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TMI Blog2025 (5) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds and rest of the additional grounds would become academic. The ld AR also submitted that to adjudicate the additional grounds no new facts need to be examined and the issue involved is purely legal. The effective additional grounds raised by the assessee reads as under: "13. erred in not passing the final assessment order within one month from the end of the month in which the DRP Directions were received as per the Section 144C(13) of the Act and thereby the order passed by the Ld. AO is time barred and liable to be quashed. 14. without prejudice to the ground no.21, erred in not appreciating the fact that the DRP directions are issued beyond time limit provided under Section 144C of the Act and thus, the DRP proceedings are time barred and bad in law thereby resulting subsequent assessment proceedings should also be bad in law." 3. The brief facts in this case is that the assessee is a company incorporated in India and tax resident of USA and is engaged in the business of Credit Information Services in multiple jurisdictions across the Globe. The assessee acts as the Investment Holding Company for the group and holding investments all across the Globe. During the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legal issue, which does not require investigation of new facts. Hence, placing reliance on the judgment of the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC), we admit these additional grounds for adjudication first. 5. The ld. AR at the outset submitted that the final assessment order dated 24.08.2022 is barred by limitation in this regard, the ld. AR drew our attention to the order of DRP which is dated 30.06.2022 and is digitally signed at 9.43 p.m on 30.06.2022. The ld. AR submitted that as per the provisions of section 144C(13) of the Act. The AO is required to pass the final assessment order within one month from the end of the month in which the DRP order is received. The ld. AR further submitted that since the order of the DRP is digitally signed on 30.06.2022 and that the DIN is generated on the same date, it is received by the AO on 30.06.2022 and accordingly the final order of assessment should have been passed by 31.07.2022. The ld. AR therefore argued that the final assessment order dated 24.08.2022 is passed beyond the time limit specified under section 144C(13) of the Act and accordingly is invalid. The ld. AR in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y through email on 01.07.2022 then the directions of the DRP is beyond the time limit of 9 months from the end of the month in which the draft assessment order was issued as per the provisions of section 144C(12). The ld. AR further argued that the draft assessment order in assessee's case was passed on 29.09.2021 and therefore, the DRP order should have been issued by 30.06.2022 and that if the same is issued as claimed by the Revenue on 01.07.2022 then the same would be barred by limitation. The ld. AR also relied on the various judicial pronouncements in this regard. 9. The ld. Departmental Representative (DR) on the other hand submitted that the judicial pronouncements relied on by the ld. AR are factually distinguishable for the reason that the time gap between the date of the DRP directions and the date of final order was wider in those cases whereas in assessee's case, the DRP directions were dated 30.06.2022 which was sent by email to the AO on 01.07.2022. Accordingly, the ld. DR argued that the final assessment order dated 24.08.2022 is well within the time limit as prescribed under section 144C(13) of the Act. The ld. DR also submitted that in the case laws relied on by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of manually entering the details of the Section 144C order in the screen, the DRP order does not reflect automatically in the case history notings (CHN) of the assessment proceedings. However, the Hon'ble High Court rejected the said contentions by holding that - "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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. 37. The fact that the FAO has merely chosen to await intimation when the order had admittedly been upl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner responded by filing relevant documents/evidence in support of objections raised by it. Finally the DRP issued directions dated 25th March 2021 under section 144C(5) of the Act. The directions of DRP were uploaded on the Income-tax Business Application ("ITBA") portal on the same date and the said directions were served on Petitioner vide e-mail dated 6th April 2021. The grievance of Petitioner essentially is that the AO failed to pass the final order in terms of the directions of DRP within 30 days, the period of limitation prescribed by Section 144C(13) of the Act and consequently prays that the ROI as filed originally has to be accepted and excess tax paid be refunded with interest. 6. After the petition was filed on 8th June 2023, the AO passed the assessment order dated 31st August 2023. The same has been placed on record as an additional document. 7. Mr. Mistri for Petitioner raised various grounds to justify seeking a refund from the department. He emphasized the admitted fact that despite the DRP issuing directions on 25th March 2021, no order was passed by the AO within the period prescribed by law. When no order is passed pursuant to the directions of DRP within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Assessment Mechanism under the scheme known as the e-Assessment Scheme ("eAS"), 2019 as notified by the Ministry of Finance (Department of Revenue) on 12th September 2019. The salient features of the scheme include defining the scope of scheme, jurisdiction of e-Assessment Centre, procedure for assessment, penalty proceedings for non-compliance amongst other features. The Central Government amended the FAS of 2019 and the first amendment came into effect on 17th February 2021. Paragraph 5(1) of the original scheme was substituted by the amendment. The amended paragraph 5(1) reads thus : "In the said Scheme, for sub-paragraph (1) of paragraph 5, the following sub- paragraph shall be substituted, namely,- (1) The assessment under this Scheme shall be made as per the following procedure, namely:- (i) the National e-Assessment Centre shall serve a notice on the assessee under sub-section (2) of section 