MICROSOFT CORPORATION (INDIA) PVT LTD,DELHI vs. DCIT (16) (1) DELHI, DELHI

आयकर अपीलीय अिधकरण
िदʟी पीठ “आई ”, िदʟी
ŵी महावीरिसंह, उपाȯƗ (तृतीयसद˟),
ŵी िवकास अव̾थी, Ɋाियक सद˟ एवं
ŵी Űजेश कुमार िसंह, लेखाकार सद˟ के समƗ

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “I”, DELHI
BEFORE SHRI MAHAVIR SINGH, VICE PRE IENT (THIRD MEMBER),
SHRI VIKAS AWASTHY, JUDICIAL MEMBER &
SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER

आअसं.1862/िदʟी/2022 (िन.व. 2017-18)
Microsoft Corporation (India) P. Ltd.,
807, New Delhi House, Barakhamba Road,
New Delhi 110001
PAN: AAACM-5586-C

...... अपीलाथᱮ/Appellant

बनाम Vs.

Deputy Commissioner of Income-Tax,
Circle 16(1), Central Revenue Building,
IP Estate, Delhi

..... ᮧितवादी/Respondent

अपीलाथŎ Ȫारा/ Appellant by : S/Shri Nageswar Rao, (Through VC) &

Parth, Advocates

ŮितवादीȪारा/Respondent by : Shri Rajesh Kumar, CIT- DR

सुनवाई कᳱ ितिथ/ Date of hearing

:
04/09/2025

घोषणा कᳱ ितिथ/ Date of pronouncement :
: 04/09/2025

आदेश/ORDER

PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the assessment order dated
30.06.2022, passed u/s. 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961,
(hereinafter referred to as ‘the Act’) for assessment year 2017-18. 2. Shri Nageswar Rao, appearing on behalf of the assessee submitted at the outset that, at this stage he is confining his submissions to ground no. 1 of appeal

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only, assailing validity of final assessment order dated 30.06.2022 on the ground of limitation.
3. The ld. Counsel narrating relevant facts to the issue raised in ground no. 1
of appeal submits that the Dispute Resolution Panel (DRP) issued directions u/s.
144C(5) of the Act on 23.03.2022, the Assessing Officer (AO) passed final assessment order on 23.06.2022. As per the provisions of Section 144C(13) of the Act, the AO is required to pass final assessment order within one month from the end of month in which directions of the DRP are received. He pointed that directions of the DRP were uploaded on ITBA portal on 01.04.2022.To support his contention, he referred to letter dated 29.07.2022 at page 471 of the paper book received from the office of DRP. He further pointed that as per the aforesaid letter the directions of the DRP were also communicated to the AO through speed post dispatched on 04.04.2022. Since, the DRP directions were conveyed to the AO in the month of April, the Assessing Officer was duty bound to pass the assessment order within one month from end of April 2022 i.e. assessment order should have been passed on or before 31.05.2022. Whereas, the Assessing Officer has passed final assessment order on 30.06.2022. The said order is clearly time barred, hence, without juri iction. The ld. Counsel further pointed that in identical set of facts in assessee’s own case in AY 2018-19, the AO had passed final assessment order beyond limitation; the Tribunal held the assessment order bad in law and quashed the same. He placed on record a copy of the Tribunal order dated 28.02.2024 in assessee’s own case in ITA No. 1863/Del/2022, for assessment year 2018-19. 3
4. Shri Rajesh Kumar representing the department fairly admitted that similar issue was considered by the Tribunal in assessee’s own case for AY 2018-19. Referring to the directions of DRP, he pointed that in the instant case a copy of directions were endorsed to Principal CIT, National Faceless Assessment Centre
Delhi, the Commissioner of Income Tax, TP-2, Delhi, the Additional/Joint/Deputy/
Assistant CIT, National Faceless Assessment Centre, Delhi and the TPO but the directions of DRP were not sent to juri ictional Assessing Officer. He contended that National Faceless Scheme was in nascent stage in the impugned AY, if there was any lacuna in the provisions of Act/Rules, the assessee should not be allowed to take benefit of same at the cost of Revenue. Referring to the decision of Hon’ble Supreme Court of India in the case of National Faceless Assessment
Centre & Others vs. Automotive Manufacturers Pvt. Ltd. in Civil Appeal No.
1829/2023 decided on 21.03.2023, he prayed for restoring the matter back to the AO for passing the assessment order afresh.
5. After hearing submissions from both sides hearing of appeal was closed.
Appeal was again re-fixed for clarification and a specific query was made to the ld.
DR i.e. Whether uploading of DRP direction on ITBA portal would amount to receipt of directions by the Assessing Officer? In response to the aforesaid query, the ld. DR sought report from the office of CIT (ITBA). The relevant extract of the said report reads as under:-
“The matter was referred to the ITBA technical team for their inputs and for extracting relevant information regarding the DRP order/directions in this case.
The requisite inputs/information, to the extent pertaining to ITBA, are submitted as under:

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1) Visibility of the DRP order in the Case History/Notings (CHN) of the pending assessment assessment proceedings:
a) The DRP Order 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 option of selecting Draft Order u/s 144C in the screen. When DRP proceedings are initiated in this manner, this creates linkage in the ITBA backend with the ITBA Assessment Module and hence when the DRP passes the order/directions u/s 144C(5) in DRP Module, such order is automatically reflected in the Case History Noting (CHN) of AO (FAO or JAO) with whom the assessment work-item is pending in Assessment Module.
b) 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(JAO/FAO). In the present case, the DRP user had created the pendency by manually entering the details of the 144C order in the screen at the time of initiating DRP proceedings in the DRP Module.
The DRP Order u/s 144C(5) dated 23.03.2022 was uploaded by the DRP user in DRP Module of ITBA on 01.04.2022. 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/directions, when uploaded by DRP user on 01.04.2022 in the DRP module in ITBA, did not get automatically reflected in the Case History/Noting of the assessment proceedings.
2) Uploading of the DRP order or Order Giving Effect thereto using the functionality of DIN/PAN-AY:
There is a 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. In the present case, as per information available in the ITBA System, the following documents were uploaded on by DCIT/ACIT(NeAC) and DCIT Circle 16(1) Delhi, and became visible in CHN of the assessment proceedings from the said respective dates onwards:

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Extracts from CHN of Assessment Proceedings (The same are also accessible to the AO from ITBA front-end screen)
Date
Action/description
From To Document
13.04.2022
Document/Response received from 'Uploading of document based on DIN/ PAN-AY screen
DC/ACIT(NeAC)-
2(1)(1)DEL
AO-
Assessment
Unit
AAACM5586C
2017-18
19.04.2022
Document/Response
Received from 'Uploading of document based on DIN/ PAN-AY screen
DC/ACIT(NeAC)-
2(2)(2)DEL
AO-
Assessment
Unit
AAACM5586C
2017-18
20.05.2022
Document/Response received from Uploading of document based on DIN/ PAN-AY screen
DCIT
Circle
16(1)
Delhi
AO-
Assessment
Unit
Microsoft
Corporation India
P Ltd. 2017-18
DRP
*These are remarks are as entered by the respective user while uploading the documents.
Copies of these documents as downloaded from ITBA backend are attached. Any further clarification/confirmation as to the said remarks entered in CHN while uploading the said documents by the respective users {DCsIT (NeAC)} may kindly be sought from NaFAC.
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 legal/procedural aspects {viz. whether uploading of the DRP directions on the ITBA portal amounts to service of the same to AO/FAO, whether faceless scheme lays down any timeframe for the same etc.} vest with the authorities concerned.”
6. We have heard the submissions made by rival sides and have examined the orders of authorities below. The limited issue for our consideration at this stage is the validity of final assessment order with reference to limitation period for passing the same. The contention of the assessee is that the assessment order is time barred, hence, without juri iction. In so far as the date of DRP directions,

6
final assessment order and the date of uploading of the DRP directions on ITBA portal is concerned they are not in dispute. However, for the sake of ready reference these vital dates are tabulated herein below:-
23.03.2022
DRP Directions
01.04.2022
Date of uploading directions on ITBA Portal
23.06.2022
Final Assessment Order.

