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2025 Supreme(Online)(ITAT) 6450
INCOME TAX APPELLATE TRIBUNAL (HYDERABAD BENCH)
SHRI VIJAY PAL RAO, VP, SHRI MADHUSUDAN SAWDIA, AM
REPAL RENEWABLES PRIVATE LIMITED HYDERABAD – Appellant
Versus
DCIT CIRCLE 8(1) HYDERABAD – Respondent
Income Tax Appeal No.116 & 481/Hyd/2022
For the Appellants/Petitioners: Not specified
For the Respondents: Not specified
The court ruled that assessment orders exceeding the legal time limits under the Income Tax Act are invalid.
Headnote:(A) Income Tax Act, 1961 - Sections 143(3), 144C(13), 153 - Appeals against assessment orders for AY 2017-2018 and 2018-2019 - Grounds raised include validity of orders and transfer pricing adjustments - Court held that assessment orders were barred by limitation and therefore invalid. (Paras 12-15)
(B) Appeal - Validity of assessment orders passed beyond prescribed limitation - Court noted that extensions under TOLA are not applicable for action under the Income Tax Act but only for judicial proceedings. (Paras 10-11)
Facts of the case:
Assessee raised multiple grounds against the assessment orders which were passed beyond the set timelines under the Act, including challenges to transfer pricing adjustments and legality of penalty initiation.
Findings of Court:
Orders were found to be invalid due to exceeding the limitation period.
Issues: Whether the assessment orders were passed within the legal limitation period.
Ratio Decidendi: The court ruled that the time limitation provisions under the Income Tax Act prevail and that the relaxed limits due to the pandemic do not apply to such assessments.
Result: Appeals allowed.
| Table of Content |
|---|
| 1. assessment orders passed beyond legal limitation are invalid. (Para 1 , 2) |
| 2. extensions under tola do not apply to tax authority actions. (Para 10 , 11) |
| 3. both appeals allowed due to invalid assessment orders. (Para 12 , 14) |
ORDER
PER VIJAY PAL RAO, VICE PRESIDENT :
These two appeals by the assessee are directed against the assessment orders dated 15.02.2022 and 22.07.2022 passed by the Assessing Officer u/sec.143(3) r.w.s.144C(13) of the Income Tax Act [in short "the Act"], 1961, for the assessment years 2017-2018 and 2018-2019, respectively.
ITA .No.116/Hyd./2022 – A.Y. 2017-2018 :
2. The has raised the following grounds of appeal :
“Payment of interest towards purchase on supplier credit
1. On the facts and circumstances of the case and in law, the Id. AO and the Ld. TPO, under the directions of the Hon'ble Dispute Resolution Panel ('DRP'), erred in re-characterizing the transaction of 'Payment of interest towards purchase on supplier credit' as an external commercial borrowing and thereby calculating at its arm's length price. The authorities ought to have appreciated that the transaction undertaken by the Appellant is a trade payable and accordingly at arm's length price.
2. Without prejudice, the ld. AO and the Ld. TPO, under the directions of the Hon'ble DRP, erred in computing the amount of transfer pricing adjustment.
Payment for consultancy services availed
3. On the facts and circumstances of the case and in law, the Id. AO and the Ld. TPO, under the directions of the Hon'ble DRP, erred in disregarding the Appellant's benchmarking analysis, the documentation maintained thereunder and determining the arm's length price of the transaction of Payment for consultancy services availed as Nil based on 'Other Method" purely on conjectures and surmises, without bringing on record any comparable instances in support thereof.
Payment of Interest on NCDs
4. On the facts and circumstances of the case and in law, the Id. AO and the Ld. TPO, under the directions of the Hon'ble DRP, erred in rejecting the Appellant's benchmarking analysis which demonstrated that payment of Interest on NCDs was at arm's length and conducting a fresh benchmarking exercise.
5. Without prejudice to the above, on the facts and circumstances of the case and in law, the ld. AO and the Ld. TPO, under the directions of the Hon'ble DRP, erred in selecting comparable instances for determining arm's length price for the payment of Interest on NCDs, which were in-fact not comparable to the Appellant. Once the incorrect comparable instances are rejected from the fresh benchmarking exercise conducted by the Id. TPO, the Appellant's transaction is at arm's length.
Computation of book profits
6. On the facts and circumstances of the case and in law, the ld. AO erred in computing the amount of book profits and the consequent taxes as per Section 115JB of the Act. The AO ought to have appreciated that "book profits cannot be enhanced by the quantum of additions under Chapter X.
Interest under section 2348 and 234D
7. On the facts and circumstances of the case and in law, the ld. AO erred in computing the interest under Section 234B and Section 234D of the Act while calculating the Appellant's payable demand.
Initiation of penalty under Section 270A
8. On the facts and circumstances of the case and in law, the ld. AO erred in initiating penalty proceedings under Section 270A of the Act.
The above grounds are independent and without prejudice to one another. The Appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal, so as to enable the Hon'ble Income-tax Appellate Tribunal to decide this appeal according to law.”
3. The assessee has also raised an additional ground by filing an application under Rule 11 of ITAT Rules, 1963. The additional ground raised by the assessee reads as under:
“On the facts and circumstances of the case and in law, the final assessment order date