143 of the Act; (ii) the assessee may, within fifteen days from the date of receipt of notice referred to in clause (i), file his response to the National e-Assessment Centre. (iii) ****** (xxviii) the National e-Assessment Centre shall, - (a) upon receipt of acceptance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the scheme shall be through the National e-Assessment Centre." Thus, any notice, summons, order is deemed to have been received by the FAO once it is available to the NeAC. 12. On 1st August 2023, when the matter was listed before this Court, a statement was made by Mr. Singh that because of the commencement of the Faceless Assessment Regime, the directions given by DRP were not received by the FAO and therefore, the FAO did not pass order under section 144C(13) of the Act and DRP had forwarded the order to the Jurisdictional Assessing Officer ("JAO"). Per contra, Mr. Mistri showed us an e-mail dated 6th April 2021 addressed to Petitioner by "ITO HQ TO DRP2 WZ" forwarding a copy of the directions issued by the DRP. The said directions of DRP also form part of the attachment to the e- mail. This email being brought to our notice, we passed the following order/directions dated 1st August 2023 : "1. Mr. Singh states that because of the Faceless Assessment Regime being started, the directions given by DRP was not received by the Faceless Assessing Officer and, therefore, the Faceless Assessing Officer did not pass order under section 144C(13) of the Income-tax Act, 1961. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax (International Taxation and Transfer Pricing) West Zone, Mumbai and another by Ms. Anne Varghese, JCIT, Ratlam on 10th August 2023. The relevant portion of the affidavit of Mr. Satish Sharma reads thus : "4. I respectfully say that I have called the factual position and the relevant records from the DRP and perused them in connection with the directions of the Hon'ble Bombay High Court in the aforesaid order dated 1-8-2023 and accordingly, based on the record, I am conversant with the facts of the issue and I am able to depose the same. I respectfully say that I am filing this affidavit on the direction of the Hon'ble Bombay High Court in the aforesaid order for the limited purpose of explaining as to why, when the Faceless Assessment Regime had already kicked in, DRP's directions were sent to the Jurisdictional Assessing Officer (hereafter JAO) instead of the Faceless Assessing Officer (hereafter FAO). 5. That the DRP passed directions (with DIN) on 25-3-2021 in the name of Vodafone Mobile Services Pvt. Ltd. (VMSL) (predecessor of Vodafone Idea Ltd.-VIL) by uploading the same on the Income-tax Business Application System. A copy of the ITBA system gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay that the documents which are visible under the "View Download - Order/Letter/Notices Tab" Functionality of the Income-tax Business Application (I.T.B.A.) are also available to other officers (AO of Faceless Assessment Unit (F.A.U.) in this case) having jurisdiction over the PAN. 6. I respectfully say that Document Identification Number (D.I.N.) had been duly generated for the directions of the D.R.P. which is visible on the first page of the hard copy of the D.R.P. directions received by the undersigned which clearly indicated that the directions by D.R.P. were passed digitally on the Income-tax Business Application (I.T.B.A.). 7. I respectfully state that it was under these circumstances that the undersigned was not required to forward the directions of D.R.P. to the concerned Faceless Assessing Officer." (Emphasis Supplied) 15. Annexed to the affidavit of Mr. Satish Sharma is a screenshot of the CHN-Case History Notings of DRP proceedings uploaded on the ITBA portal. The screenshot is of the page as it appears on the ITBA portal. A perusal of the screenshot of CHN of DRP read with the affidavit filed by Mr. Satish Sharma, the CCIT and Ms. Anne Varghese, the JCIT, clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and take into account the purpose of the Statute. It is settled law that a provision should be interpreted in its literal sense and given its natural effect. This is the elementary golden rule of interpretation of Statutes. Since there is no ambiguity pertaining to the phrase 'upon receipt of the directions issued under Sub-section 5 of 144C of the Act, the AO shall .....' there is no requirement of delving in a further in-depth analysis of the clear provision. 18. Another important aspect is that the FAO himself has not filed any affidavit to affirm the date on which he purportedly 'received' the directions of DRP. But in the affidavit of Mr. Janbandhu, it is explained that the contents of his affidavit are the inputs from the PCIT (AU) and CCIT (IT & TP) along with all the relevant records available in the office in connection with the issue as also the comments of FAO invited by him through the National Faceless Assessment Centre. He says that the procedure of handling writ litigation regarding proceedings by FAO are contained in the SOP dated 1st August 2022 issued by CBDT which have been followed in dealing with the present proceedings. Since said Mr. Janband ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h March 2021 appear only on 23rd August 2023. No explanation on behalf of the department is forthcoming. We have to draw adverse inference. 20. Section 144C of the Act is a self contained provision which carves out a separate class of assessees, i.e., 'eligible assessee'. Section 144C of the Act was inserted in the Finance Act of 2009 and came into effect from 1st October 2009. In the notes on clauses to the Finance Bill, 2009 (Budget 2009-2010), the reason for insertion of Section 144C is given as under : "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 take 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 DRP within one month from the end of the month in which such directions is received." 