QUALCOMM INCORPORATED,HYDERABAD vs. DCIT, CIRCLE- 3(1)(1), INTERNATIONAL TAXATION, NEW DELHI

3.1 Not established whether a CDMA handset registered with a service provider could be used on any Code Division Multiple Access ('CDMA') network at the unfettered discretion of the subscriber

3.2 Has merely relied on orders passed by the Hon'ble ITAT in the case of two OEMs, Huwaei and ZTE, for contending that all the non-resident OEMs with whom the Assessee has entered into agreements, have a Permanent Establishment ('PE') in India without establishing whether royalty earned by the Assessee was for the purposes of business carried on by such PE in India.

3.2 Not established whether royalty paid by the non-resident OEMs for use of patents was in the manufacturing process of the handsets or in the use of the patented technology embedded in the CDMA handsets. Instead the AO has adopted multiple positions stating that OEMs, network carriers as well as end users are users of patents.

3.4 Not determined under section 9(l)(vi)(c) of the Act, that income earned by the OEMs constitute a source of income in India. Instead irrelevant references drawn to the sale of chipsets by the QCT division of the Assessee which never was the subject matter of dispute.

4. Has disregarded the agreements and submissions and the findings in the technical expert certificate furnished by the Assessee, without providing reasons as to why they would not hold good for addressing the matters remanded by the Hon'ble ITAT.

5. Has brought irrelevant facts/ documents on record which do not address the issues under remand:

5.1 Technical Opinion issued by two Technical Experts, Mr. Ambrish Agarwal and Mr. Vishwajit Mitra, which have not answered the issue of whether a CDMA handset could function on any network.

5.2 Technical Service Agreements entered with network carriers in India, Reliance Communications and Tata Teleservices, which do not contain any details regarding use of patents of the Assessee in manufacture

5.3 Orders passed by the Hon'ble ITAT in the case of two OEMs, ZTE and Huawei, which do not establish live link between the royalty earned by the Assessee and PE of the said OEMs.

6. Erred in holding that the royalties earned by the Assessee were for the use of intellectual property of the Assessee through chispet/ ASIC embedded in the CDMA products sold in India.

7. Has deviated from the matters under remand by relying on the following irrelevant data:

7.1 Press Reports gathered from the internet regarding business and commercial negotiations between Assessee and network operators in India even after the Hon'ble ITAT had noted that reliance cannot be placed on external articles/ press reports.

7.2 Concepts of Transfer of Technology, difference between CDMA and GSM and TDMA technologies

8. Erred in law on initiation of penalty proceedings under section 271(l)(c) of the Act.

9. Erred in levying interest under section 234B the Act without following the binding decision of the jurisdictional High Court in favour of the Assessee

10. Erred in levying interest under section 234C of the Act on assessed income instead of on returned income.”

“Each of the grounds given below are independent and without prejudice to the other grounds of appeal preferred by the Appellant.

11. that the Draft Assessment Order passed u/s 144C(1) of the Income Tax Act, 1961 (Act), the Directions issued by the Dispute Resolution Panel u/ s 144C(5) of the Act and the Final Assessment Order passed u/s 143(3) read with section 144C(13) of the Act, are without jurisdiction and void ab initio.

12. that the Final Assessment order dated October 31, 2017 passed u/s 143(3) read with section 144C(13) of the Act for the subject AY i.e. AY 2005-06 is barred by limitation and therefore bad in law.”

5. A perusal of the aforementioned additional grounds shows that it does not require investigation of new facts and the issues are purely legal in nature and go to the root of the matter ascertaining the validity of the draft assessment order/DRP directions and final assessment order. The same is admitted in light of the ratio laid down by the Hon’ble Supreme Court in the case of NTPC 229 ITR 383.

(i) when it can be said that the order has been received by the appellant/respondent ?

(ii) when would the period of limitation start?

“[(2A) Notwithstanding anything contained in sub-sections (1) 17[, (1A), (1B)]and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year in which the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner:

260A. (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law.

(2) The Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be—

(a) filed within one hundred and twenty days from the date on which the order appealed against is received by the assessee or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner; (b) [***] (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved.”

