HAZIRA PORT PRIVATE LIMITED,AHMEDABAD vs. DY.COMMISSIONER OF INCOME TAX, CICLE-2(1)(1), AHMEDABAD

That on the facts and circumstances of the case and in law, the NaFAC has grossly erred in passing an assessment order u/s 143(3) read with Section 144C(3) and Section 144B of the Act dated September 15, 2021 (“First Assessment Order”), without awaiting the directions of Dispute Resolution Panel (‘DRP’) which is not in accordance with the procedure stipulated u/s 144C of the Act and is liable to be annulled.

That on the facts and circumstances of the case and in law, the final assessment order passed by the Ld. AO u/s 143(3) read with Section 144C of the Act dated May 31, 2022 (“Second Assessment Order”) is bad in law and void-ab- initio since the Act allows the Ld. AO to serve only one final assessment order u/s Hazira Port Pvt. Ltd. vs. DCIT Asst.Year –2017-18 - 2–

That on the facts and circumstances of the case and in law, the orders passed by the Ld. AO / TPO / DRP in respect of transfer pricing adjustment are not in accordance with law and contrary to the facts and circumstances of the present case, are bad in law and liable to be annulled.

That on the facts and circumstances of the case and in law, the Learned AO/TPO/DRP has erred in making a downward adjustment of INR 33,24,35,034 on Transfer Pricing issues. While making the said downward adjustment, the Learned AO/TPO/DRP have erred in:

The Learned AO/TPO/DRP have erred in making a downward adjustment of INR 20,60,40,000 in relation to provision of port facility services by the Appellant to its domestic Associated enterprise ("AE"). While making the adjustment, on the facts and circumstances of the case and in law, the Learned AO/TPO/DRP have erred in:

1 Not appreciating the functional profile and precise nature of Assessee's capital intensive business

2 Rejecting the methodology followed by the Assessee and substituting with its own methodology for the purpose of making adjustment

3 Holding that the Assessee did not file any documentation in support of determination of ALP for the subject transaction of provision of port facility services

4 Rejecting the TP documentation on the erroneous claims that the Assessee has not furnished the following:

5 Rejecting the detailed Transfer Pricing Planning report prepared by the firm of Independent Chartered Accountants, based on certain incorrect observations, surmises, and conjectures.

6 Holding that the PLI used by the Assessee, i.e. Return on Capital Employed ("ROCE") for comparability analysis is not appropriate, and adopting operating profit on operating cost ("OP/OC") as the revised PLI for benchmarking the subject transaction, despite the fact that Assessee operates in a capital-intensive LNG & Port industry which involves long gestation period and ROCE is the correct benchmark.

7 Arbitrarily rejecting one of the functionally comparable companies selected by the Assessee, namely Ennore Port Limited (now known as Kamarajar Port Limited) on account of earning higher profits

8 Computing the incorrect margins of certain companies considered in the final set (Without prejudice)

That on the facts and circumstances of the case and in law, the Ld. TPO failed to provide a reasonable opportunity of being heard to the Appellant, thus violating the principles of natural justice, and concluding the proceedings in a haste causing prejudice to the Appellant.

That on the facts and circumstances of the case and in law, the Ld. DRP/TPO have erred in rejecting the additional ground of objection filed by the Appellant without considering the same on merits or providing any logical rationale for its rejection.

The Ld. AO/ TPO/ DRP have erred in making a downward adjustment of INR 12,63,95,034 in relation to accrued interest on repayment of unsecured loans. While making the aforementioned adjustment, on the facts and circumstances of the case and in law, the AO/ TPO/ DRP have erred in:

1 Not appreciating the fact that the subject transaction is in the nature of quasi-capital contribution from the AE and thus the economic substance should prevail over the real form of transaction, as also enunciated by the OECD guidelines

2 Not appreciating important facts of case such as huge losses in initial years were incurred by the Assessee since it operates in a capital-intensive industry

3 Ignoring the well laid test of commercial expediency and not appreciating the commercial rationale behind non-charging of interest from AEs Asst.Year –2017-18 - 4–

4 Holding that the Assessee had sufficient funds to repay the interest on loan based on incorrect assumptions and not considering the fact that the rationale for obtaining the interest free loan by the Assessee was the financial distress.