24. In view of the aforesaid discussion, we have no hesitation in holding that the assessment order dated 31st August 2023 passed by FAO two years after the DRP directions, is time barred and cannot be sustained. Consequently, the ROI as filed has to be accepted. Petitioner is entitled to receive the refund together with interest, in accordance with law. The procedure to be completed within 30 days of this order being unloaded. This would, however, not preclude revenue, should the need arise, from reopening the assessment by following due process and in accordance with law." 14. From the above findings of the Hon'ble High Court, the fact that the once the DRP directions are digitally signed it is automatically available to the JAO and this fact has been admitted by the revenue in the affidavits filed by the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 (21 of 2000); or" "Section 13: Time and place of despatch and receipt of electronic record.:- (1) Save as otherwise agreed to between the originator and the addressee, the despatch 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,-(i)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 resource of the addressee." (Emphasis Supplied) 14. The E-Assessment Scheme, 2019 placed reliance on Section 13 of the I.T. Act for the purpose of delivery of electronic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 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 DRP within one month from the end of the month in which such direction is received.' 20. Undisputedly, the directive of the DRP came to be uploaded on the ITBA portal on 24 June 2022. It is additionally stated to have been dispatched through Speed Post to the third respondent (TPO) and the fourth respondent (Additional/Joint/Deputy/Assistant Commissioner of Income Tax, National Faceless Assessment Centre, New Delhi) on 27 June 2022. It is thereafter that the TPO appears to have passed the order dated 25 July 2022. 21. We, however note that paragraph 4(2) of the E-as, 2019 makes the following salient provisions:- '4(2). All communication among the assessment unit, review unit, verification unit or technical unit or with the assesse or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making an assessment under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Dispute Resolution Panel directions uploaded on the Income-tax Business Application portal were readily and clearly visible and accessible to the Faceless Assessing Officer of the assessee. 16. .. 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 the Faceless Assessing Officer. We cannot accept this because, the E-assessment Scheme itself provides that all communication is deemed to have been received by the assessment units concerned once received through the National e-Assessment Centre. Thus, once the e- assessment Centre is in receipt of the Dispute Resolution Panel directions, the period of limitation runs from that day. There is no requirement of a deep dive in an analysis of the phrase "upon receipt of directions" as it appears in section 144C(13) of the Act. The fundamental principle of interpretation is to assign words their natural, original and precise meaning, provided that the words are clear and take into account the purpose of the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplete the assessment within one month from the end of the month in which such a direction is issued. Interestingly, the Bombay High Court considered paragraph No.4(2) of Scheme of 2019 which makes it clear that all communications among the assessment unit, review unit, verification unit or technical unit or with the assessee or with any other person shall be through the national e-assessment centre. The use of words 'any other person' makes it very wide and shows the intention of the scheme makers that they intended to bring within its fold all nature of communications which shall be made through national e-assessment centre. 19. The Delhi High Court in Louis Dreyfus Company India Private Limited (supra) further held that it is obligatory under the scheme to necessarily upload the communication on the ITBA portal. Upon uploading the information on the portal, the period of limitation as prescribed under Section 144C(13) of the Income Tax Act would be liable to be computed bearing that crucial date in mind. 20. Importantly, the Bombay High Court in Vodafone Idea Ltd. (supra) poignantly held that as per the said scheme once e- assessment centre is in receipt of DRP direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s used in Section 144C(13) are 'upon receipt of directions issued under Sub-Section (5)' 24. Although, Delhi, Bombay and Madras High Courts have already taken a view and we respectfully agree with that once such directions of DRP are uploaded on the portal, the DRP lost control over it and date on which it entered the portal, the recipient i.e, the assessing officer comes to know about it. 25. To elaborate, it is profitable to refer to Section 13(1) of the I.T. Act. This Sub- Section deals with 'despatch of electronic record' and envisages that 'despatch' of an electronic record is when it enters the computer resource outside the control of originator. Indisputedly, in this case, the 'originator' is the DRP. Sub-Section (za) of Section 2 of the I.T. Act defines the word 'originator' and reads thus: "Section 2: Definitions (za) ―originator means a person who sends, generates, stores or transmits any electronic message or causes any electronic message to be sent, generated, stored or transmitted to any other person but does not include an intermediary;" (Emphasis Supplied) 26. Once 'originator' enters a computer resource ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t." (Emphasis Supplied) 31. The Income Tax Department through communication dated 30.06.2022 (Annexure P-19) informed that the order under Section 144C(5) dated 30.06.2022 is having Document No.(DIN) ITBA/DRP/M/144C(5)/2022-23/1043689612(1). This is a system generated document and it does not require any signature. A conjoint reading of communications dated 30.01.2024 and 05.03.2024 (Annexure P-18) and communication dated 30.06.2022 (Annexure P-19) leaves no room for any doubt that DRP's directions were despatched on 30.06.2022 and also uploaded on the portal on the same date. Thus, the DRP/originator had lost control over it on the date and time the said directions were uploaded on the portal. Hence, same must be treated to be a 'receipt' by the recipient i.e., the assessing officer on the same day i.e., 30.06.2022. (See paragraph No.26.7 of Suman Jeet Agarwal v. Income-tax Officer, where the Delhi High Court poignantly held that the portal of the department is the 'computer resource in the control of the department'). 32. In view of forgoing discussion, there is no cavil of doubt that assessing officer received the DRP's directions on 30.06.2022 and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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