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Facts
The assessee filed its Return of Income, which was selected for scrutiny. The Assessing Officer (AO) determined taxable income by treating certain services as Royalty/Fees for Technical Services, finalizing the assessment under Section 144C(1). The assessee objected to the Dispute Resolution Panel (DRP), which upheld the AO's action, leading to a final assessment and demand notice. The assessee appealed to the Tribunal, raising additional grounds concerning the validity of the DRP directions and the final assessment order itself.
Held
The Tribunal held that the final assessment order passed by the Assessing Officer, giving effect to the DRP's directions, was invalid and a nullity because it lacked the mandatory signature of the concerned Assessing Officer. Citing prior judgments, the Tribunal reiterated that signing is a legal requirement and not a curable procedural defect, thus quashing the unsigned order.
Key Issues
1. Whether the directions issued by the Dispute Resolution Panel were valid in light of CBDT Circular No. 19/2019. 2. Whether the final assessment order, lacking the signature of the Assessing Officer, was valid and maintainable.
Sections Cited
144C(13), 143(3), 143(2), 142(1), 90(2), 156, 144C(1), 144C(2), 282(2), 282A, 292B
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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR & SHRI SONJOY SARMA
O R D E R
Per Rajesh Kumar, AM:
This is an appeal filed by the assessee against the order dated 31.12.2022, passed by the ACIT, Circle-2(1), IT, Kolkata giving effect to the direction given by the Dispute Resolution Panel-2, New Delhi(in short the ‘DRP’), dated 04.11.2022, thereby finalizing the assessment order in accordance with the provisions of Section 144C(13) r.w.s. 143(3) of the Act.
At the outset, ld. AR drew our attention to the additional ground filed by the assessee and submitted that the appeal of the assessee may be decided on the following additional grounds taken by the assessee :-
1:0 Re.: Validity of the Directions issued by the Dispute Resolution Panel: 1:1 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the Directions dated 14 November 2022 issued by the Hon'ble Dispute Resolution Panel ['DRP'] are in violation of the guidelines issued by the Central Board of Direct Taxes ('CBDT') Circular No. 19/2019 dated 14 August 2019 and are therefore bad in law, invalid and non-est and hence ought to be struck down as such. 2:0 Re.: Validity of the Final Assessment Order: 2:1 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the impugned Order dated 31 December 2022 passed u/s. 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 is ab-initio void and hence, ought to be struck down. The Appellant craves leave to add, alter, amend, substitute and / or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal.
3. Brief facts of the case are that the assessee filed electronically its Return of Income declaring a total income of ₹. 2,24,47,871 / (chargeable to tax at special rate as per the DTAA). The Assessee's case was selected for scrutiny through CASS. Accordingly, notice under Section 143(2) of the Income Tax Act 1961 (herein after referred to as I.T Act 1961/ the Act) was issued and served on the Assessee on 29/06/2021. Subsequently, notices under Section 142(1) of the I.T. Act, 1961 dated 30/12/2021 and 19/03/2022 were served on the Assessee. In response to the above notices, the assessee from time to time, produced/filed details and documents in support of the return of income. The assessee also filed written submissions along with details and documents. The Assessing Officer found that, the gross receipts for Fees for Information Technology Services rendered by the Assessee will be taxable as both Royalty to the extent they are imparting commercial know-how and commercial experience and Fees for technical services to the extent they are making available services to Philips India Limited, Preethi Kitchen, Philips Global Business Solutions LLP, Philips Vital health Software, Philips Home Care. Considering, the rate of tax under the DTAA vis-à-vis to that in the Act being more beneficial of the two to the Assessee. Accordingly the Assessing Officer in accordance with section 90(2) of the Act, calculated taxable income at the rate mentioned under Article 12(4) & (5) of the DTAA in the tabulated form in para 3.12 at page 18.Further the Assessing Officer finalized the assessment order in terms of provisions of section 144C (1) of the Act and found that the assessee was entitled to file its acceptance of the order in terms of clause (a) or file its objections in terms of clause (b) of section 144C (2). The assessee filed objection to DRP-2, New Delhi against the said order vide objection No. 73/22-23 dated 28/04/2022. The Ld. DRP passed his directions on 14/11/2022, wherein the Ld. DRP held that "The panel does not find any infirmity in the AO's Action and is of the view that the same is to be upheld. Accordingly, the assessee's objections are rejected and the Assessing Officer finalized the assessment order in view of the DRP direction assessing the total income of the assessee at Rs.54,64,76,980/- and in consequence thereof issued demand notice u/s.156 of the Act. Now, the assessee is in further appeal before the Tribunal.
4. As the ld. AR of the assessee submitted that the finalization of the assessment by the TPO/Assessing Officer giving effect to the direction of the ld. DRP is not sustainable as the direction given by the DRP is in violation of guidelines issued by the CBDT Circular No.19/2019, dated 14.08.2019 and, therefore, the assessment order and that of the order of the ld. DRP deserved to be annulled. It was also submitted by the ld. AR the order passed by the Assessing Officer is not valid order as the same has not been signed by the concerned authority framing the assessment order. In this regard, the ld. AR also relied on the decision of the coordinate bench of the Tribunal in the case of Reuters Asia Pacific Ltd. Vs. DCIT, reported in [2023] 157 taxmann.com 705 (Mumbai-Trib.), and submitted that this issue has already been decided by the Tribunal in favour of the assessee. Thus, the ld. AR prayed that the appeal of the assessee deserves to be decided in favour of the assessee by following the said decision of the coordinate bench.