“1. The central question that arises for consideration before this Bench is whether the words "the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner" in Section 260A (2) (a) of the Income Tax Act, 1961 ('Act') mean only the 'jurisdictional' Principal or Chief Commissioner of Income-tax (CIT) or could it include any CIT including the CIT (Judicial)?

for the Assessee therefore contended that if a copy of the impugned order was available with the CIT (Judicial) on 23rd July 2014 or with the CIT (Central) on 25th July, 2014, then the present appeal which has been filed on 14th January, 2015 was beyond 120 days from the date of the receipt of the certified copy. There was no application for condonation of delay as of that date.”

“13. In the above background, by the order dated 19th October 2015 in and 756 of 2015, the following questions were referred to the larger Bench for decision:

(i) What is the correct interpretation to be placed on the expression "received by the Assessee or the Principal Chief Commissioner or the Chief Commissioner or Principal Commissioner" in Section 260A (2) (a) of the Act? Does it mean 'received' by any of the named officers including the CIT (Judicial)?

(ii) Does limitation begin to run for the purposes of Section 260A (2) (a) only when a certified copy of the order of the ITAT is received by the 'concerned' CIT within whose jurisdiction the case of the Assessee falls notwithstanding that it may have been received by any other CIT, including the CIT (Judicial) prior thereto? Is it open to the Court to read the word 'concerned' into Section 260 A (2) (a) of the Act as a prefix to any of the officers of the Department named therein?

(iii) In the context of Section 254 (3) of the Act, is there an obligation on the ITAT to send a certified copy of its order to a CIT other than the one whose details are given to it during the pendency of the appeal? Will change in the jurisdiction concerning the case of the Respondent Assessee to another CIT subsequent to the order of the ITAT have the effect of postponing the time, from which limitation would begin to run in terms of Section 260 A (2) (a) of the Act, to when such CIT receives the order of the ITAT?

(iv) After the decision of this Court in CIT v. Sudhir Choudhrie (2005) 278 ITR 490, do the decisions in CIT v. Arvind Construction Co. (P.) Ltd. (1992) 193 ITR 330 and CIT v. ITAT (2000) 245 ITR 659 (Del) require to be reconsidered, explained or reconciled?

(v) After the change of procedure where orders of the ITAT are pronounced in the open, is it incumbent on the Department through its DR or CIT (Judicial) to apply for a certified copy of the order of the ITAT and should limitation for the purposes of Section 260A (2) (a) be computed from the date on which such certified copy is made ready for delivery by the ITAT?

(vi) Whether the receipt of a certified copy of the order of the ITAT by the CIT (Judicial) is sufficient to trigger the commencement of the limitation period under Section 260 A (2) (a) of the Act?

(vii) In the context of a common order of the ITAT covering several appeals, whether limitation for all the appeals would begin to run when the certified copy is received first by either the CIT (Judicial) or any one of the officers of the Department mentioned in Section 260 A (2) (a) or only when the CIT 'concerned' receives it? Where the same CIT has jurisdiction over more than one Assessee in the batch, will limitation begin to run for all such appeals when such CIT receives the order in either of the Assessee's cases?

(viii) Whether administrative instructions issued by the Department for its own administrative convenience can have the effect of altering the time from which limitation will begin to run for the purposes of Section 260 A (2) (a) of the Act?”

The decision in CIT v. Sudhir Choudhrie 22.1 In CIT v. Sudhir Choudhrie (supra), the Court noted that orders of the ITAT were not being served upon the Department for years together. It was stated by the counsel for the Revenue appearing in those appeals that "the orders are duly communicated or served upon the authorities but sometimes they decline to accept the same and the delay is not attributable to the Registrar of the Income Tax Appellate Tribunal".

22.2 The Court was essentially dealing with the issue of the pronouncement of the final orders by the ITAT. The contention was that it was not obligatory to pronounce the final orders after listing them in Court, since Rule 35 Income Tax Appellate Tribunal Rules, 1963 (ITAT Rules) only required the orders to be communicated to the parties. It was explained that the ITAT had not been following such a direction "and does not wish to start the same being not a mandate of law".

