Timelines in Section 144C(13) of the Income Tax Act are mandatory; failure to comply invalidates the assessment order.

JUDGMENT :

S.G.PANDIT, J.

The appellant-assessee is before this Court under Section 260A of the Income-Tax Act, 1961 (for short “IT Act”), questioning the order dated 21.06.2017 in IT(TP)A No.807/Bang/2016 passed by Income Tax Appellate Tribunal, “B” Bench, Bengaluru (for short “Tribunal”), dismissing the appeal refusing to declare the proceedings under Section 144C of the IT Act as null and void.

2. The appeal coming on for admission on 15.11.2017, this Court admitted the appeal to consider the questions formulated in the appeal, which reads as follows:

“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)?

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 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 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