Commissioner of Income Tax vs. M/s. Ramco Cements Ltd.,

2025:MHC:225 TCA.No.192 of 2024 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 19.12.2024 CORAM : THE HONOURABLE DR.JUSTICEANITA SUMANTH and THE HONOURABLE MR.JUSTICE G. ARUL MURUGAN T.C.A.No.192 of 2024 Commissioner of Income Tax Chennai. .. Appellant vs M/s. Ramco Cements Ltd Ramamandiram, Rajapalayam 626 117 PAN:AAABM8375L .. Respondent Prayer : Appeal filed under Section 260A of the Income Tax Act, 1961 against order of the Income Tax Appellate Tribunal, 'D' Bench, Chennai dated 20.10.2023 passed in IT(TP)A No.27/Chny/2022. For Appellant : Mr.J.Narayanaswamy Senior Standing Counsel For Respondent : Mr.P.J.Rishikesh JUDGMENT (Delivered by Dr. ANITA SUMANTH.,J) In this Tax Case (Appeal), the challenge is by the Income tax Department to an order of the Income Tax Appellate Tribunal (ITAT/Tribunal) dated 20.10.2003 for assessment year (AY) 2017-18. 1 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 2. We have heard Mr.J.Narayanasamy, learned counsel for the appellant/revenue and Mr.P.J.Rishikesh, learned counsel for the respondent/assessee. 3. The questions of law that have been admitted are as follows: 1.Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the date of receipt of the direction of the DRP by the Assessing Officer is 31.01.2022 being the date of uploading of the order of the DRP in the Departments portal/Website? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in not appreciating that the DRP order was only received by the Assessing Officer on 03.02.2022 as per the case history data and the completion of the proceedings by the AO on 22.03.2022 is within the time limit stipulated under Section 144C(13)? 4. A return of income was filed by the assessee in terms of the relevant provisions of the Income tax Act 1961 (Act), in time. The Assessing Officer made a reference to the Transfer Pricing Officer (TPO) and subsequent to the receipt of the TPO’s report, an order of draft assessment came to be passed on 26.04.2021 making five additions. 5. As against the same, the assessee had filed objections before the Dispute Resolution Panel (DRP) on 27.05.2021. The Dispute Resolution Panel (DRP) had heard the matter in detail and had issued directions on 24.01.2022. The directions culminated in an order of final assessment dated 22.03.2022. 6.The question that arises for consideration is as to whether the date of receipt of the directions of the DRP by the Assessing Officer is ‘31.01.2022’ or 2 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 ‘03.02.2022’. This date would be critical to determine whether the final assessment has been completed within time by the Assessing Officer. 7. To be noted that the assessing officer would have to complete the final assessment as per Section 144C(13) of the Act, within one month from the end of the month in which the directions of the DRP are received. 8. It is the case of the assessee that the directions had been uploaded on 31.01.2022 and hence the limitation for passing of a final assessment order had expired by 28.02.2022, whereas, it is the case of the Assessing Officer that the directions of the DRP had been received on 03.02.2022 and hence, he had had time till 31.03.2022 to complete the assessment. The sequence of dates and events hence assumes some importance, as does the procedure followed by the department for uploading/service of orders on the assessing officers in such matters. 9. Before the Tribunal, where the assessee had been successful, the assessee relied on information received on 30.05.2023 from the Income Tax Department under the Right to Information Act 2005, to the effect that the order of the DRP had been made available to the Assessing Officer of the National e- Faceless Assessment Centre (NeFAC) on 31.01.2022 itself. Thus, the stand taken was that the final order of assessment that had been passed on 22.03.2022 was time barred and void abinitio. 3 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 10. The Commissioner of Income Tax–DR had submitted before the Tribunal that letters had been issued both to the Secretariat of the DRP as well as to the jurisdictional Assessing Officer (JAO) to ascertain the date of receipt of directions of the DRP by the Faceless Assessing Officer (FAO). The reply from the Secretariat of the DRP is dated 24.08.2023 and is extracted below: 'GOVERNMENT OF INDIA INCOME TAX DEPARTMENT SECRETARIAT, DISPUTE RESOLUTION PANEL-2, BENGALURU 'A' Wing, 4th Floor, KendriyaSadan, Koramangala, Bengaluru-560034. Phone & Fax No.080-25505730. Email:bangalore.secretary.drp2@incometax.gov.in F.No.52/DRP-2/BANG/2023-24 Date: 18.08.2023 To The Commissioner of Income tax, (DR)-1, ITAT, II Floor, 'B' Block Rajaji Bhavan, Besant Nagar, Chennai-600 009. Sub: Report on additional ground of appeal filed by M/s.The Ramco Cements Limited (PAN: AABCM8375L) A.Y. 2017-18 – reg. Ref: Your office letter in F.No. D Bench/IT(TP)A 39/CHNY/2023, dated 10.08.2023. ***** Please refer to the above. 1.It is humbly submitted that in the case of M/s The Ramco Cements Ltd (PAN: AABCM8375L) for AY 2017-18, the DRP directions were uploaded to ITBA portal on 31.01.2022 (ITBA screenshot enclosed). 2.Further, on the same day i.e 31.01.2022, the directions were also uploaded through common functionality in ITBA for NeFAC, Delhi. 