22.3 Rule 35 of the ITAT Rules states: "The Tribunal shall, after the order is signed, cause it to be communicated to the assessee and to the Commissioner". The word „Commissioner‟ in the said rule is not qualified by the word „concerned'. The second factor to be noticed is that Rule 35 still uses the word „communicated to‟ and not „received by‟ which is used in Section 260A (2) (a) after the amendment by the Finance Act, 1999.

22.4 In CIT v. Sudhir Choudhrie (supra), reference was made to Section 254 of the Act which deals with "Orders of Appellate Tribunal". The provision envisaged that once the ITAT passed an order then under Section 254(3), it was to "send a copy of any orders passed under this section to the assessee and to the Chief

Commissioner or Principal Commissioner or Commissioner". The Court emphasised that Section 254 on a plain reading (or by necessary implication) nowhere indicated that ITAT "could decline to pronounce the orders which are obviously to be dated and signed on a given date to make such orders effective and binding".

22.5 The Court in CIT v. Sudhir Choudhrie (supra) proceeded to hold: "Known precepts of procedural law would necessarily impose an obligation upon any forum or Tribunal, judicially determining the rights of the parties to declare its order on the date it is signed and declared". It further observed: "The requirement of letting the parties to know the contents of the order upon its declaration (when its dated and signed by the Bench of the Tribunal) would be the minimum requirement to the principles of natural justice. This requirement transcends all technical rules of procedure". The rational explanation was that the "pronouncement of an order would certainly put the parties at notice and they would be able to take recourse to the remedies available to them under law with some urgency, if required".

22.6 The Court in CIT v. Sudhir Choudhrie (supra) then proceeded to direct the ITAT to pronounce its judgment and orders "in open hearing and upon enlisting them for a given date."

“25. There has been no decision as such interpreting the words "received by the assessee or the Principal Chief Commissioner" occurring in Section 260A (2) (a) of the Act. The date of such receipt is the trigger for the commencement of the limitation period of 120 days for filing the appeal. Reliance has been placed by the Revenue on two decisions of this Court, which were rendered in the context of Section 256 of the Act.

26.1 The first is the decision in CIT v. Arvind Construction Co. (P) Ltd (supra). One of the questions considered was whether the application by the Revenue seeking reference was barred by time. It was pointed out that the order of the ITAT under Section 256 (1) of the Act was sent to the „Chief Commissioner, Central Revenue Building‟.

26.2 The Assessee urged that the date on which the order was received in that office i.e., 22nd May 1989 should have been the starting point for computation of the period of limitation and if so computed, the reference application would be barred by time. The revenue, on the other hand, urged that the concerned Commissioner i.e., the Commissioner, Delhi, Central-II, received the ITAT's order only on 14th August 1989, which should be the starting point for computation and limitation and not 22nd May 1989 when the order under Section 256 (1) "was sent to the Chief Commissioner".

26.3 The Court noted that the reference application under Section 256 (1) of the Act had to be filed "not by the Income Tax Officer but by the Commissioner". It observed that: "It is obviously the Commissioner of Income-tax who is in charge of the Assessing Officer who would have the jurisdiction to file an application under section 256(1)". The Court held that service of such an order on the Chief Commissioner was of no consequence and that "It is only when the order was served on the Commissioner of Income-tax (Central II), that the limitation would commence". The Court noted that after filing of an application under Section 256 of the Act, "the jurisdiction of the Commissioner may change. But, we are not, in the present case, dealing with such a controversy".

“37. At the outset, the Court would like to observe that in any matter arising from an order passed by the ITAT against the Department, an „aggrieved‟ person is the entire Department. It is not any individual officer of the Department who can be said to be 'aggrieved'. It would be factually and legally incorrect to state that only that AO, CIT or Pr CIT within whose jurisdiction the Assessee's returns are scrutinised will be the aggrieved party and not any other officer of the Department. The CIT or the Pr CIT is a representative of the Department which is the party aggrieved.

38. In other words, there can be no doubt that in all cases where the decision of the ITAT has gone against the Revenue, it is the Revenue as a whole which is the 'aggrieved party'. An individual CIT or Pr CIT can prefer the appeal on behalf of the Revenue as an aggrieved party. If the legislative intent was to confer the power to file an appeal only by the 'concerned' CIT or Pr CIT or Chief CIT, then words to that effect ought to have been used. The use of the prefix 'the' preceding the words CIT or Pr CIT in Section 260 A (2) (a) serves only the grammatical correctness of a preposition and nothing more. It is not to be read as meaning "that particular CIT" or the "concerned CIT".