5 Without prejudice, the AO/ TPO/ DRP has erred in not appreciating that a downward adjustment warranting a reduction of Assessee's income chargeable to tax is not permissible as per the provisions of Section 92(3) of the Act

6 Without prejudice, the search results provided by the TPO consist of several defects, and AO/ TPO/ DRP erred in not providing detailed search strategy to Assessee and explaining how such agreements/arrangements are comparable to the Assessee's transaction.

7 Adopting Incorrect value for 12-month U LIBOR and ad-hoc addition of 1 percent on account of forex risk without providing any reasons for such action (Without prejudice)

8 Not appreciating that no international transaction of obtaining loan from AEs was undertaken during the AY 2017-18 however only repayment of existing loans was undertaken

9 Not following the principle of consistency as laid down in several judicial precedents.

That the AO erred in law while making & DRP erred in upholding the downward adjustment in respect of repayment of unsecured Loan based upon the adjustment made by the TPO/ DRP, without appreciating that it was beyond the TPOs juri iction to make such adjustment owing to combined reading of Section 92(3), Section 92BA and Section 80IA(10) of the Act.

That on the facts and circumstances of the case and in law, the Ld. AO has grossly erred in not providing the credit of taxes already paid by the Assessee in the notice of demand & tax computation sheet accompanied with the Second Assessment order.

That on the facts and circumstances of the case and in law, the Ld. AO has erred in levying consequential interest under Sections 234B and 234C of the Act.

That on the facts and circumstances of the case and in law, the AO has erred in initiating penalty proceedings under Section 270A of the Act without appreciating the fact that the Appellant did not furnish any inaccurate particulars of income

This is an appeal filed by the assessee against the order passed by Assessing Officer under Section 143(3) r.w.s. 144C of the Act dated 31.05.2022. The issue for consideration before us is the validity of the aforesaid assessment passed by the Assessing Officer. The assessee is a Joint Venture entity between Shell Gas BV (“SGBV”) holding 74% of the share capital and Total Gaz Electricite Holdings (“Total”), holding the remaining 26% of the share capital. During the subject assessment year, the assessee was engaged in the business of developing, owning, operating and maintaining port facilities at Hazira under the Gujarat Maritime Board Act. The assessee filed it’s return of income on 29.11.2017, declaring total income of Rs. 10,22,66,750/-. The case of the assessee was selected for scrutiny and during the course of assessment, the Assessing Officer made a reference to the Transfer Pricing Officer (TPO). The TPO passed order under Section 92CA(3) of the Act, wherein certain additions were proposed. The Assessing Officer passed draft assessment order under Section144C of the Act on 22.07.2021. The assessee objected to the additions made by the Assessing Officer before Dispute Resolution Panel (DRP), vide email dated 20.08.2021. Since, the DRP offices closed early on that date due to heavy rains in Mumbai, the Counsel for the assessee submitted that DRP staff informed the assessee that it will be provided with filing confirmation vide an email response on 23.08.2021. Furthermore, given the Covid-19 situation at the relevant time, the DRP permitted the assessee to file objections over email. Vide email dated 21.08.2021 the assessee intimated the concerned Assessing Officer about filing of DRP objections. Further, the assessee also received email confirmation / Asst.Year –2017-18 - 6–

09.2021. The DRP’s rejection of the assessee’s withdrawal application dated 03.03.2022 and its continued proceedings thereafter were also without juri iction. In this regard, decisions in Cadmatic 159 taxmann.com 320 (Mumbai ITAT) were relied upon to show that the DRP has juri iction only in pending assessments, not concluded ones. In view of the above, the Counsel forcefully argued that both the final assessment orders dated 15.09.2021 and 31.05.2022 are bad in law and void-ab-initio. The first order was passed prematurely and illegally without DRP directions, and the second order was passed without juri iction since the assessment had already concluded. Accordingly, it was submitted that the entire assessment proceedings are vitiated and liable to be quashed in their entirety.