3.Regarding successful delivery of directions to AO (in this case AO, NeFAC), it is brought to your goodself's knowledge that there is no functionality in ITBA through which this office can track the delivery of the directions uploaded through common functions module for NeFAC, Delhi. Yours faithfully 4 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 Sd/- (S.P.Pream Kamel) Assistant Commissioner of Income tax (HQ) & Secretary Dispute Resolution Panel-2, Bengaluru.' 11. The Tribunal thus concludes that since the DRP’s directions were ‘uploaded through common functionality in ITBA for NeFAC, Delhi’ on 31.1.2022 itself that would be taken to be the date of service of the order/date of receipt of the directions by the FAO and limitation as per Section 144C(13) would commence from that date onwards. The assessee’s appeal was hence allowed, as against which, the present Tax Case (Appeal) has been filed by the Revenue. 12. This matter has come up for hearing on several dates and we had as early as on 25.11.2024, passed the following order: Heard both learned counsel. 2. The question relates to the date of service of the directions of the Dispute Resolution Panel (DRP) on the assessing officer qua computation of limitation under Section 144 C (13) of the Income Tax Act, 1961. 3. Mr.Narayanasamy, learned Senior Standing Counsel relies on a document that contains the following date and event: 03/02/2022 - Document Response received from Uploading of document based on DIN/PAN-AY screen 4. The Income Tax (Dispute Resolution Panel) Rules, 2009 contain Rule 11 that states that 'the panel shall, after the directions are issued, communicate the same to the eligible assessee and to the assessing officer.' 5 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 5. The assessee has relied on the decisions of the Bombay High Court in Vodafone Idea Limited V. Central Processing Centre and others (459 ITR 413), Delhi High Court in Louis Dreyfus Company India Private Limited V. Deputy Commissioner of Income Tax, Circle 13(1) and others (W.P.(C) No.15381 of 2022 dated 30.01.2024) as well as an order of the learned single Judge of this Court in Taeyang Metal India Private Limited V. The Deputy Commissioner of Income-Tax, Corp Circle 3(1) and others (338 CTR (Mad) 161) for the proposition that the date of uploading of the directions of the DRP on the ITBA portal would be taken to be the date of service of the same on the assessing officer. 6. Two affidavits will be filed by the Department, one by the concerned Assessing Officer setting out the relevant date and sequence of events in relation to how and when the order was received by him and the second by the concerned authority in the Information Technology/Systems section of the Income Tax Department outlining the procedure followed by the National Faceless Assessment Centre (NFAC) in uploading

orders/service

of summons/communication of the same to the assessee and assessing officers respectively. 7. In addition, Mr.Narayanasamy will also obtain instructions as to whether any appeal has been filed challenging the order of the single Judge in Taeyang Metal India Private Limited (supra). 8. List on 05.12.2024. 13. Time was sought and granted on subsequent occasions to enable the concerned authorities to file affidavits clarifying the stand of the Department in regard to the date that should be reckoned for the commencement of limitation under Section 144C(13) of the Act. 6 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 14. Affidavit dated 04.12.2024 was filed by the Assessing Officer, which prompted us to pass the following order at the hearing on 05.12.2024: An affidavit has been filed by the Assessing Officer pursuant to our order dated 25.11.2024. There appears to be a change in the stand of the Department in so far as before the Tribunal, the stand was that the assessment order was sent by ITBA in electronic mode on 31.01.2022 (which we understand to mean uploaded in the ITBA on 31.01.2022). However, the Assessing Officer, at paragraph No.5 of the affidavit, says that the assessment order was uploaded by CIT (DRP-2), Bengaluru through functionality in ITBA on 03.02.2022 only. 2. A final opportunity is granted to the concerned Head of Information Technology Unit/Systems to file an affidavit along the lines required under order dated 25.11.2024 with a copy served in advance on the learned counsel for the assessee. 3. List on 19.12.2024. 15. Today, when the matter is taken up, an affidavit dated 17.12.2024 has been filed, where the Assessing Officer states that he has been authorized by the Director General of Income Tax (Systems) dealing with technical aspects of NeFAC to place the contents of the unmasking report/e-mail received by the Assessing Officer on 16.12.2024. 16. We are pained to note that the Officer in charge of Systems/IT has not thought it fit or necessary to file necessary clarifications as sought for by the Court, but has merely forwarded the unmasking report to the Assessing Officer, who in turn, has extracted the report in his affidavit. 