Fiberhome India Private Limited Vs National E-Assessment Centre (Delhi High Court)
The Delhi High Court, in Fiberhome India Private Limited Vs National E-Assessment Centre, set aside the final assessment order dated 30 June 2021 for Assessment Year 2017–18, holding that the Assessing Officer was required to follow the procedure prescribed under Section 144C of the Income-tax Act, 1961 before completing the assessment. The dispute arose from transfer pricing adjustments of ₹20,22,92,961 relating to the import of goods and interest on External Commercial Borrowings (ECBs). The Transfer Pricing Officer had passed an order dated 22 January 2021 under Section 92CA(3), following which the respondent issued a draft assessment order on 21 April 2021.
The petitioner submitted that although Section 144C(2) ordinarily permits thirty days for filing objections against a draft assessment order, CBDT Circular No. 08/2021 dated 30 April 2021 had extended the relevant deadline to 31 May 2021. Accordingly, the petitioner filed objections before the Dispute Resolution Panel (DRP) on 27 May 2021, within the extended period. Nevertheless, the Assessing Officer passed the final assessment order on 30 June 2021 without awaiting the DRP’s directions. The petitioner relied upon the Supreme Court’s orders concerning extension of limitation, CBDT Circular No. 10/2021, and decisions of the Delhi, Calcutta and Bombay High Courts to challenge the legality of the assessment.
The Revenue defended the final assessment on the ground that the petitioner had not intimated the Assessing Officer about filing objections before the DRP. It argued that the Assessing Officer was therefore entitled to complete the assessment based on the draft order. The petitioner, however, informed the High Court that the DRP had already heard the objections on merits on 30 November 2021, producing an email from the Secretary, DRP-1, in support.
The High Court held that the objections filed on 27 May 2021 were clearly within the extended period permitted by CBDT Circular dated 30 April 2021. Considering the statutory scheme under Section 144C and the cited judicial precedents, the Court set aside the final assessment order dated 30 June 2021 and directed the respondent to act in accordance with the procedure prescribed under Section 144C. The writ petition and pending applications were disposed of without any order as to costs. The Court did not adjudicate the merits of the underlying transfer pricing adjustments.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
This petition has been filed by the petitioner challenging the Final Assessment Order dated 30.06.2021 passed by the respondent under Section 143(3) read with Section(s) 144C(3) and 144B of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) for the Assessment Year 2017-18.
2. The learned counsel for the petitioner submits that the petitioner had filed its return of income for the concerned Assessment Y ear on 29.11.2017.
(Computer Aided Scrutiny Selection) and accordingly, notice under Section 143(2) of the Act was issued to the petitioner on 27.08.2018. Subsequently, the case of the petitioner was referred to the Transfer Pricing Officer under Section 92CA(3) of the Act for determination of the ‘arm’s length price’ for the ‘international transaction’. The Transfer Pricing Officer, New Delhi, vide order dated 22.01.2021, made an adjustment of ₹20,22,92,961/- (Rupees twenty crore twenty- two lakh ninety-two thousand nine hundred sixty-one) on account of transfer pricing adjustment for international transactions qua the issues of import of goods and interests on External Commercial Borrowings (‘ECBs’). Based thereon, the respondent issued a Draft Assessment Order dated 21.04.2021 under Section 144C of the Act. Though Section 144C(2) of the Act allows thirty-days period to the eligible- assessee to file the objections against the Draft Assessment Order with the Dispute Resolution Panel (hereinafter referred to as the ‘DRP’), the Central Board of Direct Taxes (hereinafter referred to as the ‘CBDT’), vide Circular No. 08 of 2021 dated 30.04.2021, had extended the time limit for filing of such objections up till 31.05.2021. The petitioner accordingly, filed its objections before the learned DRP on 27.05.2021.
3. The learned counsel for the petitioner submits that as the objections against the Draft Assessment Order had been filed within the time permitted, the Assessing Officer could not have passed the Impugned Final Assessment Order without awaiting the directions of the DRP on such objections. He further places reliance on the Orders passed by the Supreme Court in Suo Motu Writ Petition (Civil) No. 03 2021:DHC:4207-DB of 2020, In Re: Cognizance for Extension of Limitation and CBDT Circular No. 10 of 2021 dated 25.05.2021to contend that the period of limitation for filing of the objections stood extended and therefore, the objections having been filed within t he time permitted, the Impugned Final Assessment Order is without jurisdiction. The learned counsel for the petitioner, in support of his submissions, places reliance on the following judgments: i. Judgment dated 14.07.2021 of this Court, passed in W.P. (C) 6484 of 2021, titled SRF Ltd. v. National Faceless Assessment Centre, Delhi & Anr.; ii. Judgment dated 06.08.2021 of this Court, passed in W.P. (C) 7936 of 2021, titled Anand NVH Products Pvt. Ltd. v. National E-Assessment Centre Delhi & Anr.; and iii. Judgment dated 01.10.2021 of the Calcutta High Court, i n W.P.A. 13778 of 2021, titled Lexmark International (India) Pvt. Ltd. v. Union of India & Ors.
4. On the other hand, the learned counsel for the respondent submits that as the petitioner had failed to intimate the Assessing Officer about the filing of his objections before the DRP, the Assessing Officer was within its right to complete the assessment on the basis of the Draft Assessment Order and therefore, no fault can be found in the Impugned Final Assessment Order.
5. Today, the learned counsel for the petitioner has submitted that the DRP has, in fact, finally heard the objections on merit on 30.11.2021. In support, he has produced before us an e- mail dated 30.11.2021 from the DCIT, Secretary (DRP-1). He also places reliance on the judgment dated 27.10.2021 of the High Court of Bombay, passed in Writ Petition (L) 15811 of 2021, titled Sulzer Pumps India Private Limited v. Dy. Commissioner of Income Tax Circle-15(3)(2) & Ors., to contend that in similar circumstances, the High Court of Bombay was pleased to set aside the Assessment O rder and directed the Assessing Officer to take steps in the matter after the DRP passes its order on the reference filed by the petitioner therein.
6. We have considered the submissions made by the learned counsels for the parties.
7. In view of the CBDT Circular dated 30.04.2021, the objections filed by the petitioner before the DRP were clearly within the time. The same has now been heard on merit by the DRP. Therefore, keeping in view of the s cheme of Section 144C of the Act and the above-referred judgments of this Court as also of the Calcutta High Court and the Bombay High Court, we set aside the Impugned Final Assessment Order dated 30.06.2021, directing the respondent to act in accordance with the procedure stipulated in Section 144C of the Act. 8. Accordingly, the writ petition along with pending applications stand disposed of. There shall be no order as to costs.