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proceedings by using option of manually entering details of the case in screen, the DRP directions are not automatically reflected in the case history noting of pending Assessment proceedings work-items of the AO (FAO or JAO).
In the instant case, the DRP user followed second method i.e. manually entering details. Thus, the AO was not having facility to view directions of the DRP on mere uploading of the same on ITBA portal on 01.04.2022. A perusal of the case history notings reflect that the DRP directions were visible to the assessment unit when it was manually entered into the system by DC/ACIT(NESE) 2(1)(1) DEL on 13.04.2022. The same was visible to the assessment unit on the same date i.e.
13.04.2022. Hence, the DRP directions were received by the AO on 13.04.2022. Once the DRP directions enters the system of assessment unit, the same is deemed to be served on the Assessing Officer. The limitation for passing the final assessment order u/s. 144C(13) would thus, be reckoned from 13.04.2022. 9. We have considered the submissions made on behalf of the Department that leverage may be allowed to the Revenue as Faceless Scheme was in nascent stage; however, we are not convinced with the arguments advanced by the ld.
DR. The provisions of section 144C were inserted by the Finance (No. 2) Act, 2009. The provisions of section 144C are unambiguous qua time line for passing the final assessment order by the AO after the DRP directions are received by him. As evident from the case history notings, the DRP directions which were uploaded on ITBA portal on 01.04.2022 were communicated to the assessment unit on 13.04.2022. As per the provisions of section 144C(13) of the Act, the Assessing
Officer had time up to 31st May 2022(i.e. within one month from the end of month in which such directions are received by the Assessing Officer) to pass final

8
assessment order. The impugned assessment order has been passed on 30.06.2022 which is clearly beyond the time prescribed by the statue. Hence, impugned assessment order is without juri iction and is liable to be quashed.
We hold and direct accordingly. The assessee succeeds on ground no.1 of appeal.
10. Since, we have allowed appeal of the assessee on juri ictional issue the other grounds raised in appeal on merits of the additions have become academic, therefore, are not deliberated upon.
11. In the result, appeal of the assessee is allowed.
PER BRAJESH KUMAR SINGH, AM

I am unable to persuade myself with the findings of my Ld. Brother regarding his decision in holding that the impugned assessment order passed on 30.06.2022 was clearly beyond the time prescribed by the statute and therefore the impugned assessment order was without juri iction. In view of this fact my ld. Brother quashed the impugned assessment order and allowed the ground no.1
of the appeal. However, I do not agree with the same.
2. The assessee company had filed its original return of income on 29.11.2017
at a total income of Rs.620,48,47,810/- and revised its return of income on 06.07.2018 at the same total income. The order under section 143(3) r.w.s.
144C(13) of the Act was passed on 30.06.2022 at a total income of Rs.1431,81,86,757/- making an addition of Rs.830,42,03,497/-to the total income declared by the assessee company and thereby raising a tax demand of Rs.549.24
Crores.

9
3. In this regard, the facts mentioned by my ld. Brother are not disputed.
However, I do not agree with the findings of my ld. Brother that the date of reckoning of the limitation period for passing the final order u/s 144C(13) of the Act under sub-section (13) to section 144C of the Act will be 13.04.2022 i.e. the date on which, the directions issued under sub-section (5) of section 144C was received by the Assessing Officer and the order u/s 143(3) r.w.s 144C(13) of the Act was to be passed on 31.05.2022. As per the provisions of section 144C(13) of the Act upon receipt of the direction 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 of the Act, 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. In this regard to ascertain the date on which the direction dated
23.03.2022 of the DRP was received by the AO, a report was called from the Department. The report from the CIT(ITBA) submitted by the ld. DR as reproduced and discussed in para 5 on pages 3 to 5 of the order of my ld. Brother is reproduced as under:-
5. After hearing submissions from both sides hearing of appeal was closed. Appeal was again re-fixed for clarification and a specific query was made to the ld. DR i.e. Whether uploading of DRP direction on ITBA portal would amount to receipt of directions by the Assessing Officer? In response to the aforesaid query, the ld. DR sought report from the office of CIT (ITBA).
The relevant extract of the said report reads as under:-
“The matter was referred to the ITBA technical team for their inputs and for extracting relevant information regarding the DRP order/directions in this case.

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The requisite inputs/information, to the extent pertaining to ITBA, are submitted as under:
1) Visibility of the DRP order in the Case History/Notings (CHN) of the pending assessment assessment proceedings:
a) The DRP Order 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 option of selecting Draft
Order u/s 144C in the screen. When DRP proceedings are initiated in this manner, this creates linkage in the ITBA backend with the ITBA Assessment
Module and hence when the DRP passes the order/directions u/s 144C(5) in DRP Module, such order is automatically reflected in the Case History
Noting (CHN) of AO (FAO or JAO) with whom the assessment work-item is pending in Assessment Module.
b) 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(JAO/FAO). In the present case, the DRP user had created the pendency by manually entering the details of the 144C order in the screen at the time of initiating DRP proceedings in the DRP Module. The DRP Order u/s 144C(5) dated
23.03.2022 was uploaded by the DRP user in DRP Module of ITBA on 01.04.2022. 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/directions, when uploaded by DRP user on 01.04.2022 in the DRP module in ITBA, did not get automatically reflected in the Case History/Noting of the assessment proceedings.
2) Uploading of the DRP order or Order Giving Effect thereto using the functionality of DIN/PAN-AY:
There is a functionality available in ITBA ("Uploading of document based on DIN/PAN-AY"). Documents uploaded by any ITBA user, using this 11
functionality are shared in the Case History/Notings of the selected proceedings, pending with JAO or FAO as the case may be. In the present case, as per information available in the ITBA System, the following documents were uploaded on by DCIT/ACIT(NeAC) and DCIT Circle 16(1)
Delhi, and became visible in CHN of the assessment proceedings from the said respective dates onwards:
Extracts from CHN of Assessment Proceedings (The same are also accessible to the AO from ITBA front-end screen)
Date
Action/description
From To Document
13.04.2022
Document/Response received from 'Uploading of document based on DIN/ PAN-AY screen
DC/ACIT(NeAC)-
2(1)(1)DEL
AO-
Assessment
Unit
AAACM5586C
2017-18
19.04.2022
Document/Response
Received from 'Uploading of document based on DIN/ PAN-AY screen
DC/ACIT(NeAC)-
2(2)(2)DEL
AO-
Assessment
Unit
AAACM5586C
2017-18
20.05.2022
Document/Response received from Uploading of document based on DIN/ PAN-AY screen
DCIT Circle 16(1)
Delhi
AO-
Assessment
Unit
Microsoft
Corporation
India P
Ltd.
2017-18 DRP

*These are remarks are as entered by the respective user while uploading the documents.
Copies of these documents as downloaded from ITBA backend are attached.
Any further clarification/confirmation as to the said remarks entered in CHN while uploading the said documents by the respective users {DCsIT (NeAC)}
may kindly be sought from NaFAC.

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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 legal/procedural aspects {viz. whether uploading of the DRP directions on the ITBA portal amounts to service of the same to AO/FAO, whether faceless scheme lays down any timeframe for the same etc.} vest with the authorities concerned.”
4. From the perusal of the above following facts emerge
(i)
In the present case, the DRP user had created the pendency by manually entering the details of the 144C order in the screen at the time of initiating DRP proceedings in the DRP Module. The DRP Order u/s 144C(5) dated 23.03.2022 was uploaded by the DRP user in DRP Module of ITBA on 01.04.2022. 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/directions, when uploaded by DRP user on 01.04.2022 in the DRP module in ITBA, did not get automatically reflected in the Case History/Noting of the assessment proceedings.
(ii)
Uploading of the DRP order or Order Giving Effect thereto using the functionality of DIN/PAN-AY:
There is a 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. In the present case, as per information available in the ITBA System, the documents were 13
uploaded on by DCIT/ACIT(NeAC) and DCIT Circle 16(1) Delhi, and became visible in CHN of the assessment proceedings from the said respective dates onwards.
5. The relevant extract of the order-sheet details (case history) relating to passing of the assessment order as submitted by the Ld. DR is reproduced as under:-
27/10/2021
Response from Assessee
MICROSOFT
CORPORATION
(INDIA)
PRIVATE
LIMITED
-