7 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 17. In any event, since it is the submission of the learned Senior Standing Counsel that all necessary particulars have been furnished by the Departmental officials, recording the consent expressed by the parties, we take the matter up for final hearing. 18. The sole issue to be decided is the point of initiation of limitation for passing a Final Assessment Order. Section 144C is entitled ‘Reference to dispute resolution panel’ and sets out the procedure for assessment in cases involving international transactions. The procedure contemplated commences with a Draft Assessment Order (DAO) being passed by the Assessing Officer. The Assessee could either accept the same or, as in the present case, file objections before the DRP with a copy marked to the Assessing Officer. 19. Once the DRP hears both parties, it issues directions that are served both upon the Assessee as well as the Assessing Officer. The procedure then culminates with the passing of a Final Assessment Order in terms of Section 144C(13) of the Act, extracted below: 144C Reference to dispute resolution panel. . . . . (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. 8 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 20. The commencement of limitation for the passing of the Final Assessment Order is 30 days from the end of the month when the directions of the DRP are received by the Assessing Officer. In affidavit dated 04.12.2024, the Assessing Officer states that he had received the assessment order only on 03.02.2022. He makes this clear from paragraph 5 of the affidavit, stating thus: '5.In this regard, I respectfully submit the following facts as under: It is clear from the 'Case History/Notings' that the date of receipt of Dispute Resolution Panel's (Shortly as DRP) directions by the AO-Assessment Unit is on 03.02.2022 and no other date can be considered as the date of receipt, because it was the date on which the order was uploaded by CIT(DRP-2), Bengaluru through functionality in ITBA. The same has been viewed by Assessment Unit, NFAC on 03.02.2022. It is evidenced by Serial No.76 of Case History/Notings in Income Tax Business Application (ITBA). No other order has been uploaded by CIT(DRP-2), Bengaluru prior to 03.02.2022. The same also can be verified in Case History/Notings in ITBA. I respectfully submitted that, according to section 144C(13) of Income-tax Act, “the assessment is to be completed within one month from the end of the month in which the DRP issues directions”. Therefore, the AO- Assessment Unit received Directions of the DRP only on 03.02.2022, hence one month from the end of the month of receipt of DRP directions would be 31.3.2022. (i.e.) date of limitation for completion of assessment is 31.3.2022. The assessment order in the instant case has been passed on 22.3.2022, which is well before the date of limitation. Therefore, final assessment order u/s 143(3) r.w.s. u/s 144C(13) r.w.s. 144B of the Act passed by the Assessment Unit on 22.03.2022 is not barred by limitation.' 21. The communication from the DRP to the Tribunal confirms the position that the Directions of the DRP had been uploaded in the Income Tax 9 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 Business Application (ITBA) on 31.01.2022 itself. Since the ITBA portal can be accessed by both the assessee as well as the Assessing Officer on their furnishing necessary credentials, the point that remains to be determined is how there could be two dates, i.e., 31.01.2022 and 03.02.2022, when the same order was served upon the FAO and which date is to be reckoned as the point of commencement of limitation. 22. As per the affidavit filed on 17.12.2024 the response given by the Secretary, DRP-2, Bengaluru to the appellant as recorded by the Tribunal at paragraph 6 thereof is as follows: Sl.No Information called for Response ...... 3. On what date was the communication order received by the AO NFAC This particular information is not available with this office. 23. For the first time in the proceedings, the FAO places on record the Unmasking Report (Report) as part of his affidavit dated 17.12.2024. Since the Report would be critical to determine the question before us, we extract the same in full: 1) Visibility of the DRP order in the Case History/Notings (CHN) of the pending assessment proceedings: The DRP Order passed in ITBA software is reflected automatically in the pending assessment work-item (pending either with FAO or JAO), if DRP user initiates DRP proceedings in the ITBA DRP Module, by using the 10 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 option of selecting the Draft Order u/s 144C in the screen. When DRP proceedings are initiated in this manner, this crates linkage with the Assessment Module and hence when DRP passes the order u/s 144C (5), such order is automatically reflected in the Case History Noting of AO (FAO or JAO) with whom the assessment work-item is pending. Where, however, the DRP user initiates DRP proceedings by using the option of manually entering the details of the case in the screen, the DRP Order passed does not reflect automatically inside the case history noting of pending Assessment Proceedings work-item of the AO (whether Jurisdictional Assessing Officer of Faceless Assessing Officer – JAO/FAO). In the present case, as per inputs of the technical team, the DRP created the pendency by manually entering the details of the 144C order in the screen. The DRP Order u/s 144C (5) dated 24.01.2022 was uploaded by the DRP user in ITBA on 31-01-2022 with DIN : ITBA/DRP/M/144C(5)/2021-22/103924174(1). Further, since the DRP had created the DRP proceedings by manually entering the details of the case (and not by creating linkage with the assessment proceedings), the DRP order, when uploaded on 31.01.2022 in the DRP module, did not get automatically reflected in the Case History/Noting of the assessment proceedings. 