DCIT, NEW DELHI vs. M/S GE MONEY FINANCIAL SERVICES LTD, NEW DELHI

Both appeals filed by the assessee and the Revenue were heard together and are being disposed off by this consolidated order for the sake of convenience.

The assessee has filed additional ground of appeal and has pointed out that the said additional ground of appeal is purely legal in nature and the same do not require any adjudication on merits. Hence, the same may be admitted for adjudication. The additional ground of appeal raised by the assessee reads as under:-

The additional ground of appeal raised by the assessee is against the time period within which the assessment order had to be passed and does not require any adjudication on facts; hence, the same is admitted for adjudication.

Briefly in the facts of the case the assessee had filed return of income on 30.09.2010. Thereafter, revised return of income was filed on 30.03.2012. The case of the assessee was selected for scrutiny and notice u/s 143(2) of the Act was issued on 09.04.2012. In response thereto, the Ld.AR for the assessee attended the assessment proceedings and the assessment order was passed on 27.02.2014, under which the addition was made on account of transfer pricing issues. Though, the assessee had raised several grounds of appeal against the transfer pricing adjustment made, but has also raised the preliminary issues to the effect that the assessment order passed on 27.02.2014 is barred by limitation u/s 153 of the Act. Hence, the said order is both nullity and void ab initio.

The Ld.AR for the assessee in this regard pointed out that where the addition has been made in the hands of the assessee on account of transfer pricing issues, wherein no reference was made to the Transfer Pricing Officer (in short “TPO”), but the addition was made by the Assessing Officer himself, then as per section 153 of the Act, such order has to be passed within two years from the end of the assessment year i.e. 31.03.2013. It was further pointed out by the Ld.AR that the assessment order in the present case has been passed on 27.02.2014, which is time barred. Such a & 3510/Del/2016 Assessment Year-2010-11 proposition has been raised on the ground that no reference was made to the TPO or any order of the TPO was passed in the case of the assessee and hence, the provision of 3rd proviso to section 153 of the Act were not attracted.

The Ld. DR for the Revenue on verification, admitted that neither reference was made to the TPO nor any order was passed by the TPO in the present case.

We have heard rival contentions and perused the record. The issue which is raised by way of additional ground of appeal is against the assessment order passed in the case by the Assessing Officer, wherein though additions were made under the transfer pricing provisions but without any reference to the TPO; then the question which arises is whether the present assessment order is barred by limitation. The year under appeal is Assessment Year 2010-11 and as per section 153 of the Act, the assessment in the case had to be completed by 31.03.2013.

However, in case the Assessing Officer makes reference to the TPO, who in turn makes upward adjustment on account of the arms length price of the international transaction, if any, then as per the 3rd Proviso to section 153 of the Act, the Assessing Officer gets further time of one year to pass the assessment order, after receipt of the reference order from the TPO. Such is the proposition as per the 3rd Proviso to section 153 of the Act, prior to its amendment. In the present set of facts, the Assessing Officer suo motto made the aforesaid transfer pricing adjustment and had neither made any & 3510/Del/2016 Assessment Year-2010-11 reference to the TPO nor received any order from the TPO, then it was incumbent upon the Assessing Officer to pass an assessment order within the period of two years from the end of the Assessment Year i.e. by 31.03.2013. It is not disputed that neither reference was made to the TPO nor any report was received from the TPO. Accordingly, we hold that the assessment order passed by the Assessing Officer on 27.02.2014 is barred by limitation prescribed u/s 153 of the Act. Hence, the order passed by the Assessing Officer is both nullity and void ab initio. We thus, allow additional ground of appeal raised by the assessee. Since the assessment order has been held to be nullity, we do not go into the merits of the addition made and also the appeal of the Revenue do not survive as the assessment order is held to be nullity and void ab initio. Thus, the additional ground of appeal raised by the assessee is allowed and cross appeal filed by the Revenue is dismissed.

In the result, appeal filed by the assessee is allowed and appeal filed by the Revenue is dismissed.