14
XXXXXXX

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6. Thus, it appears that the directions of the DRP dated 23.03.2022 was uploaded by the DRP on 01.04.2022 on the ITBA module, which was not automatically reflected in the Case History/noting of the assessment proceedings.
The same directions of the DRP were uploaded by the Faceless Assessing Officer
(hereinafter referred as ‘FAO'), DC/ACIT(NeAC)-2(1)(1)DEL to AO-Assessment Unit on 13.04.2022. Further, on 19.04.2022, it appears that the directions of the DRP dated 23.03.2022 were uploaded by the FAO DC/ACIT(NeAC)-2(2)(2)DEL to AO-
Assessment Unit. Again on 20.05.2022, it appears that the directions of the DRP dated 23.03.2022 were uploaded by the juri ictional Assessing Officer
(hereinafter referred as ‘JAO’), DCIT, Circle-16(1), Delhi to AO-Assessment Unit.
Further, again on 28.06.2022, the juri iction over the case was transferred from the AO Assessment Unit, Faceless Unit to the JAO, DCIT, Circle-16(1) Delhi on the 16
ground that the assessment could not be finalized by the Faceless Assessment
Unit because the amended provisions of section 144B of the Act had become effective from 01.04.2022 and required changes in systems/hierarchy, which was under implementation. It was further stated that as per FAU, the limitation in this case is falling in the month of June, 2022 and the assessment in this case was being transferred from FAU to the JAO i.e. DCIT, Cricle-16(1), Delhi with the approval of CBDT for the completion of the assessment within the limitation period. Thereafter, on 29.06.2022, the DCIT Circle-16(1), Delhi,submitted the response on the draft order and on 30.06.2022 the order was generated u/s 143(3) of the Act and the demand notice and the computation sheet was generated on 30.06.2022 and thereby the assessment u/s 143(3) r.w.s. 144C(13) of the Act was passed on 30.06.2022 by the DCIT, Circle-16(1), Delhi.
7. Therefore, the facts in this case are as under:-
(i)
That the DRP order u/s 144C(5) of the Act dated 23.03.2022 was uploaded by the DRP user in DRP module of ITBA on 01.04.2022 and since the DRP had created the DRP proceedings by manually entering the details of the case, the DRP order/directions when uploaded by DRP user on 01.04.2022 in the DRP model in ITBA did not get automatically reflected in the Case History/noting of the assessment proceedings.
(ii)
That on 13.04.2022, the said direction of the DRP were at least visible to the FAO, DC/ACIT(NeAC)-2(1)(1)DEL as it transferred the DRP directions to the AO
Assessment Unit on the ITBA.

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(iii)
That on 20.05.2022, the said direction of the DRP were also visible to the JAO, DCIT Circle-16(1) Delhi, as it transferred the DRP directions to the AO
Assessment Unit on the ITBA.
(iv)
That on 28.06.2022, the assessment proceedings in this case was transferred from the FAO to the JAO, DCIT Circle-16(1) Delhi, on the ground that the assessment could not be finalized by the faceless AU because the amended provisions of section 144B of the Act had become effective from 01.04.2022 and required changes in systems/hierarchy, which was under implementation.
(v)
That as per the noting of the FAU, the limitation in this case was falling in the month of June 2022. (vi)
That the assessment order u/s 143(3) r.w.s. 144C(13) of the Act was passed by the JAO, DCIT, Circle-16(1), Delhi, on 30.06.2022. 8. On perusal of the facts available on record, it appears that the JAO in the case of the assessee for the present assessment year was DCIT, Circle-16(1), Delhi, who received the directions of the DRP order u/s 144C(5) of the Act dated
23.03.2022 on 20.05.2022(this date of receipt by the JAO i.e. 20.05.2022 is being construed from the Case History/Note sheet of this case, wherein, the JAO i.e.
DCIT, Circle-16(1) uploaded the directions of the DRP on the ITBA). Therefore, as per facts discussed later in this order, the passing of the order u/s 143(3) r.w.s.
144C(13) of the Act on 30.06.2022 by the JAO i.e. DCIT, Circle-16(1) Delhi, is within the limitation period as provided under the provisions of section 144C(13) of the Act.

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9. However, the assessee submits that the directions of the DRP order u/s 144C(5) of the Act dated 23.03.2022 was received by the FAU on 13.04.2022 and therefore the assessment order u/s 143(3) r.w.s. 144C(13) of the Act passed on 30.06.2022 should have been passed on or before 31.05.2022 and therefore, it was barred by limitation, which has been agreed by my learned Brother. In this regard, the Hon’ble Supreme Court in the case of NFAC vs Automotive
Manufacturers Private Limited in Civil Appeal No.1829 of 2023, in its order dated
21.03.2023, appreciated the fact that the Faceless Assessment Scheme has been introduced recently and therefore, the Revenue ought to have been given some leverage to correct themselves and take corrective measures.In this case, the Hon’ble Bombay High Court had set-aside the assessment order declaring it as non est as the mandatory requirement under section 144B of the Act namely the show cause notice with a draft assessment order was not issued and served upon the assessee. The Hon’ble Court held that considering the fact that the Assessment Order was passed without issuing a show cause notice with a draft
Assessment Order, as was mandatorily required, under Section 144B of the Act, as such, it cannot be said that the High Court has committed any error. The Hon’ble
Court further held that at the same time, considering the fact that the Faceless
Assessment Scheme has been introduced recently and therefore, the Revenue ought to have been given some leverage to correct themselves and take corrective measures and therefore the High Court ought to have remanded the matter to the Assessment Officer to pass a fresh order in accordance with law, after following the due procedure, as required under the law, namely, more particularly, under Section 144B of the Act. The Hon’ble Court in view of the above reasons, modified the impugned judgment and the order passed by the 19
Hon’ble Bombay High Court and remanded the matter to the Assessing Officer to pass a fresh Assessment Order, after following due procedure, in accordance with law under Section 144B of the Act. The full judgment of the Hon’ble Supreme
Court is reproduced as under:-
“1. Leave granted.
2. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court of Judicature at Bombay in Writ Petition (L) No.
16281/2021, by which the High Court in exercise of powers under Article
226 of the Constitution of India has set aside the Assessment Order declaring it as non est as the mandatory requirement under Section 144B of the Income Tax Act, 1961 (for short “the Act”), namely, the show cause notice with a draft Assessment Order was not issued and served upon the assessee.
3. Shri Balbir Singh, learned ASG, appearing for the Revenue has submitted that, as such, the High Court ought not to have entertained the writ Petition under Article 226 of the Constitution of India challenging the order of assessment. It is submitted that, even otherwise, if the Hon’ble Court was of the opinion that the assessment proceedings were in breach of principles of natural justice inasmuch as the show cause notice with draft Assessment
Order was not served in that case, the matter ought to have remanded to the Assessing Officer and with liberty in favour of the Assessing Officer to pass a fresh order in accordance with law and after following due procedure as required under Section 144B of the Act.
4. Having heard Shri Balbir Singh, learned ASG, appearing of the Revenue and Shri Dharan Gandhi, learned counsel appearing for the respondent- assessee and having gone through the impugned judgment and order passed by the High Court and considering the fact that the Assessment
Order was passed without issuing a show cause notice with a draft
Assessment Order, as was mandatorily required, under Section 144B of the 20
Act, as such, it cannot be said that the High Court has committed any error.
However, at the same time, considering the fact that the Faceless
Assessment Scheme has been introduced recently and therefore, the Revenue ought to have been given some leverage to correct themselves and take corrective measures and therefore the High Court ought to have remanded the matter to the Assessment Officer to pass a fresh order in accordance with law, after following the due procedure, as required under the law, namely, more particularly, under Section 144B of the Act.
5. In view of the above for the reasons stated above, we modify the impugned judgment and order passed by the High Court and remand the matter to the Assessment Officer to pass a fresh Assessment Order, after following due procedure, in accordance with law under Section 144B of the Act.
All the contentions/defences which are available to the assessee on merits are kept open to be considered by the Assessing Officer in accordance with law and on its own merits. With this, the present Appeal stands disposed of.”
10. As seen from the facts mentioned in the Case History/Order-sheet Noting relating to the assessment of this case, the juri iction to pass the assessment order in the case of the assessee was transferred on 28.06.2022 from the AO
Assessment Unit, Faceless Unit to the JAO, DCIT, Circle-16(1) Delhi on the ground that the assessment could not be finalized by the faceless AU because the amended provisions of section 144B of the Act had become effective from 01.04.2022 and required changes in systems/hierarchy, which was under implementation. Therefore, in the given facts, it was impossible for the FAU to complete the assessment in this case in the faceless system and therefore the assessment juri iction in this case was transferred by the FAU to the JAO i.e.
DCIT, Circle-16(1) Delhi on 28.06.2022 and the JAO i.e. DCIT, Circle -16(1), Delhi,

