Income Tax Appellate Tribunal - Ahmedabad
Astra Specialty Compounds India ... vs The Dy.Cit, Circle-1(1)(1), Ahmedabad on 18 August, 2023
आयकर अपीलीय अधिकरण, अहमदाबाद नयायपीी IN THE INCOME TAX APPELLATE TRIBUNAL, '' D'' BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER आयकर अपील सं./ITA(TP) No. 357/AHD/2022 धििाधरण वरध/Asstt. Year: 2018-19 Astra Specialty Compounds India D.C.I.T, Pvt. Ltd., Vs. Circle-1(1)(1), Plot No.Z56-Z58 & Z67, Ahmedabad.
Dahej SEZ Part-I, Taluka-Vagra, Bharuch.
PAN: AALCA2559G
(Applicant) (Respondent)
Assessee by : Shri S.N Soparkar, Sr. Advocate with
Shri Parin Shah, A.R
Revenue by : Dr. Darsi Suman Ratnam, CIT. D.R
सुिवाई की तारीख/Date of Hearing : 18/07/2023
घोरणा की तारीख /Date of Pronouncement: 18/08/2023
आदेश/O R D E R
PER WASEEM AHMED ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), Ahmedabad, (in short "Ld. CIT(A)") arising in the matter of assessment order passed under s. 143(3) r.w.s. 144C(13) of the Income Tax Act 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2018-19.
ITA no(TP).357/AHD/2022 Asstt. Year 2018-19 2
2. The assessee has challenged the validity of the draft order framed under section 143(3) read with section 144C of the Act on account of barred by limitation of time.
3. The necessary facts are that the assessee, in the present case a private limited company, is engaged in the business of manufacturing of master-batch and additive systems and other allied items. In the present case, the draft order was framed by the AO under the provisions of section 143(3) read with section 144C of the Act vide order dated 29 September 2021 which was received by the assessee on the same date i.e. 29 September 2021. The assessee on receipt of such draft order was at liberty under the provisions of subsection (2) of section 144C of the Act either to accept the variation proposed in the draft order or raise objection if aggrieved with the dispute resolution panel and the assessing officer. Such an acceptance/ objection was to be filed by the assessee within 30 days from receipt of the draft order by him.
4. In the event the assessee accepts the variation or raises no objection within the specified period as discussed above, the AO shall complete the assessment order based on the draft order as provided under subsection (3) of section 144C of the Act. As such the AO shall frame the assessment order within one month from the end of the month in which the acceptance is received by the AO or the period of filing of objections under subsection (2) expires as mandated under subsection (4) of section 144C of the Act.
5. Admittedly, in the present case the assessee has raised the objection before the DRP dated vide letter dated 12 November 2021 whereas the time limit specified under subsection 2 of section 144C of the Act for filing the objection expired as on 29 October 2021. Admittedly, the objection was filed by the assessee belatedly. This fact is also evident from the finding of the learned DRP which is reproduced here under:
ITA no(TP).357/AHD/2022 Asstt. Year 2018-19 3 5.2.1 We have carefully considered the objection being raised by the assessee. This is a jurisdictional ground which goes to the root of the entire dispute. The objection concerns, as per assessee, passing of an invalid draft assessment order dated 29/09/21 by the AO.
According to the assessee, the draft assessment order is invalid and deserves to be cancelled or quashed on the grounds that the assessee company got the draft assessment order u/s 144C dated 29/09/21, from Income Tax Portal while doing some other work on the IT portal. The assessee company did not receive the mail, nor the hard copy for SCN and the draft assessment order u/s 144C. The assessee wants the panel to decide this objection on merits and requests for cancelling the draft assessment order for the reasons mentioned above.
5.2.2 Facts in very brief are that the AO passed the draft assessment order or DAO on 29/9/21. The assessee had to file objections within one month of the same. However, the assessee filed the objection (dated 8- 11-21) on 12-11-21. Therefore, the objection filed is late by around 13 days or so. However, the assessee interestingly has not filed any condonation for delay before the DRP. Rather, it has filed objection no 1 which says that due to the facts as mentioned above, the DAO is bad in law and deserves to be cancelled. When this fact of not requesting for condonation of delay, was brought up during the course of hearing, the factum of taking objection for cancelling the DAO was only repeated. It is found that later on, the assessee has indeed filed one compilation of written submissions dated 10-06-22 as received on 13-06-22. In this compilation, there is an index at the beginning whose paragraph 1 is headed as "Condonation of delay". However, in the entire text of paragraph, same facts have been repeated and there again is no request for condonation of delay or the grounds of delay. So, it can be concluded that there is no request from the assessee for condonation of delay. The assessee wants the Panel to adjudicate the objection no 1 on merits, that is to say, whether the assessment order deserves to be cancelled or not, as per the reasons given by the assessee.