2) Uploading of the DRP order using the functionality of DIN/PAN-AY: There is functionality available in ITBA(“Uploading of document based on DIN/PAN-AY”). Documents uploaded by any ITBA user, using this functionality are shared in the Case History/ Notings of the selected proceedings, pending with JAO or FAO as the case may be. As per information available in the ITBA System, a document named “the

ramco

cements

2017- 11 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 18_202201311317.pdf” with the following description was uploaded by CIT (DRP-2) Bangalore – 3 on 03.02.2022 using the said functionality. A copy of the said document named “the ramco cements AY 2017-18_202201311317.pdf” {which is the DRP order u/s 144C(5) dated 24.01.2022} is attached herewith. Since the document was uploaded using the said functionality on 03.02.2022, it became available in the case History/Notings of the assessment proceedings on 03.02.2022. 3) A Step by Step document explaining the process of DRP Proceedings is attached which is also available in ITBA Help Guide under the folder named DRP Proceedings (see- below pasted screenshot) 4) Besides, a copy of ITBA communication regarding “Visibility of orders passed by DRPs to other ITBA users” which provides guidance w.r.t. the above matter to ITBA users is also attached for information and necessary further action. It is further submitted that this office can only provide inputs regarding the workflows in ITBA software and information in respect of any proceedings as available in ITBA system. The administrative/legal aspects vest with the authorities concerned. Regards, Pritpal Singh ADIT (ITBA)-5 O/o CIT (ITBA) Directorate of Income Tax (Systems) 24. Thus, it now appears that the internal processes followed by the Income Tax Department make it possible for the user to initiate proceedings in the ITBA portal using two methodologies. According to the Unmasking Report, 12 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 if the DRP user selects the option of ‘draft order under Section 144C’ in the screen, then a link is created with the assessment module such that the Direction passed by the DRP would automatically be reflected in the case history notings of the Assessing Officer, both the FAO and JAO. 25. The second method is where the DRP user has initiated DRP proceedings by using the option of manually entering the details of the Section 144C order in the screen. In such circumstances, the DRP order does not reflect automatically in the case history notings of the assessment proceedings. 26. According to the Report, the second option has been availed by the DRP user and hence though the order was uploaded by the DRP user in the ITBA on 31.01.2022 itself, such uploading was not noticed by the Assessing Officer. However, as far the Assessing Officer is concerned, an Advisory issued by the ITBA team on 'Visibility of orders passed by DRPs to other ITBA users, is relevant. The Advisory reads thus: Visibility of orders passed by DRPs to other ITBA users Kind Attn. All ITBA Users Sub: Visibility of orders passed by DRPs to other ITBA users – Reg. This is to inform that on passing order by the DRP in ITBA(DRP Module) [either through online system mode or through Manual to system mode], the DRP Directions/Order would be reflected automatically in the pending assessment work-item either with FAO or JAO – provided that at the time of initiating DRP proceedings, in ITBA DRP Module, DRP users had selected the Draft order u/s 144C in the system itself, rather than entering the details on the ITBA screen on its own. 13 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 If, at the time of initiating DRP proceedings, the DRP user had not selected the Draft Order u/s 144C in the system, and had rather entered the details manually on the ITBA screen on its own, then the DRP Order will not reflect inside the pending / Assessment Proceedings work-item. In either of the above scenarios, however, the DRP order would be visible in the ‘360 Degree’ screen to the FAO if any assessment work item is pending with the FAO related to that PAN. The JAOs can view the DRP order in ‘360 Degree’ screen for all the PANs existing in their jurisdiction. Besides, JAO can also get the details from DRP by offline letter/communication. FAOs can also call for any details from JAOs by using the ‘Issue Letter’ functionality inside the work- item, and in response the JAOs can upload the details by using “Uploading of Documents based on the DIN/PAN-AY” screen in ITBA. Regards, ITBA Team (Emphasis supplied) 27. Paragraphs 1 and 2 of the above Advisory stipulate the two methods/options for uploading of the order. However, whatever be the method chosen, the directions of the DRP would be visible in the 360 degree screen to the FAO, if any assessment work item were pending with the FAO, in relation to a PAN number. 