21
passed the assessment order u/s 143(3) r.w.s. 144C(13) of the Act on 30.06.2022. Further, from the facts mentioned in the Case History/Order-sheet Noting as referred above, according to FAO, the limitation date for passing the order u/s 143(3) r.w.s. 144C(13) of the Act was expiring in June, 2022. Therefore, obviously it appears that there is some mistake in the calculation of the limitation date for passing of the assessment order u/s 144C(13) of the Act by the FAO considering it to be June, 2022, if the date is reckoned from 13.04.2022, when the DC/ACIT(NeAC)(2)(1)(1), Delhi uploaded the directions of the DRP to the AO assessment unit on the ITBA, meaning thereby that at least on 13.04.2022, the FAO was in receipt of the directions dated 23.03.2022 of the DRP. However, as discussed above the JAO i.e. DCIT, Circle-16(1), Delhi, was in receipt of the directions of the DRP on 20.05.2022 and due to the fact that it was impossible for the FAO to pass the assessment order in this case in the faceless system within the limitation period, it is held that the JAO i.e. DCIT, Circle-16(1), Delhi had the effective juri iction to pass the assessment order u/s 143(3) r.w.s. 144C(13) of the Act and not the FAO. Since, the DRP directions u/s 144C(5) of the Act dated
23.03.2022 was received by the JAO i.e. DCIT, Circle-16(1), Delhi, on 20.05.2022
and therefore the assessment order u/s 143(3) r.w.s. 144C(13) of the Act passed by the JAO i.e. DCIT, Circle-16(1), Delhi in this case on 30.06.2022 is held to be passed within the limitation period as per the provisions of section 144C(13) of the Act.
11. Further, it is a fact that perhaps for the first time, in the entire world, the faceless assessment scheme was launched in the Income Tax Department on 13.08.2020 in our country in such a comprehensive manner, wherein, certain difficulties due to technical glitches and the systems being in transition has to be 22
factored in. As seen that in the present case, from the ‘Case History’/Ordersheet noting, the assessment proceedings in this case was transferred on 28.06.2022
with the approval of the CBDT from the FAO to the JAO, DCIT Circle-16(1) Delhi, on the ground that the assessment could not be finalized by the faceless AU because the amended provisions of section 144B of the Act which had become effective from 01.04.2022 required changes in systems/hierarchy, which was under implementation. Therefore, in view of the decision of the Hon’ble Supreme
Court in the case of NFAC vs Automotive Manufacturers Private Limited (supra) this case is a fit case for granting leverage to the Department when there is no tinge of any malafide in the action of the AO in passing the assessment order on 30.06.2022 (even if the limitation date for passing the assessment order in this case is considered to be 31.05.2022) and when no prejudice has been caused to the assessee so far as in making its submissions before the AO before the finalization of the assessment order. Therefore, in view of the fact thatthe amended provisions of section 144B of the Act had become effective from 01.04.2022 and required changes in systems/hierarchy, which was under implementation and the FAO could not pass the assessment order u/s 144C(13) of the Act in this case during the material time due to the transition period, the State
Exchequer should not lose its due taxes, if any of the addition amounting to Rs.830.42 Crores is found sustainable on merits. At the cost of repetition, in the present case, no prejudice has been caused to the assessee so far as in making its submissions before the AO before the finalization of the assessment order.
12. However, as discussed earlier, it is held that the JAO i.e. DCIT, Circle-16(1),
Delhi had the effective juri iction to pass the assessment order u/s 143(3) r.w.s.
144C(13) of the Act and the DCIT, Circle-16(1), Delhi, is considered to be the AO

23
for the purpose of passing of the order u/s 143(3) r.w.s. 144C(13) of the Act and not the Faceless Assessment Unit(FAU)/FAO. The DRP directions u/s 144C(5) of the Act dated 23.03.2022 was received by the JAO i.e. DCIT, Circle-16(1), Delhi, on 20.05.2022 and therefore the assessment order u/s 143(3) r.w.s. 144C(13) of the Act passed by the JAO i.e. DCIT, Circle-16(1), Delhi in this case on 30.06.2022 is held to be passed within the limitation period as per the provisions of section 144C(13) of the Act.
13. Since, the assessment order u/s 143(3) r.w.s. 144C(13) of the Act passed by the JAO i.e. DCIT, Circle-16(1), Delhi in this case on 30.06.2022 is held to be passed within the limitation period as per the provisions of section 144C(13) of the Act and as per law, I therefore, dismiss the ground no.1 of the appeal of the assessee. In view of this, the other grounds raised in the appeal on merits of the addition do not remain academic and needs to be deliberated upon and decided on its merits.

PER: MAHAVIR SINGH, VICE PRESIDENT AS THIRD MEMBER:
By the order of President, ITAT vide U.O. No.F.28-Cent.Jd(AT)/2025 dated
17th February, 2025, the undersigned has been nominated to adjudicate the difference of opinion between the learned Judicial Member and learned
Accountant Member on the following question:-

“Whether in facts and circumstances of the case, the final assessment order dated 30.06.2022 has been passed beyond the time line as mandated u/s.
144C(13) of the Act, hence, is without juri iction?”

24
2. Brief facts relating to the above referred question are that the assessee filed its original return of income, for the relevant assessment year 2017-18, on 29th November, 2017 under Section 139(1) of the Income-tax Act, 1961
(hereinafter referred to as ‘the Act’). This return was revised on 6th July, 2018 and thereafter again revised on 31st March, 2019. The return of income was processed under Section 143(1) of the Act. The assessee’s case was selected for scrutiny assessment under CASS by issuing notice under Section 143(2) of the Act dated 23rd August, 2018. The assessee company is a wholly owned subsidiary of Microsoft Corporation, USA and is engaged in manufacturing, replicating, marketing and distribution of Microsoft retail software products in India including online cloud based services. The draft assessment order under Section 144C of the Act was passed on 28th September, 2021. The draft order was passed by National Faceless Assessment Centre, Delhi, which was objected to by the assessee before Dispute Resolution Panel-2, New Delhi (hereinafter ‘the DRP’).
The DRP passed directions under Section 144C(5) of the Act vide order dated 23rd
March, 2022. In view of the directions of the DRP issued under Section 144C(5) of the Act, the assessment order was passed by the DCIT, Circle 16(1), Delhi under Section 143(3) read with Section 144C(13) of the Act for the relevant assessment year 2017-18 dated 30th June, 2022. The assessee raised the first juri iction issue that the final assessment order passed by the DCIT, Circle 16(1), Delhi under Section 143(3) read with Section 143C(13) of the Act dated 30th June, 2022 is time barred. For this, the assessee has raised following ground Nos.1.1 and 1.2:-

“1.1
On the facts and in the circumstances of the case and in law, the final assessment order dated 30 June 2022 passed by the Ld. AO under section 143(3) r.w.s. 144C(13) of the Act is time barred.

25
1.2
Impugned assessment order and proceedings are bad in law as the procedure prescribed in law are not followed and the juri ictional conditions are not satisfied.”