39. The interpretation of the prefix "the" has to be both purposive and contextual. The object of the provision is to enable the filing of appeals within a period of limitation. As it is, the period of limitation (120 days) is considerably longer than in routine cases (30, 60 or a maximum of 90 days). The interpretation has to serve the purpose of not lengthening the period of limitation further, but to ensure that the time limit is strictly adhered to. Relaxation of the period of limitation in such cases has to be an exception and not the rule. The decisions in Consolidated Coffee v. Coffee Board (supra) and Shree Ishar Alloys Steels Ltd. v. Jayaswal Neco (supra) were rendered in the context of different statutes where the wording of the provisions in question dictated the result of the interpretative exercise. They are not useful in the interpretation of the word "the" which precedes the words CIT or Pr CIT in Section 260 A (2)(a) of the Act.

42. The problem can also be viewed from the angle of the frequent transfers and posting of the income tax officers including CIT/Pr CIT on account of the allocation/re-allocation of duties and other administrative exigencies. It is possible that the CIT who was the „concerned‟ CIT at the time of dispatch by the ITAT of the copy of the order ceases to be such when he receives the copy. That will not give rise to a fresh period of limitation or postpone the commencement of limitation till such time the substitute 'concerned' Pr CIT/CIT receives a copy of the said order. Given the fact that, legislatively, a larger period of limitation has been granted for filing appeals, there is no warrant for any flexibility in the interpretation thereby giving a discretion to officers of the Department to extend the period of limitation beyond what is envisaged by the statute. In these very cases, the impugned order was received by a particular CIT (Judicial) and then sent to the „concerned‟ CIT, who was shifted out by the time a copy reached him. Meanwhile, the period of 120 days lapsed. The period of 120 days cannot be sought to be stretched indefinitely till the 'concerned' CIT receives the order. That would then defeat the legislative purpose.

23. Finally, the Hon’ble High Court answered the question as under:

“51. The answers to the questions referred to this Court are answered thus:

Q: (i) What is the correct interpretation to be placed on the expression "received by the Assessee or the Principal Chief Commissioner or the Chief Commissioner or Principal Commissioner" in Section 260A (2) (a) of the Act? Does it mean 'received' by any of the named officers including the CIT (Judicial)?

Ans: The word „received‟ occurring in Section 260A (2) (a) would mean received by any of the named officers of the Department, including CIT (Judicial). The provision at present names four particular officers i.e. the Principal Commissioner, Commissioner, Principal Chief Commissioner, and the Chief Commissioner of Income Tax. These are the only designations of the officers who could receive a copy of the order. In the absence of a qualifying prefix „concerned‟, the receipt of a copy of the order of the ITAT by any of those officers in the Department including the CIT (Judicial) will trigger the period of limitation.

Q: (ii) Does limitation begin to run for the purposes of Section 260A (2)

(a) only when a certified copy of the order of the ITAT is received by the 'concerned' CIT within whose jurisdiction the case of the Assessee falls notwithstanding that it may have been received by any other CIT, including the CIT (Judicial) prior thereto? Is it open to the Court to read the word 'concerned' into Section 260 A (2) (a) of the Act as a prefix to any of the officers of the Department named therein? Ans: In Section 260A (2) of the Act, the words CIT, Pr CIT or Chief CIT are not prefixed or qualified by the word 'concerned'. There is no warrant for the Court to read into the provision such a qualifying word. The Court rejects the contention of the Revenue that limitation for the purposes of Section 260A (2) (a) begins to run only when a certified copy of the order of the ITAT is received by the 'concerned' CIT within whose jurisdiction the case of the Assessee falls notwithstanding that it may have been received by any other CIT, including the CIT (Judicial) prior thereto.

Q: (iii) In the context of Section 254 (3) of the Act, is there an obligation on the ITAT to send a certified copy of its order to a CIT other than the one whose details are given to it during the pendency of the appeal? Will change in the jurisdiction concerning the case of the Respondent Assessee to another CIT subsequent to the order of the ITAT have the effect of postponing the time, from which limitation would begin to run in terms of Section 260 A (2) (a) of the Act, to when such CIT receives the order of the ITAT?