28. In other words, in the event of pending assessment proceedings, an FAO would have to key in the concerned PAN number of the assessee, such that, panoramic, 360 degree visibility is available to the officer to view the DRP directions as and when uploaded, which, in this case, is on 31.01.2022. In the 14 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 present case, order of assessment dated 22.03.2022 has been passed (per serial no.12 of assessment order dated 22.3.2022) under Section 143(3) read with Section 144C (13) read with Section 144B of the Act. This provision requires an assessment to be framed only in faceless mode by an FAO and in fact, it is the FAO who has framed the assessment. 29. The Advisory makes it clear that the FAO would be able to view the DRP order in the 360 degree screen, since the assessment was pending with that officer. This feature has evidently been provided to ensure that an officer can access/receive the directions of the DRP as soon as it is uploaded by the Secretariat of the DRP and the pending proceedings would be completed within the statutory limitation provided. 30. Hence, there is no protection available to the Department by the DRP user having selected the second manual option, as, an assessing officer, in order to ensure that the assessment proceedings are strictly in accordance with statutory limitation, has been given full and complete access to all inputs required for completion of the assessment including the directions of the DRP immediately on their uploading into the ITBA portal by the DRP. 31. Clearly, limitation cannot be dependent on varying user functionalities which are nothing but internal processes. If this argument were to be accepted, the commencement of limitation would vary depending on the 15 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 option exercised by the user which would defeat the purpose of statutory limitation apart from being an acceptable proposition. 32. The starting point of limitation has thus to be reckoned from the earliest instance when the directions of the DRP would be visible to the officer and cannot be taken to fluctuate from one methodology to another depending on the option exercised by the user. 33. Mr.Narayanasamy has circulated a screen shot of the 360 degree view, that presents as follows: Since the fields in the above image are not clear, the screen shot as provided by the Department is inserted at this point as page 18. 16 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 17 THIS PAGE IS INTENTIONALLY LEFT

BLANK https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 34. Our understanding of the 360 degree view page is that on entering the details of the assesse including the PAN number and the assessment year, the form would auto populate in regard to all details relating to that assessee including present status of proceedings and all orders, letters and notices. 35. In this, we are supported by the concluding portion of the advisory that states that the DRP order would be visible in the 360 degree screen to the FAO for his ready access. Thus, all that is required to gain complete and up-to- date access to all relevant data in regard to an assessee's assessment would available on the 360 degree screen. 36. Learned Standing Counsel draws attention to letter dated 12.12.2024 from the Secretariat of the DRP, specifically the portion where the DRP states that ‘no separate mail had been sent to AO or FAO’. The Assessing Officer thus appears to have been awaiting personal intimation of the order to his e-mail ID. 18 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 37. The fact that the FAO has merely chosen to await intimation when the order had admittedly been uploaded on the ITBA by the DRP user, and his consequent belated response, cannot thus lead to a situation of disadvantage to the assessee, particularly when the Advisory provides a methodology by which the FAO can access the document uploaded by the DRP simultaneously, and realtime. 38. Lastly, Section 144C is a Code by itself that provides for very strict timelines for completion of an assessment. Hence the stipulation in regard to limitation cannot be reckoned in a manner so as to give rise to more than one interpretation, where either party can take benefit of a later date. 39. This issue has also attracted the attention of the Bombay and Delhi High Courts in Vodafone Idea Limited V. Central Processing Centre and others (459 ITR 413) and Louis Dreyfus Company India Private Limited V. Deputy Commissioner of Income Tax, Circle 13(1) and Others (Manu/DE/4671/2024). In both the cases, the very submissions as made before us, were advanced and have been rejected by those Courts. 40. The Tax Case (Appeal) is dismissed and the substantial questions of law are answered in favour of the assessee. No costs. [A.S.M., J] [G.A.M., J] 19.12.2024 sl Index:Yes 19 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 Speaking Order Neutral Citation:Yes DR. ANITA SUMANTH.,J. and G. ARUL MURUGAN.,J. Sl T.C.A.No.192 of 2024 20 https://www.mhc.tn.gov.in/judis TCA.No.192 of 2024 19.12.2024 21 https://www.mhc.tn.gov.in/judis