Date
Action/description
From To Document
13.04.2022
Document/Response received from ‘Uploading of document based on DIN/PAN-AY screen
DC/ACIT
(NeAC)- 2(1)(1)
DEL
AO-
Assessment
Unit
AAACM5586C
2017-18
19.04.2022
Document/Response received from ‘Uploading of document based on DIN/PAN-AY screen
DC/ACIT
(NeAC)- 2(2)(2)
DEL
AO-
Assessment
Unit
AAACM5586C
2017-18
20.05.2022
Document/Response received from Uploading of document based on DIN/PAN-AY screen
DCIT
Circle
16(1) Delhi
AO-
Assessment
Unit
Microsoft
Corporation
India
P.
Ltd.
2017-18 DRP

Learned Counsel stated that the learned Judicial Member, while adjudicating this issue, has also tabulated the vital dates in terms of the above report, as under:-

“9. We have considered the submissions made on behalf of the Department that leverage may be allowed to the Revenue as Faceless
Scheme was in nascent stage; however, we are not convinced with the arguments advanced by the ld. DR. The provisions of section 144C were inserted by the Finance (No.2) Act, 2009. The provisions of section 144C are unambiguous qua time line for passing the final assessment order by the AO after the DRP directions are received by him. As evident from the case history notings, the DRP directions which were uploaded on ITBA portal on 01.04.2022 were communicated to the assessment unit on 13.04.2022. As per the provisions of section 144C(13) of the Act, the Assessing Officer had time up to 31st May 2022 (i.e. within one month from the end of month in which such directions are received by the Assessing
Officer) to pass final assessment order. The impugned assessment order has been passed on 30.06.2022 which is clearly beyond the time prescribed by the statue. Hence, impugned assessment order is without juri iction and is liable to be quashed. We hold and direct accordingly. The assessee succeeds on ground no.1 of appeal.”

31
details, as may be necessary for the purposes of making an assessment under this Scheme shall be through the National e-assessment Centre.”
22. It is thus manifest that as per the provisions of E-as, 2019, all orders, notices and decisions have to be necessarily uploaded on the ITBA portal and as part of the larger faceless assessment regime which now holds the field. The uploading of the directive of the DRP on the ITBA portal would thus constitute valid and sufficient service and the period of limitation as prescribed in Section 144C(13) of the Act would be liable to be computed bearing that crucial date in mind. Once the aforesaid position becomes clear, it is evident that the order of assessment, if at all could have been framed lastly by 31 July 2022. There has thus been an abject failure on the part of the first respondent to comply with the mandatory timelines as incorporated in the aforenoted provisions. Accordingly, the writ petition is liable to be allowed and the impugned order of assessment and the consequential penalty proceedings are thus liable to be set aside on this short score alone.”
7. He further drew my attention to the decision of Hon'ble Madras High Court in the case of CIT Vs. Ramco Cements Ltd. – [2025] 171 taxmann.com 306
(Madras), wherein Hon'ble Madras High Court held that commencement of limitation for passing of final assessment order in terms of Section 144C(13) is 30
days from the end of the month when the directions of the DRP are received by the Assessing Officer and, in the facts of that case, Hon’ble High Court discussed that when the directions of DRP were uploaded on ITBA portal on 31st January,
2022, the limitation for passing of final assessment order would commence from 31st January, 2022 and not from the date when the FAO/JAO has viewed the directions on 3rd February, 2022. Hon’ble High Court affirmed the conclusion of the Tribunal by holding that since the DRP directions were uploaded through common functionality in ITBA from NeFAC, Delhi, that date itself would be taken

32
to be the date of service of the order/date of receipt of directions by the FAO and limitation as per the provisions of Section 144C(13) would commence from that date onwards. Hon'ble Madras High Court has considered the internal process followed by the Income-tax Department and consequent advisory issued by the ITBA team on visibility of orders passed by DRP to other ITBA users. The relevant discussion by Hon'ble Madras High Court appears in Paragraph 24 to 27, as under:-
“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, https://www.mhc.tn.gov.in/judis 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.

33
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. 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 juri iction. 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.”
8. Further, considering the Advisory, Hon’ble High Court has explained the entire process from Paragraph 29 to 32 as under:-
“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 34
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 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.”

“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

35
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.
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.”
10. Finally, Hon’ble High Court, while interpreting the provisions of Section 144C of the Act, held that the provisions of Section 144C is a Code by itself that provides for strict timelines for completion of an assessment. According to Hon’ble High Court, 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.

A.
At the outset, it is submitted that the revenue completely rely on the order dated 20.01.2025 of the Hon'ble A.M (Shri B.K Singh), in which, the Hon'ble AM has, after considering the facts of the case, law on the issue,

37
the Hon'ble Apex court decision in the case of The National Faceless
Assessment Centre and Orsv/s Automotive Manufacturers (P) Ltd. in Civil
Appeal no. 1829 of 2003( arising out of SLP (C) No.1857/2023) and also the Faceless scheme launched by the department, has passed a very detailed and comprehensive order.

B.
Facts of the case

The facts of the case are duly mentioned in the para 7 & para 8 of the Hon'ble A.M. order and also duly discussed in the physical hearings, both by the assessee's counsel as well as by the undersigned by referring to AM's order only and therefore for the sake of brevity, the same are not being repeated.

C.
Main Issue: Which date is to be taken as the date of receipt of DRP directions by Assessing Officer?

The Ld. Counsel of the assessee has made arguments in the court, stating that the day the DRP directions are uploaded in the systems, that date should be taken as date of receipt for computation of limitation date for passing the final order as per section 144C(13) of the IT Act. In this connection, as argued before the Hon'ble V.P (as third member), both the Hon'ble JM and Hon'ble AM has rejected this argument of the assessee counsel. The Hon'ble JM, (In para 8 of his order) has taken the date of 13.04.2022 i.e. the date on which DC/ACIT NEAC 2(1)(1) has uploaded the directions as date of receipt whereas the Hon'ble A.M has taken the date of 20.05.2022 i.e. date of receipt by JAO as the date of receipt by DRP directions by Assessing Officer for computation of limitation date for passing of final assessment order. (para 8 of para 10 of Hon'ble JM order).

Thus, the assessee contention of taking date of uploading of DRP directions as date of receipt by AO has been duly rejected by both the Hon'ble members and thus on this issue, there is a unanimity and no difference of opinion between the members that in case of manually entering the details by DRP, directions are not directly visible to the AO's and accordingly with 38
respect, it is submitted that this argument of assessee’s counsel is not before the Hon'ble third member.

The Point of difference arose because the Hon'ble JM considered the date of date of uploading by DC/AC NeAC i.e. on 13.04.2022 as date of receipt by faceless AO whereas the Hon'ble JM after considering the amended provisions of section 144B, (which came into effect from 01.04.2022) and relied on CHN notings i.e. it is impossible for the faceless AO to pass order as it required changes in the systems, considered the date of receipt of DRP directions i.e. 20.05.2022 by JAO who passed the final assessment order.

Further the Hon'ble AM also considered the launch of Faceless Assessment scheme, the direct decision of the Hon'ble SC in the case of Automotive
Manufacturers considering faceless scheme and also the fact that no prejudice has been caused to the assessee even if limitation date is treated as 31.05.2025. All the issues raised by assessee and also duly considered by Hon'ble AM in his order and argued at length by the undersigned before the Hon'ble Third
Member are discussed on mentioned paras.

D.
Implementation of Faceless Scheme of Assessment in the Income
Tax Department:-As argued before the Hon'ble Bench, It is once again mentioned that the Govt of India has launched implemented the faceless scheme of assessment which is the biggest direct tax reforms in India launched for bringing efficiency, transparency and accountability in the system. This has brought about a paradigm shift in working of the Income
Tax Department with regard to assessment and appeals and the same is based on data analytics and Artificial Intelligence (AI). In fact, faceless system has transformed the working of Income Tax department and has ended the human interface and brought about the complete transparent and efficient tax administration.

The faceless system was launched by none other than the Hon'ble Prime
Minister Shri Narendra Modi and it emphasized his vision of making tax

39
administration fully transparent, efficient and completely accountably to the tax payer. Faceless Assessment brought about a complete change in the assessment procedure and now even the assessee and the department does not know who is the assessing Officer and vice versa. Further, it is humbly submitted that the major reforms like faceless scheme which has brought about a paradigm shift in the working of the entire Income Tax
Department, also has the probability of occurrence of some technical
/procedural lapses which cannot be ruled out in the initial stages. So, if a technical/procedural lapse has occurred in the case which ideally should not have happened however when we compare it with the implementation of faceless scheme (launched by none other than the Hon'ble Prime
Minister), it is humbly prayed that the same should be allowed to be rectified at the department level and department should be given leverage to correct any errors and assessment proceedings should not be quashed because of errors caused because of faceless regime and the State
Exchequer should not be allowed to lose its due taxes.