Ans: As far as the obligation of the ITAT under Section 254 (3) of the Act is concerned, the said obligation is satisfied once the ITAT sends a copy of an order passed by it to the Assessee as well as to the Pr CIT or the CIT or even the CIT (Judicial). The ITAT has to be simply go by the details as provided to it in the memo of parties. If there is a change concerning the jurisdiction of the CIT and it is some other CIT who has jurisdiction, it will not have the effect of postponing the commencement of the period of limitation in terms of Section 260A (2) (a) of the Act. The statute is not concerned with the internal arrangements that the Department may make by changing the jurisdiction of its officers. It is for the officer of the Department who first receives a copy of the ITAT‟s order to reach it in time to the officer who has to take a decision regarding the filing of an appeal.

Q: (iv) After the decision of this Court in CIT v. Sudhir Choudhrie (2005) 278 ITR 490, do the decisions in CIT v. Arvind Construction Co. (P.) Ltd. (1992) 193 ITR 330 and CIT v. ITAT (2000) 245 ITR 659 (Del) require to be reconsidered, explained or reconciled?

Ans: The decisions in CIT v. Arvind Construction Co. (supra) and CIT v. ITAT (supra) were rendered in the context of Section 256 of the Act (and not Section 260 A (2) (a) of the Act) and also prior to the decision in CIT v. Sudhir Choudhrie (supra). While the former decisions may not require reconsideration, they require to be reconciled with the latter decision in CIT v. Sudhir Choudhrie (supra). The decisions in CIT v. Arvind Construction Co. (supra) and CIT v. ITAT (supra) are of no assistance to the Revenue in its interpretation of Section 260 A (2) (a) of the Act.

Q: (v) After the change of procedure where orders of the ITAT are pronounced in the open, is it incumbent on the Department through its DR or CIT (Judicial) to apply for a certified copy of the order of the ITAT and should limitation for the purposes of Section 260A (2) (a) be computed from the date on which such certified copy is made ready for delivery by the ITAT?

Ans: While there is no requirement for the DR or CIT (Judicial) to apply for a certified copy of the ITAT, in any event under the extant ITAT Rules, a copy of the order is sent to the CIT (Judicial). In the context of Section 260A(2)(a) of the Act, once an order is listed for pronouncement in the ITAT, the DR or the CIT (Judicial) should be taken to be aware of the order. From that point, it is a purely an internal administrative arrangement as to how the DR or CIT (Judicial) obtains and further communicates the order to the officer who has to take a decision on filing the appeal. It is possible that immediately after pronouncement, the AR or the DR or both may apply for a certified copy of the order of the ITAT. In that case, the time taken for the certified copy to be readied for collection by the applicant will be excluded while computing limitation. But here again, if earlier to such date, a copy is received by a party from the ITAT, then such earlier date will be the starting point for limitation.

Q: (vi) Whether the receipt of a certified copy of the order of the ITAT by the CIT (Judicial) is sufficient to trigger the commencement of the limitation period under Section 260 A (2) (a) of the Act?

Ans: The receipt of a certified copy of the order of the ITAT by CIT (Judicial) would trigger the commencement of the limitation period under Section 260 A (2) (a) of the Act.

Q: (vii) In the context of a common order of the ITAT covering several appeals, whether limitation for all the appeals would begin to run when the certified copy is received first by either the CIT (Judicial) or any one of the officers of the Department mentioned in Section 260 A (2) (a) or only when the CIT 'concerned' receives it? Where the same CIT has jurisdiction over more than one Assessee in the batch, will limitation begin to run for all such appeals when such CIT receives the order in either of the Assessee's cases?

Ans: Where there, is a common order of the ITAT covering the several appeals, limitation would begin to run when a certified copy is received first by either the CIT (Judicial) or one of the officers of the Department and not only when the CIT „concerned‟ receives it. When the same CIT has jurisdiction for more than one Assessee, the limitation begin to run for all from the earliest of the dates when the DR of CIT (Judicial) or any CIT first receives the order in any of the cases forming part of the batch disposed of by the common order. If there are four separate orders passed, then the limitation begins to run when such separate orders are received first by any officer of the Department.

