12, 825/- in the sale & purchase of goods proposed in the TPO order and as adopted by AO in the draft assessment order dated 25.10.2023, which fact/communication has been taken note by the AO, who reproduced the same at Page 4 of the impugned Order. Pursuant to the ibid response from Assessee, the AO asked the assessee to furnish copy of Form 35A i.e. objection filed before DRP, which assessee didn’t respond. The AO issued letters on 07.02.2024 & 24.02.2024, which was replied by Assessee on 24.02.2024, wherein assessee inter alia submitted that they have filed hard copies of the same physically before the DRP – Bangalore. Thereafter, the AO notes that the DRP vide order dated 09.07.2024 refused to condone the delay in filing of the objections before it within the time prescribed. Thereafter, the AO is noted to have passed the final assessment order on 26.09.2024 by making addition of on account of adjustment of Rs 1,75,12,825/- in the sale & purchase of goods as proposed by TPO; and disallowed claim on account of research and development to the tune of Rs.1,25,90,513/-; and thus, computed the

IT (TP) A 13 /Chny/2025 (AY 2020-21) KINGFA SCIENCE & TECHNOLOGY (INDIA) LIMITED :: 6 :: total income at Rs.42,36,61,008/- in place of returned income of Rs.39,35,57,670/-. The assessee is impugning the action of the AO before us and has raised the legal issue challenging the final order dated 26.09.2024 passed by the AO to be barred by limitation. We don’t find any merit in the legal issue raised by the assessee. From the facts narrated supra it is noted that the assessee had chosen to file its objections with the DRP and informed the same to the AO vide communication dated 25.10.2023, which fact is discernible from perusal of the Page 4 of the impugned Order, wherein AO has reproduced the said communication sent by the assessee. Having chosen to file objection before the DRP, the assessee cannot now turn around and assail the action of the AO not to have passed the final assessment order as envisaged under sub-section (4) of section 144C of the Act. Therefore, the legal issue raised by the assessee in the facts of the case is devoid of merits and hence, rejected. Having held so, we find that the DRP has rightly didn’t condone the delay in filing of the objection before it. In such a scenario, as held by the Hon’ble Madras High Court in the case of Inno Estates Pvt Ltd. V. DRP-2 supra, the impugned order of the AO though stated as an order u/s.143(3)/144C(13) of the Act, is not an order pursuant to the direction of the DRP, but an order of assessment simplicitor and hence, an appeal lies before the CIT(A), who is the first appellate authority. Hence, the instant appeal filed by the assessee against the assessment order passed u/s.143(3) is not maintainable. However, for the interest of justice and fair play, considering the facts discussed supra, it cannot be said that there was any mala fide action on the part of the assessee to have pursued the route of preferring objection before the DRP though belated. Hence, we give liberty to the assessee to file appeal before the Ld. CIT(A) against the impugned order of the AO, within four (4) weeks from receipt of this order; and in such an event, the Ld. CIT(A) shall not raise the question of limitation in filing of the appeal

IT (TP) A 13 /Chny/2025 (AY 2020-21) KINGFA SCIENCE & TECHNOLOGY (INDIA) LIMITED :: 7 :: before him and treat it as if filed within the limitation time and the Ld. CIT(A) to decide the grounds of appeal on its own merits in accordance to law after hearing the assessee. 7. In the result, appeal of the assessee is held to be not maintainable and dismissed. Order pronounced on the 05th day of August 2026, in Chennai.

Sd/- Sd/- (प�ावती .एस) (एबी टी. वक�) (PADMAVATHY. S) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 05th August, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF Digitally signed YASHVI by YASHVIR SINGH R SINGH Date: 2026.08.12 15:50:00 +05'30'

More judgments on Section 144C(13)

All 3,426 judgments and leading authorities on Section 144C(13) →

Recent GST High Court judgments

Search GST case law →