5.2.3 We have given careful considerations to the facts as mentioned by the assessee on this objection. The admitted facts are that the DAO was indeed passed on 27-09-21 and was available on the IT departmental portal. The assessee claims that the DAO was sent on an incorrect mail id, namely, rovinder [email protected]. The correct mail id was [email protected]. That, the assessee had submitted a letter to this effect to the department that the second mail rather than the first one was to be used.
5.2.4 Moving forward, another set of admitted facts are that the assessee did come to know about the DAO on 11-10-21 from the IT portal while doing some other work. So, even though it was a chance discovery but there was still time left for it to file objections before the DRP within the time-limit. However, it did not do so. Rather, it chose to file a detailed reply on 23-10-21 for revision in the DAO as, according to the assessee, there were many apparent mistakes. The assessee also informed the AO that if no reply is received within 7 days, they shall file objections before the DRP, No reply was received. However, there were Diwali holidays, Sundays etc due to which the matter got delayed further and the objections were filed finally on 12-11-21.
5.2.5 Now, even going by what is stated by the assessee, it seems that there was enough time left for it to file objections before the DRP within the time limit, even when the DAO was not received in the new mail id but was accidentally discovered while on a visit to the IT portal. However, strangely, the assessee instead of not loosing any time more, chose to file a letter before the AO. Now, even if any assessee chooses to file any rectification application before the AO, the limitation to file objections remains as it is and does not get extended. Further, giving a time of 7 days to the AO for rectifying the mistakes, is also ITA no(TP).357/AHD/2022 Asstt. Year 2018-19 4 artificial, as the AO is within his rights to dispose off the application within the limitation prescribed under the Act.
5.2.5 Now, the assessee wants the Panel to cancel the DAO because of these so-called reasons. Frankly speaking, we are not impressed with the assessee' arguments. These are not sufficient and good grounds to cancel or quash the DAO. Whatever inconvenience the assessee might have encountered due to change in email id, there was still sufficient time for it to file the objections within the time limit. It chose not to do so. Also. we do not consider it correct to cancel the order on the basis of some confusion on account of e-mail id. The assessee is well aware of the scheme of Income Tax Act in India and time-barring nature of majority of actions under the Act. As such, it is not difficult to expect the assessment order by a certain date or so and therefore, apart from the AO, it is equally the responsibility of the assessee to check with the IT portal frequently to know the outcome of the scrutiny proceedings going on.
5.2.6 We have given careful considerations to all the facts and circumstances of the case. We are of the considered opinion that the filing of objections is delayed. But, what is surprising to note that the assessee still does not think that its objections are delayed and that, they require due condonation of the same. Accordingly, the assessee has not applied for any condonation of delay. Consequently, the objections filed can only be treated as non-est. Accordingly, the objection no 1 is not accepted and is therefore, rejected. Since the objections filed are being treated as non-est, there is no requirement to issue directions on the merits of the case in respect of the rest of the grounds taken by the assessee. As such, the entire objections of the assessee are treated technically as dismissed.
6. In the light of the above discussion, we have to see whether the assessment order has been framed by the Revenue within the time provided under the provisions of law. There is no ambiguity to the fact that the time limit for filing the objection expired on 29 October 2021 and therefore the time limit available with the assessing officer to frame the assessment under 143(3) of the Act read with section 144C of the Act is up to 30 November 2021 i.e. within one month from the of the month in which the period of filing of objection under subsection (2) of 144C of the Act expires. Nevertheless, the assessment has been framed by the AO under the provisions of section 143(3) read with section 144C of the Act dated 18 July 2022.
7. At the time of hearing, the learned AR before us contended that the assessment framed by the AO under the provisions of section 143(3) read with section 144C of the Act vide order dated 18 July 2022 is barred by time and therefore the same is liable to be quashed. The learned AR in support of his contention relied on various case laws of the Tribunal as reproduced below:
ITA no(TP).357/AHD/2022 Asstt. Year 2018-19 5
1. Planet Online (P.) Ltd. Vs. ACIT [2016] 65 taxmann.com 46 (Hyderabad-Trib.)
2. Aalaya Jewel Industry (P.) Ltd. Vs. ACIT [2018] 93 taxmann.com 23 (Chennai - Trib.)
3. TDK Electronics AG Vs. ACIT (International taxation) [2020] 116 taxmann.com 986 (Pune- Trib.)
4. Yokogawa India India Ltd. Vs. ACIT
5. Astro Offshore Pte. Ltd. Vs. DCIT (International taxation) [2022] 134 taxmann.com 99 (Delhi-Trib.)
8. On the contrary, the learned DR contended that the delay in passing the order should be condoned. The ld. DR vehemently supported the order of the lower authorities.