E.
Decision of Hon'ble supreme court in the case of The National
Faceless Assessment Centre and Ors v/s Automotive Manufacturers (P) Ltd.
in Civil Appeal no. 1829 of 2003, arising out of SLP (C) No.1857/2023 ) with regard to violation of provision of section 1448 of IT Act.

During the hearing before the Hon'ble Division Bench, the undersigned relied upon the decision of Hon'ble Supreme Court in Automotive
Manufacturers Private Limited wherein the Hon'ble Apex Court while deciding on the violation of provision of section 144B of the Income Tax
Act, though held that the conditions prescribed in section 1448 are mandatory, however the Hon'ble SC has also taken notice of the fact that faceless scheme has been recently launched by Income Tax Department and department has to be given some leverage to correct itself and take corrective action.

The Hon'ble J.M though has mentioned in his order (para 4) about the reliance by the department on Hon'ble Supreme Court order but didn't discuss, whether the same is applicable or inapplicable on the case. Also 40
one of the contentions raised was the binding nature of the Hon'ble
Supreme Court decision in the case of Automotive Manufacturers on the Hon'ble ITAT under article 141 or the constitution, however the Hon'ble JM didn't discuss this issue also.

On the other hand, the Hon'ble AM quoted the entire text of the Hon'ble
Supreme court order and also discussed the facts (para 9) and also relied on the same and considered the present case as the fit case of granting leverage (As held by Hon'ble Supreme Court) in para 11 of its IT order.

In the case of Automotive Manufacturers, the Hon'ble Supreme Court considered Faceless schemes launched by the department and also gave leverage to take corrective measures because of the impact of faceless schemes and based on that, even remitted back the proceedings to AO even when the order was passed by the Hon'ble High Court against the department. Even at the cost of repetition, the relevant extract of the Hon'ble Supreme Court decision is reproduced below:

41
after following due procedure, in accordance with law under Section 144B of the Act.

From the perusal of the above, it is crystal clear that on similar violation of section 144B, the Hon'ble Supreme Court didn't quash the entire proceedings and after considering the faceless schemes launched by Department, remitted the matter to AO. The Hon'ble SC also explicitly mentioned that the department ought to be given some leverage because of the impact of faceless scheme.

Thus, the Hon'ble Supreme Court has decided the above noted case after considering the Faceless scheme and the directions of Hon'ble Supreme
Court i.e. to give leverage to department to correct themselves and take corrective measures is binding on all courts including Hon'ble ITAT.

F.
Under Article 141 of the constitution, the ratio decidendi and even obiter dicta of Hon'ble Supreme Court is binding on all courts in India including Hon'ble ITAT. In my respectful submission, the decision of Hon'ble
Apex Court in Automotive Manufacturers comes under the ratio decidendi and reliance to placed on Hon'ble Supreme Court decision in the case of the THE PEERLESS GENERAL FINANCE AND INVESTMENT COMPANY LTD.
VERSUS COMMISSIONER OF INCOME TAX, CIVIL APPEAL NO. 1265 OF 2007. Being very pertinent, the relevant extract of the Hon'ble Apex decision is reproduced below:

(10) While it is true that there was no direct focus of the Court on whether subscriptions so received are capital or revenue in nature, we may still advert to the fact that this Court has also, on general principles, held that such subscriptions would be capital receipts, and if they were treated to be income, this would violate the Companies Act. It is, therefore, incorrect to state, as has been stated by the High Court, that the decision in Peerless
General Finance and Investment Co. Limited (supra) must be read as not 11
having laid down any absolute proposition of law that all receipts of subscription at the hands of the assessee for these years must be treated

42
as capital receipts. We reiterate that though the Court's focus was not directly on this, yet, a pronouncement by this Court, even if it cannot be strictly called the ratio decidendi of the judgment, would certainly be binding on the High Court. Even otherwise, as we have stated, it is clear that on general principles also such subscription cannot possibly be treated as income. Mr. Ganesh is right in stating that in cases of this nature it would not be possible to go only by the treatment of such subscriptions in the hands of accounts of the assessee itself.

Thus, as held by the Hon'ble Apex court, in above stated order that pronouncement/judgment, even if not directly on the issue is binding on all courts. Thus, decision on faceless scheme in Automotive Manufacturers case becomes binding on the Hon'ble ITAT. Similar proposition of law has been held by the Hon'ble Apex Court/High Courts in various other cases and for the sake of brevity, the same are not being reproduced.

G.
Further, reliance is also placed on the decision of Hon'ble Bombay
High Court decision in the case of MohandassIssardasAndOrs u/s A.N.
Sattarathan AIR, AIR1955BOM113, (1954)56BOMLR1156, 1955CRILJ423,
ILR1955BOM319, AIR 1955 BOMBAY 113, 56 BOM LR 1156 wherein the Hon'ble High Court has held that even the opinion expressed by Hon'ble
Supreme Court is binding on all courts. Being pertinent, the relevant extract of the decision is reproduced below:

43
Thus, the Hon'ble High Court has clearly held in unequivocal terms that the opinion expressed by Hon'ble Supreme Court even on a question which was not necessary for the decision is binding on the High Court. Accordingly, even if the Hon'ble ITAT thinks that the decision of Hon'ble Supreme court in Automotive Manufacturers is an opinion on faceless schemes, even then it becomes binding on the Hon'ble ITAT and the Hon'ble ITAT has to accord leverage to the department considering faceless scheme.

H.
Further reliance is also placed on the decision of Hon'ble Supreme
Court in the case of Suresh Kumar Suganthi, In Appeal (Crl) 65 & 66 of 2002, wherein the Hon'ble Supreme Court has held that the legal proposition as decided by Hon'ble Supreme Court remains in force till the other benches of Supreme Court overrules or depart from it. The relevant extract of the decision is reproduced below:

Saying so, learned single judge set aside "that part of the order passed by the sessions court directing an accused to undergo simple imprisonment for a period of six months in case of his committing default in payment of the compensation awarded." Thereafter learned single judge cited another decision of this Court in Balraj v State of U.P., AIR (1995) SC 1935. It related to a murder case. Apart from the sentence of imprisonment this Court awarded compensation and directed the amount to be collected under Section 431 of the Code. But there is not even a remote hint in the said decision doubting the correctness of the legal proposition adopted in Hari
Singh v. Sukhbir Singh. In other words, the said legal position remains in force as no other Bench of this Court has even chosen to depart from it.

It is impermissible for the High Court to overrule the decision of the apex
Court on the ground that Supreme Court laid down the legal position without considering any other point. It is not only a matter of discipline for the High Courts in India, it is the mandate of the Constitution as provided in Article 141 that the law declared by the Supreme Court shall be binding on all courts within the territory of India. It was pointed out by this Court in Anil Kumar Neotia v. Union of India, AIR 1988 SC 1353 that the High Court cannot question the correctness of the decision of the Supreme Court even

44
though the point sought before the High Court was not considered by the Supreme Court.

Thus, as argued in the physical court also, as no other bench of the Hon'ble
Supreme Court has overruled/ deviated form the decision in Automotive
Manufacturers, then the decision becomes binding on the Hon'ble ITAT

In view of the above noted decisions of the Hon'ble Supreme Court, it is humbly submitted that it is a judicially settled principle that the ratio decidendi/obiter dicta and even opinion of the Hon'ble apex court is binding on all courts including Hon'ble ITAT in India. Further as the decision in the case of Automotive Manufactures is not overruled, with respect, it is submitted that it has been rightly followed by Hon'ble AM. The facts of the present case squarely fits in the ratio of the decision of Hon'ble Supreme
Court in Automotive manufacturers and it is humbly prayed that it may kindly be followed by the Hon'ble VP as Third member also.

I.
Principle of the prejudice caused

Further, even for a moment, if it is considered that limitation date was 31.05.2025 but as discussed and held by Hon'ble AM, it is once again stated that no prejudice is caused to the assessee, which is a big MNC, operating in India. It is a case which involves addition of Rs.830 Cr with tax demand of Rs.549 Cr and principle of prejudice caused definitely comes in the picture. Reliance is placed on the decision of Hon'ble Supreme Court in the case of Sugandhi v/s P. Raj Kumar, civil Appeal No. 3427 of 2020(Arising out of SLP (C) no 16491 of 2019). Being pertinent, the relevant extract of the discussion is reproduced below.

