(PER: HON'BLE MR. JUSTICE S.G.PANDIT)
under Section 144C of the IT Act as null and void.
2. The appeal coming on for admission on 15.11.2017,
"1. Whether on the facts and circumstances of
the case, the Tribunal is justified in law
upholding the validity of final assessment
order passed by the Assessing Officer beyond
the time limit prescribed under Section
144C(13)?
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2. Whether on the facts and circumstances of
the case, the Tribunal is justified in law in
failing to follow the decisions of co-ordinate
bench?"
3. Heard learned senior counsel Sri.K.K.Chaitanya for
Sri.Tata Krishna, learned counsel for the appellant and
Sri.Y.V.Raviraj, learned counsel for the respondent-
Revenue. Perused the entire appeal papers.
4. The brief facts of the case are that, the appellant, a
Partnership Firm filed its returns for the assessment year
2011-12 on 30.09.2011. The same was processed under
Section 143(1) of the IT Act and notice under Section
143(2) of the IT Act was issued calling upon certain
details/information from the appellant. Thereafter, the
case of the appellant was referred to Transfer Pricing
Officer under Section 92CA of IT Act and the Transfer
Pricing Officer passed order under Section 92CA on
30.01.2015. Thereafter, the respondent passed draft
assessment order under Section 144C read with Section
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143(2) of IT Act on 27.03.2015 for the relevant
assessment year. Aggrieved by the said draft assessment
order, the appellant is said to have filed an appeal before
the Dispute Resolution Panel, Bangalore (for short "DRP")
in Form No.35A. The DRP, after hearing the parties
passed an order on 17.12.2015 under Section 144C(5) of
the IT Act and communicated the same to the respondent
on 29.12.2015. Subsequently, final assessment order was
passed on 18.02.2016 under Section 143(3) of the Act.
Against which, the appellant filed an appeal before the
Tribunal. The Tribunal, under impugned order dated
21.06.2017 dismissed the appeal of the appellant.
5. Learned senior counsel Sri.Chythanya for appellant
would contend that the final assessment order dated
18.02.2016 is contrary to Section 144C(13) of the IT Act.
He invites attention of this Court to the above said
provision and submits that the final assessment order
ought to have been passed within one month from the end
of the month in which communication of order under
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Section 144C(5) of the IT Act was received. In that, he
submits that DRP passed order on 17.12.2015 and the
same was communicated on 29.12.2015. Learned counsel
submits that the Assessing Authority ought to have passed
final assessment order on or before 31.01.2016, whereas
the final assessment order is passed on 18.02.2016, as
such there is delay of 18 days in passing the final
assessment order, which is contrary to Section 144C(13)
of the IT Act.
6. Learned senior counsel taking us through the
impugned order of the Tribunal submitted that the
Tribunal erroneously placed reliance on the decision of the
Andhra Pradesh High Court in the case of RAIN CEMENTS
LIMITED v/s DEPUTY CIT (392 ITR 253) to come to a
conclusion that the proceedings cannot be declared as null
and void simply because the Assessing Officer passed
assessment order beyond the period prescribed therein.
He submits that the above decision came to be passed on
a different context and the same would not apply to the
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facts of the present case. In support of his contention,
learned senior counsel places reliance on the decision of
the High Court of Delhi reported in (2024) 159
taxmann.com 244 (Delhi) in LOUIS DREYFUS
COMPANY INDIA (P). LTD., v/s DEPUTY
COMISSIONER OF INCOME-TAX and a decision of the
High Court of Telangana in W.P.Nos.44891-44915/2022
disposed of on 09.01.2025 RAPISCAN SYSTEMS PVT.
LIMITED, REP. BY AUTHORISED REPRESENTATIVE
V/S ADIT (INT.TAX)-2 AYAKAR BHAWAN, OPP: L.B.
STADIUM, BASHEER BAGH, HYDERABAD & OTHERS.
7. Learned senior counsel would further contend that in
terms of Section 144C(13) of the IT Act, if the Assessing
Officer fails to pass order within the time prescribed
therein, the proceedings would lapse. Thus, he prays for
allowing the appeal.