Q: (viii) Whether administrative instructions issued by the Department for its own administrative convenience can have the effect of altering the time from which limitation will begin to run for the purposes of Section 260 A (2) (a) of the Act?

Ans: Instructions issued by the Department for its administrative convenience cannot alter the time when limitation would begin to run under Section 260A (2) (a) of the Act. To reiterate these administrative instructions are for the administrative convenience of the Department and will not override the statute, in particular, Section 260A (2) (a) of the Act.”

24. In her rebuttal, the ld. DR strongly relied upon the decision of the Hon’ble Supreme Court in the case of the Deepak Agro Foods in Civil Appeal No. 4327-28 of 2008 and referred to the following observations of the Hon’ble Supreme Court:

“16. Proceedings for assessment under a fiscal statute are not in the nature of judicial proceedings, like proceedings in a suit inasmuch as the assessing officer does not adjudicate on a lis between an assessee and the State and, therefore, the law on the issue laid down under the civil law may not stricto sensu apply to assessment proceedings. Nevertheless, in order to appreciate the distinction between a "null and void" order and an "illegal or irregular" order, it would be profitable to notice a few decisions of this Court on the point.”

25. Citing the above observations, the ld. DR vehemently stated that it is only a procedural lapse which can be cured.

26. Let us take an example. An assessment is getting barred by limitation on 31.03.2021. The Assessing Officer framed assessment order on 15.04.2021. Can this be accepted as procedural lapse? In our considered opinion, no court will accept this to be a procedural lapse because procedural lapse cannot be stretched to statutory period of limitation.

27. Further, on a perusal of the judgement of the Hon’ble Supreme Court (supra) we find that at para 13, the Hon’ble Supreme Court has referred to the factual position in that case as under:

“13.As afore-stated, in the counter-affidavit as well as in the written submissions filed on behalf of the respondents, it is stated that the order of the Appellate Authority, dated 8th June, 2000, was received by the Assessing Authority on 13th July, 2000 and, therefore, fresh assessment, pursuant to the said order, could be completed by 12th July, 2002 (ignoring further period of six months, which could be extended by the Commissioner). That being so, even if it is assumed that the assessment order, for the assessment year 1995-96, had, in fact, been passed on 29th June, 2002, as alleged by the appellant, it was still very much within the time limit prescribed under the afore- noted provision i.e. 12th July, 2002. We are, therefore, unable to accept the stand of the appellant that the assessment having been made after the expiry of the time limit, it was null and void and should have been annulled.”

28. And therefore, at para 15 made the following observations:

“15. All irregular or erroneous or even illegal orders cannot be held to be null and void as there is a fine distinction between the orders which are null and void and orders which are irregular, wrong or illegal. Where an authority making order lacks inherent jurisdiction, such order would be without jurisdiction, null, non est and void ab initio as defect of jurisdiction of an authority goes to the root of the matter and strikes at its very authority to pass any order and such a defect cannot be cured even by consent of the parties. (See: Kiran Singh & Ors. Vs. Chaman Paswan & Ors.1). However, exercise of jurisdiction in a wrongful manner cannot result in a nullity - it is an illegality, AIR 1954 SC 340 capable of being cured in a duly constituted legal proceedings.”

29. The Hon’ble High Court of Delhi once again in the case of GE Energy Parts Inc 111 taxmann.com 56 had the occasion to consider a similar issue relating to challenge of the order qua the period of limitation. The relevant findings of the Hon’ble High Court read as under:

“23. It is pointed out by the Respondents that reliance by the Petitioners on the decision of the Full Bench of this Court in Commissioner of Income Tax v. Odeon Builders Private Limited (supra) is misplaced since that decision was in the context of limitation for filing an appeal under Section 260A (2) (a) of the Act i.e. filing an appeal in this Court against the order of the ITAT. However, in the present case the dispute regarding limitation was referable to Section 275 of the Act and was in a different context viz., levy of penalty. It is submitted that a penalty order can be passed by the jurisdictional AO which in this case is the CIT, International Taxation [CIT (IT)]. Therefore, it is contended that such till time the CIT (IT) receives the copy of the order of the ITAT, the period of limitation for initiating penalty proceedings does not commence. More or less the same plea has been taken by the Respondents in each of the other petitions.