Also, the similar proposition of law was decided in the landmark decision of the Hon'ble Supreme Court of India in the case of ShyamLalMurari and other (1976) 1 SCC 719 wherein the Hon'ble Supreme Court has clearly mentioned that the Courts are supposed to decide the cases on merits and not on technicalities. Thus, the Hon'ble Third Member is kindly requested to consider the fact that there was no malafide in the action of the AO, delay if at all, has been caused because of the recent launch of the Faceless scheme and time was required to make the changes in the systems, and the so called delay has not caused any prejudice at all to the assessee company and the state exchequer should not be allowed to lose its due share of Taxes (in this case tax demand is Rs 549 Cr) because of technical glitches.

J.
Authority and Duties of Tribunal

Lastly even at the cost of repetition, it is once again submitted that in the instant case, additions have been made amounting to Rs. 830Cr with a tax demand of around Rs. 549Cr and the state exchequer should not lose its due taxes only because of some technical/juri ictional issue. The duty of the tribunal doesn't end with quashing of assessments and it has the authority and at the same time duty to correct all errors. In this connection, reliance is placed on the decision of Hon'ble Supreme Court in the case of Kapur Chand Shrimal v/s CIT (1981) 7 Taxman 6(SC) and being pertinent, the relevant extract of decision is reproduced below.

K.
Further the assessee has relied on certain case laws which are clearly distinguishable on facts and laws, as as discussed below:

ii)
Further, in this case, in para 27 it is mentioned that dispatch of electronic record occurs when it enters the computer resource outside the control of the originator and the Hon'ble Bench has taken the date of 30.11.2021 as the date on which the electronic record i.e. DRP directions entered the computer systems. Again the findings of the Hon'ble Bench are incorrect because if the electronic record ie. DRP directions got corrupted and bounced back because of systems default then how can the same be treated as dispatch is beyond comprehension.

iii) In this case, the Hon'ble Bench has relied on the decision of Hon'ble
Supreme Court in the case of VRA Cotton Mills Pvt. Ltd. vs. UOI &Ors in special leave to appeal (civil no. 34846/2011) arising from judgement from order dated 27.09.2011 in CWP NO. 18193/2011 of Hon'ble High Court of Punjab & Haryana. First of all this case was with regard to totally different facts i.e. issuance of notice u/s 143(2) of the IT Act. In fact, the Hon'ble
Tribunal, also acknowledges this facts in para 37 of the order. Further in para 36 of the ITAT order, in which the Hon'ble Bench has mentioned the conclusion, the facts are very clear that the decision of the Hon'ble
Supreme Court writ issuance of notice 143(2) which talks of issuance of notice and the Hon'ble Supreme Court, while dealing with several case laws has held that date of receipt is not relevant if issuance of notice is proper

48
and this was held to bring certainty and to avoid the attempts of the addressee to evade the process of receipt of notice. Thus in that case, the Hon'ble Supreme Court was dealing with totally different matter i.e. which is issuance of notice U/s 143(2) and also held that once the notice is issued, it is treated as communicated, irrespective of its date of receipt by addressee. In our case, facts are totally and completely different, as the section 144C(13) talks of receipt of DRP's direction by AO and not issue of directions by DRP. Once the Act provide for receipt of DRP's directions, it is the actual receipt by AO which matters and the issue of direction by DRP is immaterial. Thus the Hon'ble bench reliance on apex court decision is the case of VRA Cottons Mills (P) Ltd. is misplaced and out of context for interpreting the meaning of word receipt.

In para 8 and 12 of the order, the Hon'ble Tribunal has taken the date of receipt by NeFAC 07.04.2022 i.e. the date on which the DRP had uploaded its directions on systems as the date of receipt by AO without realising the fact that the Act has been amended from 1.04.2022 and NeAC cannot be treated as assessing officer.

It is respectfully submitted that till 31.03.2022 as per section 144B (1),
National Faceless Assessment Centre was finalizing the assessment, however, the provisions of section 144B has been amended in the Act from 01.04.2022 and it is mentioned in section 144B(1) that National Faceless
Assessment Centre is the coordination body and assessment is not done by the NeFAC Centre. Because of the faceless regime, the national faceless assessment centre is the body which is between the AO and the assessee.
The National Faceless Assessment Centre assigns the case to a respective assessment unit and only the correspondence to the assessee and the AO

49
are routed through the NeFAC. The scheme of faceless assessment has been discussed in detail in section 144B(1) and for the sake of brevity, the same are not being repeated. As the case involves the receipt of DRP directions, it is clearly mentioned in u/s section 144B (1)(xxviii) that NeFAC upon receipt of directions by the DRP, will forward such directions to the assessment units. Further in section 144B (1) (xxix), it is clearly mentioned that the assessment units in conformity with directions issued by the DRP were to complete the assessment within time allowed u/s 144C(13) and to send a copy of the assessment order to national faceless assessment centre. Also in section 144B(1) (xxx), the National faceless Assessment
Centre upon receipt of the assessment order is obliged to serve the copy of the order and notice initiated for penalty proceedings along with demand notice to the assessee on the basis of such assessment.

Thus it is crystal clear from the provision of section 144B (1) (xxviii) to (xxx) that the assessment is not completed by the National Faceless Assessment
Centre and it is done by the respective AO and national faceless assessment centre is only the coordinating body between the AO i.e
FAO/JAO and the assessee.

Thus, it is clearly evident that the Hon'ble Bench in its order has clearly overlooked the amended provisions of the Act and with respect it is submitted that they have incorrectly taken the day of receipt by the Ne AC as the date of the receipt of DRP's directions by AO as they equated NeAC with AO. Further as mentioned in the Para C above, both the Hon'ble JM and Hon'ble AM has rejected this argument of taking the date of receipt of DRP's directions by Ne AC as the date of receipt by the AO. The Hon'ble JM,
(In para 8 of his order) has taken the date of 13.04.2022 i.e. the date on which DC/ACIT NeAC 2(1)(1) has uploaded the directions as date of receipt whereas the Hon'ble A.M has taken the date of 20.05.2022 i.e. date of receipt by JAO as the date of receipt by DRP directions by Assessing Officer for computation of limitation date for passing of final assessment order.
(para 8 of para 10 of Hon'ble JM order). Thus it is respectfully submitted that both the members have already disagreed with the earlier views taken

50
by the Hon'ble ITAT in the assessee's own case in ITA No.1863/Del/2022 for AY 18-19. By making reference to provision of section 13 of Information Technology
Act and section 144B of Income Tax Act it has also been emphasized on the point, that the moment document is uploaded by the originator, the receipt of the document should be the same date as the issuance date of the document. In this connection, it is respectfully submitted that in regular systems, definitely the date and time of uploading of documents becomes the date and time of receipt by the addressee, as both the originator and the recipient are in the systems. The systems adopted by the Income Tax
Department is unique in the sense that in order to bring transparency and accountability in system, the identity of the AO is not known to the assessee as well as to the DRP. Accordingly, the system in order to protect the identity of the AO, another institution or a person is placed between the AO and the assessee and that is National Faceless Assessment Centre.
As explained in detail above, the role of NeAC is basically of coordination and facilitation and all the communications are routed through NeAC. Thus as any document is uploaded by DRP is not automatically received by the NeAC on systems. The receipt by NeAC, accordingly cannot be taken as receipt by the AO because both AO as well as NeAC are different and distinct. In fact on the same basis, the other case law relied upon by assessee i.e. decision of Hon'ble apex court in the case of G.S Chatha Rice
Mills and Another 2021 2 SCC is distinguishable in our case the addressee i.e. assessing officer is not identifiable, because deliberately his identity is not known to others including DRP because of introduction of faceless regime.