8. Per contra, learned counsel Sri.Y.V.Raviraj for
Revenue would support the order passed by the Tribunal
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impugned herein and further submits that in the facts and
circumstances of the case, the Tribunal is justified in
placing reliance on the decision of the Telangana High
Court in RAIN CEMENTS LIMITED (supra). Thus, he
prays for dismissal of the appeal.
9. The facts are not in dispute. The appellant/assessee
filed returns for the year 2011-12 on 30.09.2011, within
the time prescribed. On process of the returns, notice
under Section 143(2) of the IT Act was issued to the
appellant calling for certain information. Thereafter, the
case of the appellant was referred to the Transfer Pricing
Officer under Section 92CA of the IT Act. The Transfer
Pricing Officer passed order under Section 92CA of IT Act
on 30.01.2015 for the assessment year 2011-12.
Subsequently, the respondent-Revenue passed draft
assessment order under Section 144C read with Section
143(2) of the IT Act on 27.03.2015. Against the said draft
assessment order, appellant filed objections/appeal before
the DRP and the DRP after hearing, passed order on
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17.12.2015 under Section 144C(5) of the IT Act. The said
order passed by the DRP was communicated to the
Assessing Officer on 29.12.2015. On receipt of the
order/direction of the DRP, the Assessing Officer is
required to pass order in terms of Sub-section (13) of
Section 144C of the IT Act. Section 144C(13) of the IT Act
reads as follows:
"144C. (13) Upon receipt of the
directions 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, 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."
10. In terms of the above provision, the Assessing Officer
shall complete 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 the instant case, the Assessing
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Officer received the direction from the DRP passed under
Sub-Section (5) of Section 144C of the IT Act on
29.12.2015 and the Assessing Officer was required to pass
assessment order within one month from the end of
December 2015 i.e., the Assessing Officer ought to have
passed assessment order on or before 31.01.2016.
However, the Assessing Officer passed assessment order
only on 18.02.2016, beyond the prescribed time under
Sub-Section (13) of Section 144C of the IT Act. Under
Sub-Section (13) of Section 144C of the IT Act, the
Assessing Officer is mandated to pass order within the
time prescribed thereunder and no discretion is vested
with the Assessing Officer. Under Sub-Section (13) of
Section 144C of the IT Act, the Assessing Officer on
receipt of direction under Sub-Section (5) from DRP,
mandated to complete the assessment within one month
from the end of the month in which such direction is
received. In other words, immediately on receipt of
direction from the DRP under Sub-Section(5), the
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Assessing Officer shall complete the assessment within the
timeline. The timeline prescribed under Sub-Section 144C
are to be construed as mandatory.
11. The High Court of Delhi in the case of LOUIS
DREYFUS COMPANY INDIA (P) LTD., (supra) was
considering an identical factual situation and at paragraphs
17, 18, 19 and 20, held as follows:
"17. As is manifest from a reading of sub-
section (13) of Section 144-C of the Act, the
assessing officer is not accorded any discretion in
the framing of an order of assessment once
directions have come to be framed by the Dispute
Resolution Panel. In fact, the provision requires the
assessing officer to frame an order of assessment in
conformity with those directions and without
providing any further opportunity of hearing to the
assessee. This principle of law has been affirmed by
the Bombay High Court in the aforenoted paras
of Vodafone Idea Ltd. case [Vodafone Idea
Ltd. v. Central Processing Centre, (2023) 459 ITR
413 : 2023 SCC OnLine Bom 2464] and in Shell
India Markets (P) Ltd. v. CIT [Shell India Markets
(P) Ltd. v. CIT, (2022) 443 ITR 366 : 2022 SCC
OnLine Bom 379] judgment dated 14-2-2022 in WP
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No. 3298 of 2021. The relevant para of the decision
in Shell India Markets (P) Ltd. case [Shell India
Markets (P) Ltd. v. CIT, (2022) 443 ITR 366 : 2022
SCC OnLine Bom 379] are extracted hereinbelow:
"10. Sub-section (13) of Section 144-C,
therefore, is very clear inasmuch as the
assessing officer shall, upon receipt of the
directions issued under sub-section (5), in
conformity with the directions, complete the
assessment within one month from the end of
the month in which such direction is received.