24. This Court has heard the submissions of Mr. Sachit Jolly, learned counsel for the Petitioners, Mr. Sagar Suri, learned standing counsel

for Income Tax Department and Ms. Laxmi Gurung, learned senior standing counsel for the Revenue.

25. A consideration of the above submissions has to begin with an examination of Section 275(1) of the Act which reads as under:

"Bar of limitation for imposing penalties.

(a) in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whichever period expires later :

Provided that in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A, and the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whichever is later;

(b) in a case where the relevant assessment or other order is the subject-matter of revision under section 263 or section 264, after the expiry of six months from the end of the month in which such order of revision is passed;

(c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later."

“30. It is seen in the present case that an SCN was issued to the Assessee on 16th February, 2017 itself by the AO under Section 271 (1) (c) of the Act and this could not have happened if the AO was not already aware of the order of the ITAT. The appeal effect order passed on 22nd May, 2017 could not have been issued without a copy of the order of the ITAT. Therefore, in any event, the six-month period of limitation in terms of Section 275 (1) (a) of the Act would begin to run from 22nd May, 2017.”

“34. The result of the above discussion is that the impugned orders of penalty dated 26th April 2018 were issued far beyond the six-month period of limitation in terms of Section 275 (1) (a) of the Act and were, therefore, invalid. On the date that the said orders were issued, i.e. 26th April, 2018 they were without jurisdiction.”

“5. Aggrieved by the above assessment order, the Assessee filed an appeal being before the Income Tax Appellate Tribunal ('ITAT'). The decision of the ITAT rendered in the aforementioned appeal on 18th May 2012 was as under: a. As regards disallowance of expenditure incurred on issue of mobile handsets on 'free of cost' basis, the ITAT noted that on an identical issue for AY 2000-01 and 2001-02, as well as for AY 2006-07, the ITAT had set aside the assessment order and remanded the matter to the file of the AO. Accordingly, the impugned assessment order was set aside "to the file of the AO with the directions to decide the issue afresh after affording the assessee a reasonable opportunity of being heard." b. As regards the applicable rate of depreciation on computer peripherals, the ITAT allowed the Assessee's appeal and directed the AO to allow depreciation on computer peripherals at the rate of 60% instead of 15% as allowed in the original assessment order. c. As regards disallowance of expenditure on account of price protection expenses, the ITAT observed that "Since we have admitted additional evidence in respect of other distributors to whom trade price protection has been allowed, we set aside this issue to the file of the AO with the directions to examine the case of the assessee in the light of additional evidence filed before this Tribunal and decide the issue on merits. Needless to say the AO will provide the assessee a reasonable opportunity of being heard." d. As regards the TP adjustments in relation to provision of software development services to its AEs, the ITAT agreed with the Assessee that the DRP had obtained information under Section 133 (6) of the Act and had used such information without affording the Assessee an opportunity of being heard. Consequently, the ITAT held that "the assessment order needs to be aside to the file of the assessing officer who will refer the matter to DRP for providing necessary opportunity of being heard. We order accordingly." e. As regards working capital adjustment for computing the arm's length price ('ALP') of the international transaction, the ITAT noted that for AY 2006-07, the ITAT had remanded the matter to the file of the AO/TPO for re-consideration in light of the fact that the said adjustment had been allowed to the Assessee in the earlier AYs. Accordingly, the ITAT set aside the matter to the file of the AO with the direction to examine the case of the assessee and decide the issue afresh in accordance with the provisions of law. The AO was asked to provide the Assessee the necessary opportunity of being heard. f. As regards the addition on account of Advertising, Marketing and Promotion ('AMP') expenses, it was noted by the ITAT that both the parties agreed that the issue be set aside in the light of the amended provisions of Section 92B of the Act. Accordingly, the ITAT "set aside the matter to the file of the AO with the directions to decide the issue afresh after affording the assessee a reasonable opportunity of being heard." g. As regards the power of the TPO to determine ALP in respect of international transactions not referred to him by the AO, the ITAT held that, in view of the amended provisions of Section 92CA of the Act with retrospective effect from 1st April 2002, this ground urged by the Assessee had become academic. It was accordingly rejected.