L. Lastly, as argued before the Hon'ble Bench before the Hon'ble Third member, reliance is placed on the decision of the Coordinate Bench of Hon'ble ITAT Bench in the case of Haier Appliances India Pvt. Ltd. Vs. ACIT in ITA No. 1521/Del/2022 for AY 18-19 wherein similar issue of date of receipt of DRP's directions has been decided by the Hon'ble bench. In this case, detailed written submissions were made by the department which is duly incorporated in Para 6 & 7 of the order page no. 7-50 of the Hon'ble

51
ITAT's orders. In the written submissions all the case laws cited by the assessee including the judgment of Hon'ble Bombay High Court in the case of Vodafone India Ltd. In 150 taxmann.com to 258 Bombay etc. have been duly distinguished. As stated in the physical hearings, the undersigned relies on the submissions made in that case and only for the sake of brevity, the submissions are not being repeated. It is also humbly stated that after considering the similar arguments made in the present case and after analysing the various case laws cited by the Ld. Counsel, the Hon'ble
Bench has decided the issue in the revenue’s favour.”

“10. From the perusal of the aforesaid provisions, we find that section 144B(5) of the Act clearly stipulates that all the communication shall be through National Faceless Assessment Centre. Further, section 144B(6)(v) clearly stipulates that the time and place of dispatch and receipt of electronic record shall be determined in accordance with the provision of section 13 of the Information Technology Act, 2000. In this regard, the 52
provision of section 13 of the Act National Information Act, 2000 requires to be reproduced which is as under:-

“13. Time and place of dispatch and receipt of electronic record. (1) Save as otherwise agreed to between the originator and the addressee, the dispatch of an electronic record occurs when it enters a computer resource outside the control of the originator.

(2) Save as otherwise agreed between the originator and the addressee, the time of receipt of an electronic record shall be determined as follows, namely (a) if the addressee has designated a computer resource for the purpose of receiving electronic records,-

(f) receipt occurs at the time when the electronic record enters the designated computer resource; or (ii) if the electronic record is sent to a computer resource of the addressee that is not the designated computer resource, receipt occurs at the time when the electronic record is retrieved by the addressee:

(b) if the addressee has not designated a computer resource along with specified timings, if any, receipt occurs when the electronic record enters the computer resources of the addressee." “

“The dispatch of a record occurs when it enters a computer resource outside g the control of the originator. The time of receipt of the electronic record is fixed by the provisions of sub-section (2) of Section 13. When the addressee has designated a computer resource, receipt occurs when the record enters the computer resource so designated. Otherwise, where no computer resource is designated, the receipt of the record is when it is retrieved by the addressee. These provisions have been incorporated in the law to enable the dispatch and receipt of a record in the electronic form to be defined with precision with reference to both time and place.”

53
12. On a cohesive reading of provision of section 130 and 144B of the Act read together with section 13 of the Information Technology Act, 2000, we hold that the moment document is uploaded by the originator (which in the present case ld DRP) on 07.04.2022 in ITBA portal that dispatch from the side of the ld DRP is complete and since the entire documents are uploaded through electronic mode, the same happens seamlessly and accordingly, the receipt of the said document also becomes instantaneously. Hence, the date of receipt of DRP direction also happened on 07.04.2022 itself and the due date in terms of section 144C(13) would start reckoning from that date. Merely, because the NeAC had retained the document receipt from ld DRP in the form of DRP directions for few months in its kitty and the later transfer the same to the assessment unit on 02.05.2022, the due date in terms of section 144C(13) of the Act for framing the final assessment order by the ld AO does not get automatically extended. Hence, we have no hesitation to hold that the final assessment order ought to have been passed by the ld AO on or before 31.05.2022 in the instant case. Since, the same was done on 30.06.2022 which is barred by limitation. Accordingly, ground Nos. 2 and 3 raised by the assessee are allowed. Since, the entire final assessment is quashed as barred by limitation the adjudication of other grounds becomes academic in nature and they are left open.”

“37. Though we are conscious about the fact that the aforementioned decision of the Hon'ble Supreme Court (supra) is in the context of service of notice u/s 143(2) of the Act, but the ratio decidendi squarely applies on the present controversy which relates to dispatch and receipt of electronic

54
record as contemplated u/s 132 of the Information Technology Act, 2000, as discussed at Para 30 above.

It means that the decision in the case of Haier Appliances India Pvt.Ltd. (supra) is itself contradictory and different views are coming out of the same. Another argument of learned CIT-DR was that on similar violation of Section 144B of the Act, Hon'ble Supreme Court did not quash the entire proceedings in the case of Automotive Manufacturers (P) Ltd.(supra)and, after considering the faceless schemes, remitted the matter back to the Assessing Officer by observing that the Department ought to have been given some leverage because of the initial period of introduction of the faceless scheme by the Government. I noted and already distinguished this decision of Hon'ble Supreme Court on facts that before Hon'ble
Supreme Court, the issue was of violation of natural justice which is curable defect and with utmost respect I state that Hon'ble Supreme Court has rightly remitted the matter back to the Assessing Officer. But, in the present case before me, the issue is of limitation and consequent assumption of juri iction by the Assessing Officer for passing of the final assessment order which is barred by limitation.

56
i.e., FAO or JAO. Admittedly, the DRP entered the details manually as per records.
Hence, the Assessing Officer was not having the facility to view directions of DRP merely upon uploading of the same on ITBA portal on 1st April, 2022. A perusal of the ITBA technical team report reveals that DRP directions were visible to the Assessment Unit when it was manually entered into the system by DC/ACIT(NESE)2(1)(1), Delhi dated 13th April, 2022. It means that the DRP order/directions were available or is visible to the Assessment Unit on 13th April,
2022. It means that the receipt of DRP directions to the Assessment Unit was on 13th April, 2022. 18. Now, going back to the jurisprudence evolved on the communication through information technology tools which was made applicable from the year
2000 with introduction of Section 13 of the Information Technology Act read with Section 130 and 144B of the Act. This issue has been discussed by the Coordinate
Bench in assessee’s own case for assessment year 2018-19, which is reproduced above in Paragraph 15 above that a cohesive reading of provision of section 130
and 144B of the Act read with section 13 of the Information Technology Act,
2000, I am of the view that the moment document is uploaded by the originator
(which in the present case DRP) in ITBA portal that dispatch from the side of the DRP is complete and since the entire documents are uploaded through electronic mode, the same happens seamlessly and accordingly, the receipt of the said document also becomes instantaneously. Hence, on the date of receipt of DRP direction, the due date in terms of section 144C(13) would start reckoning from that date.

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19. In view of the above discussion, facts of the case and case laws discussed above, I am of the view that the final assessment order passed by the DCIT, Circle-
36(1), Delhi dated 30th June, 2022 is barred by limitation. I agree with the view of learned Judicial Member accordingly, and answer the question referred to me as under:-

Question framed by the Bench
Answer to the Question

Whether in facts and circumstances of the case, the final assessment order dated 30.06.2022 has been passed beyond the time line as mandated u/s. 144C(13) of the Act, hence, is without juri iction?
In the given facts and circumstances of the case and discussion carried above, the answer to this question is in the affirmative, as the assessment order passed is barred by limitation in terms of Section 144C(13) of the Act.

PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the assessment order dated
30.06.2022, passed u/s. 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961,
(hereinafter referred to as ‘the Act’) for assessment year 2017-18. After hearing the appeal, the Judicial Member allowed legal issue raised in ground no. 1 of the appeal and consequently upheld the order of CIT(A). The Accountant Member opined otherwise and wrote a separate order dismissing ground no. 1 in appeal of the assessee. On account of difference of opinion

58
between the Members constituting the Bench, a reference was made to the Hon’ble President ITAT u/s. 255(4) of the Act. The Hon’ble President vide order dated 17.02.2025 nominated Third Member to decide the reference. The ld. Third
Member vide order dated 28.08.2025 concurred with the view of Judicial
Member. Consequent to the opinion of Third Member, appeal of the assessee is allowed.
Order pronounced in the open court on Thur ay the 04th day of September, 2025. (BRAJESH KUMAR SINGH)
(VIKAS AWASTHY)
लेखाकार सद᭭य/ACCOUNTANT MEMBER
᭠याियक सद᭭य/JUDICIAL MEMBER
िदʟी / Delhi, ᳰदनांक/Dated 04/09/2025

NV/-
ᮧितिलिप अᮕेिषतCopy of the Order forwarded to :
1. अपीलाथᱮ/The Appellant ,
2. ᮧितवादी/ The Respondent.
3. The PCIT
4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी
5. गाडᭅ फाइल/Guard file.

59
BY ORDER,

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(Asstt.