Ld. CIT-DR, on the other hand, relied on the orders of the authorities below.
We have considered the rival contentions of the parties and perused the material available on record. A perusal of the order passed by the DRP and the assessment framed thereafter giving effect to the direction of DRP by the Assessing Officer. At the outset, we found that the order passed by the Assessing Officer pursuant to the directions given by the ld. DRP, is without signature of the concerned Assessing Officer, which itself is not maintainable as the same is nullity and invalid. This issue has already been decided by the coordinate bench of the Tribunal relied upon by the ld. AR of the assessee before us in the case of Reuters Asia Pacific Ltd (supra), wherein the Tribunal has mentioned that, “signing of an assessment order by the Assessing Officer is a mandatory requirement and not merely a procedural formality and it is not a curable procedural defect which can be fixed by signing of order after service of same on the assessee.” The relevant observations of the Tribunal in this regard are as under :- 16. The Id. Departmental Representative referred to the provisions of Rule 127A i.e.the Rule framed in pursuance to the provisions of section 282(2) of the Act for service of notice, summons, requisition order and other communications. The Id. Departmental Representative has pointed that since the assessment order communicated to the assessee originated from the designated E- mail ID of the Assessing Officer, therefore, in terms of rule 127A, the said document shall be deemed to be authenticated. The said argument is desultory and not in unison with the provisions of section 282A of the Act. The relevant provisions of section 282A of the Act are reproduced herein below: "282A: Authentication of notices and other documents: (1) Where this Act requires a notice or other document to be issued by any income-tax authority, such notice or other document shall be signed and issued in paper form or communicated in electronic form by that authority in accordance with such procedure as may be prescribed. (2) Every notice or other document to be issued, served or given for the purposes of this Act by any income-tax authority, shall be deemed to be authenticated if the name and office of a designated income-tax authority is printed, stamped or otherwise written thereon. (3) For the purposes of this section, a designated income-tax authority shall mean any income-tax authority authorised by the Board to issue, serve or give such notice" The aforesaid section is with respect to authentication of notices and other documents le orders/summons requisitions/communications etc. Sub-section (1) makes it obligatory that where any notice or other document is required to be issued under the provisions of the Act, the same shall be signed and issued by the competent authority in accordance with the procedure prescribed. The section is unambiguous, specifies signing of notice or other documents mandatory and the manner of signing procedural. Therefore, the Board has issued instructions from time to time laying down the procedures inter alia for signing of the notices and the assessment orders. Sub-section (2) of section 282A of the Act explains the connotation of expression "authentication". Thus, signing of document and authentication of document carry different meaning. Signing of document denotes committing to the document, whereas, authentication of document relates to genuineness of origin of document. If signing and authentication would mean the same, then there was no need for the Legislature to lay down the requirement of signing the documents viz, notices, orders etc. in sub-section (1) and explain the purpose of authentication in sub-section (2) of section 282A of the Act. If argument of the Revenue is accepted, then the provisions of sub-section (1) to section 282A would become redundant.
Lastly, the Revenue has tried to take shelter under section 2928 of the Act. The said section cures the procedural defects or omissions. The section does not grant immunity from non- compliance of statutory provisions, Non signing of an assessment order is not a procedural flaw that can be cured subsequently. The order is complete only when it is signed and released. The date on which the order is signed by the Assessing Officer is the date of order. If Revenue's contention is accepted and the Assessing Officer is allowed to sign the assessment order now considering it to be procedural deficiency, still the order would suffer from the defect of limitation and would be without jurisdiction.
In the case of Vijay Corporation (supra), the Co-ordinate Bench in a case where the assessment order served on the assessee was not signed by the Assessing Officer, held that requirement of signature of the Assessing Officer is a legal requirement. The omission to sign the order of assessment cannot be cured by relying on the provisions of section 2928 of the Act and held the order invalid.
Ergo, in facts of the case and documents on record, we hold the unsigned impugned assessment order served on the assessee invalid and quash the same.
Since, we have granted relief to the assessee on the legal ground raised
in ground no. I of appeal, the other grounds raised in appeal on merits have become academic, hence, not deliberated upon.
21. In the result, appeal of the assessee is allowed.
7. Respectfully following the observations of the coordinate bench of the Tribunal made in this regard, we allow the issue raised by the assessee in additional ground holding that the assessment order framed by the Assessing Officer giving effect to the directions of the ld. DRP, is not maintainable as the assessment order is not authenticated by the concerned authority with his signature. In our opinion the said order unsigned order is invalid and is hereby quashed. Consequently, the appeal of the assessee is allowed.
Since, we have allowed relief to the assessee on the legal ground raised in ground no. 2 of appeal, therefore tjhe other grounds raised in appeal on merits have become academic, hence, not decided at this stage.