“10. By the impugned order dated 2nd December 2015, the AO disposed of the above objections by holding that the case was not covered under Section 153 (2A) of the Act which, according to the AO, was applicable only when a fresh order of assessment has to be made pursuant to an order in appeal or revision. Since the assessment had not been totally set aside or cancelled by the ITAT and, in fact, had been partly upheld on certain issues, the objection regarding limitation was not valid. It was further pointed out that the Revenue was also in appeal before the High Court against the relief allowed by the ITAT as well as to some of the issues restored by the ITAT to the AO/TPO and even to the DRP.”

“14. On the other hand, Mr. Sanjay Jain, learned Additional Solicitor General of India ('ASG'), submitted that Section 153 (2A) of the Act would apply only where the entire assessment was set aside or cancelled. However, as in the present case, where the AO was required to follow certain specific directions issued to him by the ITAT he was 'chained' as far as exercise of discretion was concerned. In such circumstances, Section 153 (2A) of the Act would not apply.

According to the learned ASG, it was only Section 153 (3) (ii) of the Act which would apply to the present case.”

“22. Having perused the impugned order of the ITAT carefully and the operative portions qua which the assessment order was set aside and the matter remanded to the AO, the Court is unable to agree with the contention of learned ASG that the aforementioned order of the ITAT did not constitute a complete setting aside of the assessment with directions to the AO to pass a fresh order. The Court does not agree with the submission of the learned ASG that the AO was 'chained' by the ITAT's directions and could not have passed a fresh assessment order de novo pursuant to such remand.

“32. In the considered view of the Court, the aforesaid decision of the Gujarat High Court fully supports the case of the Assessee here. The decisions of the Madhya Pradesh High Court in Gulabchand Motilal v. Commissioner of Income-tax [1988] 174 ITR 117 (MP), the High Court of Punjab and Haryana in Bharti Engineering Corporation v. Union of India [2008] 298 ITR 400 (P&H) and Deep Chand Jain v. ITO [1984] 145 ITR 676 (P&H), and the Karnataka High Court in CIT v. Paul Noel Rodrigues [2015] 231 Taxman 811 (Kar), all hold likewise. The Kerala High Court in Patel R.P. v. ACIT 2015 (5) KHC 370 held that Section 153 (2A) of the Act would apply even where more than one issue is involved i.e. even where one of the issues has been remanded to the AO for a fresh determination.”

“12. The resultant position therefore is that, even in a case where only one issue has been directed to be considered afresh, the limitation under Section 153(2A) would apply. It is clear from the passage in [(2008)300 ITR 176 (Delhi] (supra) extracted above that, sub section (3) of Section 153 applies to a different situation where only a consequential order has to be passed in implementation of a direction issued by the appellate forum. In the present case, as already found above the direction was to consider the issue afresh. Therefore, Section 153(2A) of the Act is attracted. In view of the above, this is a case in which the Assessing Officer ought to have passed a consequential order within the time limit stipulated. Since no such order was passed the petitioner is entitled to succeed.

In view of the aove findings the writ petition is allowed. It is held that in so far as the issue that was remitted to the respondent Assessing Officer for fresh consideration, the time bar contained in Section 153(2A) of the Act operates. The petitioner shall therefore be entitled to the refund sought for, in accordance with law. It is made clear that on all other aspects the assessment order is final and binding on the assessee. Such refund shall be made as expeditiously as possible and at any rate within a period of three months of the date of receipt of a copy of this judgment.”

CONCLUSION

The draft orders dated 27.12.2016 and final assessment orders dated 30.10.2017 are, therefore, barred by limitation in light of the judicial decisions of the Hon'ble Jurisdiction High Court of Delhi [supra] and the Hon'ble High Court of Kerala [supra]. Allowing the additional grounds raised by the assessee, we hold that the draft assessment orders and final assessment orders are barred by limitation.

40. Since we have quashed the assessment order as null and void being barred by limitation, we do not find it necessary to dwell into the merits of the case.

41. Since the appeals have been decided, the stay applications become infructuous.

The order is pronounced in the open court on 24.11.2021.