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TMI Blog2024 (3) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 144C(5) of the Act. 2. The primary challenge advanced by the writ petitioner to the aforenoted assessment order is on the ground of it being contrary to the provisions contained in Section 144C(13) of the Act. The petitioner questions the jurisdiction assumed by the respondents in framing that order of assessment beyond the mandatory time frame as embodied in sub-section (13) of the aforenoted provision. The petitioner contends that once a direction is framed by the DRP, it is incumbent upon the AO to frame an order of assessment in conformity with those directions within one month from the end of the month in which such a direction is received. 3. According to the writ petitioner, the DRP framed its order dated 20 June 2022 in accordance with Section 144C(5) of the Act and which came to be uploaded on the official portal in terms of the E-assessment scheme, 2019 on 24 June 2022. According to learned counsel, the period of one month as contemplated in Section 144C(13) of the Act would thus have to be computed from 30 June 2022, being the last day of the month and which constitutes the starting point for computation of 30 days. Viewed in that light, learned counsel submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving been uploaded on the ITBA portal on 24 June 2022 is not disputed. What the respondents however contend is that the period of one month as prescribed in Section 144C(13) of the Act is liable to be computed from 25 July 2022 when the TPO passed an order giving effect to the directions framed by the DRP. It is their case that the period of one month when computed from that date, would place the assessment order dated 24 August 2022 within the period as prescribed under Section 144C(13) of the Act. 8. Assailing the aforesaid stand, Mr. Vasudevan, learned counsel for the petitioner, drew our attention to the provisions comprised in the E-as, 2019 and submitted that the moment the order of the DRP came to be uploaded, the jurisdictional AO and all other authorities would be deemed to have been duly served and made aware of the making of that order. It was submitted that the uploading of the directive on the ITBA portal was sufficient compliance with the requirements placed under the Act and the fact that the order of the TPO came to be communicated to the jurisdictional AO thereafter would be wholly irrelevant. In fact, learned counsel submitted that once the DRP had framed a direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March 25, 2021. In fact Mr. Singh, in fairness admitted the directions of the Dispute Resolution Panel were available on the Income-tax Business Application portal. The defense of the respondents, however, was that the direction of the Dispute Resolution Panel under section 144C(5) of the Act were noted in the Case History Notings of the Faceless Assessing Officer only on August 23, 2023, and hence, that is the day he should be deemed to have received it. On the court putting a question to Mr. Singh as to how and under what mechanism are the directions of the Dispute Resolution Panel noted in the Case History Notings of the Faceless Assessing Officer, Mr. Singh candidly stated that was entered by the Faceless Assessing Officer. The fact remains that the Dispute Resolution Panel directions were always visible and accessible to the Faceless Assessing Officer on the Income-tax Business Application portal. 17. Mr. Singh made all attempts to persuade us that despite the Income-tax Business Application portal displaying the Dispute Resolution Panel directions and the same being accessible to the Faceless Assessing Officer, it was only on August 23, 2023, that the same were received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 160 of 314 ITR (St.)) : "The subjects of transfer pricing audit and the taxation of foreign company are at nascent stage in India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view. The correction of such view takes very long time with the existing appellate structure. With a view to provide speedy disposal, it is proposed to amend the Income-tax Act so as to create an alternative dispute resolution mechanism within the Income-tax Department and accordingly, section 144C has been proposed to be inserted so as to provide inter alia the Dispute Resolution Panel as an alternative dispute resolution mechanism." 21. Thus, if the provisions of section 144C as mandated by the statute are not strictly adhered to the entire object of providing for an alternate redressal mechanism in the form of Dispute Resolution Panel stand defeated. That is not the intention of the Legislature when the provision was introduced in the Act. Section 144C(10) of the Act provide that the directions of Dispute Resolution Panel are binding on the Assessing Officer. By failing to pass any order in terms of the provision, the Assessing Officer cannot be permitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the TPO. 14. The determination which the AO makes in the first instance is recognized to be a draft of the proposed order of assessment by virtue of section 144C(1) of the Act. If the assessee be aggrieved by the proposed order of assessment, it is entitled to file objections before the DRP in accordance with Section 144C(2) of the Act. The power of the AO to complete the assessment on the basis of the draft order stands interdicted in case objections have come to be preferred within the 30 day period as contemplated in Section 144C(2) of the Act. It is the DRP which thereafter proceeds to decide the objections and frame directions to enable the AO to complete the assessment in accordance with Section 144C(5) of the Act. 15. In terms of sub-section (13) of Section 144C of the Act, the AO is mandated to complete the assessment ―in conformity with the directions‖ as framed by the DRP. That very provision commands the AO to complete the assessment within one month from the end of the month in which such a direction is received. 16. This is evident from Section 144C of the Act which is extracted hereinbelow:- "144-C. Reference to Dispute Resolution Panel.-(1) The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. [Explanation.-For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee.] (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of Section 92-CA; and (ii) any non-resident not being a company, or any foreign company.‖ 17. As is manifest from a reading of sub-section (13) of Section 144C of the Act, the AO is not accorded any discretion in the framing of an order of assessment once directions have come to be framed by the DRP. In fact, the provision requires the AO 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 paragraphs of Vodafone Idea and in Shell India Markets Private Limited v. Additional Commissioner of Income Tax Officer, National Faceless Assessment Centre & Ors Judgment dated 14 February 2022 in WP No. 3298/2021. The relevant paragraph of the decision in Shell India are extracted hereinbelow: "10. Sub-section (13) of Section 144C, 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 23. The writ petition is allowed. The order of assessment dated 24 August 2022 as well as the penalty show cause notice dated 24 August 2022 are quashed and set aside. For r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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