Case Law Details
Benteler Automotive India Pvt. Ltd. Vs Union of India (Bombay High Court)
Bombay HC Holds TP Assessment Time-Barred for Failure to Pass Final Order Within 30 Days of DRP Directions; Quashes Proceedings
The petitioner is part of a foreign MNC. It filed return of income for AY 2016-2017. The case was transferred to the transfer pricing officer. A draft assessment order dated 28.11.2019 came to be passed. The petitioner appeared before the DRP: It passed an order dated 22.02.2021 in terms of Section 144C(5) of the Act, directing adjustment and addition of over Rs7.93 crores. directions were issued by the DRP. The assessing officer did not pass order within time provided for final assessment. Hence; petition was filed claiming that proceedings are time barred.
The Hon’ble Bombay High Court held that assessment was time barred and allowed the writ petition. It held: (i) section 143C(13) of the Income Tax Act requires final assessment order to be passed within 30 days of the month in which DRP passes order; admittedly; it was not done in the present case; (ii) follows its earlier decision in Shell India case; (iii) holds that the proceedings are time barred; hence, no order can be passed today; (iv) allows petitioner to withdraw the protective appeal filed before CIT(A).
Argued by Adv. Bharat Raichandani i/b UBR Legal
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule returnable forthwith. With consent of learned counsel for both sides, disposed of finally.
2. Brief facts of the case are this. The petitioner is engaged in the manufacture of automotive fasteners and connectors. The entire share capital of the petitioner is held by Bentler Automotive International GMBH, Germany, together with Bentler Deutschland GMH, Germany. The ultimate holding company is Bentler International AGH International, Austria.
3. The Petitioner filed its return of income on 27.11.2016, disclosing income for Assessment Year 2016–2017 as ‘Nil’. Notice under Section 143(2) dated 01.08.2017 was issued by Respondent No. 2 for scrutiny assessment. Thereafter, on 29.05.2018, Respondent No. 2 transferred the case to the Transfer Pricing Officer for determination of the arm’s length price. Notices under Section 92CA(1) dated 07.12.2018 and 05.04.2019 were issued by the Transfer Pricing Officer. The petitioner replied. However, the Transfer Pricing Officer passed an order dated 30.10.2019 under Section 92CA(3), adjusting the arm’s length price by Rs.7,93,60,779/-. On the same day, notice under Section 142(1) came to be issued to the petitioner. The petitioner filed its reply vide letters dated 06.11.2019 and 18.11.2019.
4. However, without issuing a draft order mandated under Section 144C(1) of the Act, Respondent No. 2 passed a final assessment order dated 27.11.2019 under Section 143(3), assessing the total income as Rs.7,93,60,779/-. Being aggrieved, the petitioner filed a protective appeal against the same.
5. However, subsequently, a draft assessment order dated 28.11.2019 came to be passed. The petitioner appeared before the DRP pursuant to the said order. The petitioner filed its detailed objections before the DRP, which passed an order dated 22.02.2021. In terms of Section 144C(5) of the Act, directions were issued by the DRP. In compliance with the aforesaid directions, Respondent No. 2 was required to pass a final assessment order to give effect to the above directions.
6. The final assessment order ought to have been passed on or before 31stMarch, 2021. In terms of notifications issued by CBDT under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the time allowed for passing the order was extended up to 30th June, 2021. However, yet, no order was passed. The Petitioner, vide letter dated 03.03.2021, requested Respondent No. 2 for passing the order. Further, vide letter dated 25.04.2022, the petitioner requested to set aside the pending proceedings against it as the assessment was time-barred. Respondent No. 2 did not respond to the above submitted letters. Hence, the present petition came to be filed. An Affidavit in reply has been filed on 24.07.2024 by the Respondents.
7. On 06.04.2026, the present petition was listed, and after hearing both sides, this Court inquired with the learned Counsel for Respondent No. 2 as to whether any final assessment order had been passed pursuant to the DRP directions dated 22.02.2021. In response thereto, the learned counsel for Respondent No. 2, vide Email dated 08.04.2026, has placed on record written instructions stating that upon verification of the ITBA systems and the case records, no such order has been passed. It has been confirmed by the Deputy Commissioner of Income Tax, Circle-8, Pune that no final order, pursuant to the DRP’s directions issued under Section 144C(5) dated 22.02.2021, has been passed either on the ITBA or manually.
8. We have heard the learned counsel for the parties, and with their assistance, we have perused the record.
9. The undisputed fact before this Court is that no final assessment order has been passed pursuant to the directions of the DRP vide order dated 20.02.2021. Section 144C(13) of the Income Tax Act requires the Assessing Officer to pass the final assessment order pursuant to DRP directions within one month from the end of the month in which such directions are received. In the instant case, the DRP, in terms of Section 144C(5), issued directions on 22.02.2021.
10. The time limit to pass the final assessment order was on or before 31stMarch, 2021. Even in terms of notifications issued by the CBDT, the time allowed for passing the final order was extended up to 30.06.2021. However, as confirmed by the learned counsel for the Respondents, on written instructions, no order has been passed. Hence, the assessment is barred by limitation.
11. This Court, in Shell India Markets Pvt. Ltd. vs. Additional Commissioner of Income Tax, New Delhi, reported at 2022-TIOL-431-HC-Mum-IT, in similar facts, held as under:
“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, complete the assessment within one month from the end of the month in which such directions is received. Sub-section (13) also provides that the Assessing Officer can complete the assessment without providing any further opportunity of being heard to the assesse. This means that the moment the Assessing Officer receives the direction under Sub-section (5), he has to straightaway complete the assessment and he does not even have to hear the assesse. 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.”
12. In these circumstances, we allow the writ petition in terms of prayer clause (a), which reads as under:
“(a) that this Hon’ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of certiorari or any other writ, order of direction under Article 226 of the Constitution of India calling for the records pertaining to the petitioner’s case and after going into the validity and legality of the provisions quash and set aside the impugned assessment initiated vide draft assessment order No. ITBA/COM/F/17/2019-20/1021215184(1) dated 28.11.2019 under Section 143(3) read with Section 144C(1) of the Income Tax Act, 1961 by the Respondent No.2 holding the impugned pending assessment is time barred as per the provisions of the Act.”
13. Mr. Raichandani states that to be on the safer side, the petitioner filed an appeal as well against the order dated 27.11.2019, treating the same as a final order. He undertakes to withdraw the said appeal within two weeks from today. The undertaking is accepted.
14. Rule is made absolute in the aforesaid terms and the petition is also disposed of in terms thereof. However, there shall be no order as to costs.
15. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.
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