In response, the Ld. DR submitted that the first assessment order dated 15.09.2021 was passed by the Faceless Assessing Officer (FAO) strictly in accordance with Section 144C(3) of the Act, as the assessee had failed to validly intimate the filing of objections with the DRP. Although the assessee claimed to have sent such intimation via email and physical submission, the Ld. DR contended that these were not in compliance with the statutory requirements under Section 144B of the Act, as the communications were not sent through the registered account on the designated e-filing portal and were made to non- designated email addresses from an unregistered email ID. Therefore, these communications never reached the FAO and could not be treated as valid. The Ld. DR submitted that the entire faceless assessment mechanism depends on communications being routed through proper electronic channels, and any deviation renders such communications Asst.Year –2017-18 - 9–

The issue / controversy before us is that for the impugned assessment year, the Assessing Officer has passed two assessment orders: the first assessment order is dated 15.09.2021 and appeal against such order is pending disposal before Ld. CIT(A). Thereafter, the Assessing Officer passed another assessment order, pursuant to directions of DRP dated 31.05.2022, against which the appeal is pending before us. Before us, the Counsel for the assessee submitted that the final assessment order passed by the Assessing Officer dated 31.05.2022 is bad in law and void-ab-initio since the Act only allows the Assessing Officer to pass one final assessment order under Section 143(3) of the Act for any particular assessment year, while the same has already been passed / issued by the Assessing Officer vide order dated 15.09.2021. The appeal against the said order is pending adjudication before Ld. CIT(A). It was submitted that the issuance of two assessment orders in respect of the same assessment year is clearly against the provisions of the Act. The assessee relied on judicial precedents in support of the contention that once the assessment proceedings have been finalized, the Assessing Officer does not have Hazira Port Pvt. Ltd. vs. DCIT Asst.Year –2017-18 - 11– (Mumbai – Tribunal), the Tribunal of Mumbai Bench held that where Asst.Year –2017-18 - 12–

In the present facts, we note that the argument of the Ld. DR is that the Assessing Officer was not intimated regarding the filing of objections before DRP in the prescribed manner and before the due date prescribed under the Act. It was in view of non-receipt of intimation regarding or filing of objections before DRP that the Assessing Officer proceeded to finalize the assessment order dated 15.09.2021, against which the assessee is in appeal before the Ld. CIT(A) and such appeal is pending adjudication. When the proceedings before DRP started, the assessee intimated the DRP that the assessee had already filed an appeal before Ld. CIT(A) against the initial assessment order dated 15.09.2021 on 11.10.2021. The assessee vide letter dated 14.03.2022 filed an application for withdrawal of DRP objections, but DRP rejected the application for withdrawal and passed it’s final directions on 28.04.2022. Thereafter, the Assessing Officer passed the second assessment order dated 31.05.2022 to give effect to the directions of DRP passed on 28.04.2022. On consideration of the above facts, with regards to the second assessment order dated 31.05.2022, we are of the considered view that once the assessee has duly intimated the DRP that the assessment order had been finalized and the appeal against the same Asst.Year –2017-18 - 13–

Therefore, the second assessment order dated 31.05.2022, in our view cannot be sustained. Accordingly, we are hereby allowing ground no. 2 of the assessee’s appeal on the legal ground that in light of the above observations, the assessment order is invalid in the eyes of law. Since we have held that the second assessment order, against which the assessee is in appeal before us is invalid in the eyes of law, the grounds raised by the assessee on merits do not require any adjudication.

Before us, the Counsel for the assessee submitted that the assessee would pursue the appellate proceedings before Ld. CIT(A) against the first assessment order dated 15.09.2021. Accordingly, in light of the above observations, having held that the present/ subsequent assessment order is invalid in the eyes of law, assessee would be at liberty to pursue it’s appeal before Ld. CIT(A) against the first assessment order.

In the result, the appeal of the assessee is allowed on the above terms. This Order pronounced in Open Court on 26/09/2025 (ANNAPURNA GUPTA) JUDICIAL MEMBER Ahmedabad; Dated 26/09/2025

संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file.