Sub-section (13) also provides that the
assessing officer can complete the assessment
without providing any further opportunity of
being heard to the assessee. This means that
the moment the assessing officer receives the
directions under sub-section (5), he has to
straightaway complete the assessment, and he
does not even have to hear the assessee. The
assessing officer shall simply comply with the
directions received from the Dispute Resolution
Panel within one month from the end of the
month in which such direction is received."
18. In this backdrop, we note that both the
judgments of the Bombay High Court in Shell India
Markets (P) Ltd. case [Shell India Markets (P)
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Ltd. v. CIT, (2022) 443 ITR 366 : 2022 SCC OnLine
Bom 379] and Vodafone Idea Ltd. case [Vodafone
Idea Ltd. v. Central Processing Centre, (2023) 459
ITR 413 : 2023 SCC OnLine Bom 2464] construe
the timelines as provided in Section 144-C to be
mandatory in character. In our considered opinion,
this interpretation is in accord with the intent
behind insertion of that provision and the bare text
and spirit of that section. Thus, we accord our
approval to the interpretation as set out in the
aforenoted decisions of the Bombay High Court.
19. Further, the procedure of assessment as
provided under Section 144-C does not envisage or
contemplate the interdiction or involvement of the
transfer pricing officer once a directive has been
framed by the Dispute Resolution Panel. The role of
the transfer pricing officer comes to an end once an
order as contemplated under Section 92-CA(4) of
the Act has come to be framed and remitted to the
assessing officer. There was thus no occasion for
the transfer pricing officer having resumed
proceedings post the passing of the direction by the
Dispute Resolution Panel on 20-6-2022.
20. Undisputedly, the directive of the Dispute
Resolution Panel came to be uploaded on the
Income Tax Business Application portal on 24-6-
2022. It is additionally stated to have been
dispatched through speed post to the third
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respondent (TPO) and the fourth respondent
(Additional/Joint/Deputy/Assistant Commissioner of
Income Tax, National Faceless Assessment Centre,
New Delhi) on 27-6-2022. It is thereafter that the
transfer pricing officer appears to have passed the
order dated 25 July 2022."
12. In RAPISCAN SYSTEMS PVT. LIMITED (supra),
the Division Bench of Telangana High Court while
considering Section 144C of the IT Act at paragraph 32
and 33 has observed as follows:
"32. In view of the forgoing discussion, there
is no cavil of doubt that the Assessing Officer
received the Dispute Resolution Panel's directions
on June 30, 2022 and, therefore, the limitation
must be counted from that date and not from July
5, 2022. The impugned assessment orders dated
August 30, 2022 and September 1, 2022 that were
issued counting the limitation from July 5, 2022 in
both the writ petitions are liable to be set aside as
the same are issued beyond permissible period of
limitation.
33. In the result, both the writ petitions are
allowed by setting aside the impugned assessment
orders dated August 30, 2022 and September 1,
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2022. There shall be no order as to costs.
Miscellaneous applications, if any, shall stand
closed."
13. The reason of the Tribunal while passing the
impugned order placing reliance on the RAIN CEMENTS
LIMITED is misplaced, as the said decision though arises
from Section 144C of the IT Act, it was under a different
context or different fact situation; in the said case, no
direction under Sub-Section (5) of Section 144C of the IT
Act was passed within the time prescribed therein. In the
said circumstances, the said decision would have no
application to the facts of the present case, as in the
present case upon the direction issued by DRP, the order
should have been passed within the time prescribed.
under Section 144C(13) of the I.T. Act.
14. For the reasons stated above, the following:
ORDER
i) Appeal is allowed.
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ii) The impugned order bearing
IT(TP)A.No.807/Bang/2016, dated
21.06.2017 (Annexure-A) passed by the
Income Tax Appellate Tribunal, Bengaluru
'B' Bench is set aside.
iii) Accordingly, the Substantial Question of
Law No.1 is answered in favour of the
appellant/assessee and against the
respondent/revenue.
iv) In view of answering Substantial Question
of Law No.1 in favour of the
appellant/assessee, Substantial Question
of Law No.2 would no more survive for
consideration.
Sd/-
(S.G.PANDIT)
JUDGE
Sd/-
(T.M.NADAF)
JUDGE
MPK/NC
CT:bms