9. We have heard the rival contentions of both the parties and perused the materials available on record. There is no dispute with the fact that the assessment order under section 143(3) read with section 144C of the Act has been framed beyond the time provided under the statute. The assessment order has been framed under the provisions of section 143(3) read with section 144C of the Act dated 18 July 2022 whereas the last date for the assessment in the year in dispute lapses 30-11-2021 as per the provisions of sub-section (4) to section 144C of the Act. The relevant extract of sub-section (4) to section 144C of the Act is extracted as under:
(4) The Assessing Officer shall, notwithstanding anything contained in section 15340[or section 153B], pass the assessment order under sub-section (3) within one month from the end of the month in which,--
(a) the acceptance is received; or
(b) the period of filing of objections under sub-section (2) expires.
9.1 In view of the above, we hold that the assessment framed under section 143(3) read with section 144C of the Act is not sustainable being barred by time and liable to be quashed. In holding so, we also draw support and guidance from the order of Planet Online (Pvt.) Ltd. Vs. ACIT reported in 65 taxmann.46 wherein it was held as under:
7. From a literal reading of the above provisions, it is clear that section 144C of the I.T. Act deals with the circumstances under which the AO can make a reference to the DRP and the procedure to be followed by the AO in making a reference to the Dispute Resolution Panel and also the procedure to be followed by the DRP while dealing with the ITA no(TP).357/AHD/2022 Asstt. Year 2018-19 6 objections raised before it by the assessee and the passing of the final assessment order by the AO. Sub-section (1) provides that upon the receipt of the order of the Transfer Pricing Officer suggesting the adjustments after determination of the ALP, AO shall pass a draft assessment order and forward the same to the eligible assessee, if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. In the case before us, in accordance with the above provisions, the AO has passed the draft assessment order on 14.03.2014. Sub section 2 of section 144C provides that on receipt of the draft assessment order, the eligible assessee shall, within 30 days of receipt by him of the draft assessment order, file his acceptance of the variations to the AO or file its objections, if any, to such variation with the DRP and the AO. Sub-section (3) provides that if the assessee does not exercise the options provided in sub section-2, the AO shall pass the final assessment order. Sub section (4) provides the time limit within which the final assessment order is to be passed i.e. one month from the end of the Month in which the assessee exercises the option of accepting the variation or fails to file its objections within the period prescribed under sub section (2) of section 144C. In the case before us, the assessee has not exercised any of the two options within the specified period of 30 days of the receipt of the draft assessment order. The consequence of this inaction by the assessee is provided for, under sub sections 3 and 4 of section 144C of the Act. From the above, it is clear that on the expiry of the period of one month from the end of the month in which the prescribed time to exercise the option by the assessee expires the AO is required to pass the final assessment order. If the assessee exercises the options of filing its objections before the DRP, then under sub section (5), the DRP shall issue such directions as it deems fit for the guidance of the AO to enable him to complete the assessment. In the case before us, the assessee did not file the objections before the DRP within the prescribed time and therefore, the objections are not maintainable until the delay is condoned by the DRP. We find that the DRP has refused to condone the delay in raising of the objections before it by the assessee and therefore it amounts to non admission of the grounds and adjudication by the DRP. Therefore, there are also no directions issued by the DRP for the guidance of the AO to enable him to complete the assessment. Therefore, the final assessment order passed by the AO after rejection of the assessee's objections by the DRP 'in limini' is thus not sustainable. The final assessment order passed by the AO dated 7.1.2015 allegedly u/s 143(3) r.w.s. 92CA(3) r.w.s. 144C(5) is therefore to be quashed.
9.2 Based on the above discussion, we conclude that the assessment has been framed by the AO under section 143(3) read with section 144C of the Act being barred by limitation. Hence, the order framed under section 143(3) read with section 144C of the Act is not sustainable. Hence, the additions made by the AO on merit are liable to be deleted.
9.3 It is important, at this juncture, to note that we have decided the issue in favour of the assessee on technical ground and therefore, we do not find any reason to deal with the grounds on merit raised by assessee. As such, once the order in dispute is not sustainable, the grounds raised by the assessee on merit ITA no(TP).357/AHD/2022 Asstt. Year 2018-19 7 become infructuous. Accordingly, we dismiss the grounds raised by the assessee on merit as infructuous.
10. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the Court on 18/08/2023 at Ahmedabad.
Sd/- Sd/-
(SIDDHARTHA NAUTITAL) (WASEEM AHMED)
JUDICIAL MEMBER ACCOUNTANT MEMBER
(True Copy)
Ahmedabad; Dated 18/08/2023
Manish