Transfer Pricing Order passed beyond the period of Limitation: ITAT quashes order u/s 92CA(3) [Read Order]

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) quashed the order under section 92CA(3) of the Income Tax Act,1961 as the transfer pricing order was passed beyond the period of limitation.

It was contended that the TPO passed two assessment orders dated 31.10.2019 and 1.11.2019. The order dated 31.10.2019 is a manual order without containing a Documentation Identification Number (DIN) and the order dated 1.11.2019 is an order with a DIN.

Further argued that the order u/s.92CA is in violation of the CBDT Circular No.19 of 2019 dated 14.8.2019 and the draft assessment order was passed under the TP order dated 31.10.2019 which is bad in law.

It was evident that after passing the above order dated 31.10.2019, the TPO passed an order dated 01.11.2019 by affixing a DIN and that this order is barred by limitation. It is submitted that in terms of section 2CA(3A), the TPO ought to pass the order 60 days before the date on which the period of limitation prescribed u/s.153 of the Act expires and in the given case for AY 2016-17 it expires on 31.10.2019.

A Coram comprising of Smt. Beena Pillai, Judicial Member and Ms Padmavathy S, Accountant Member noticed that the DRP has held that the order dated 31.10.2019 which was issued without DIN is made good by the order dated 01.11.2019 which is issued without DIN since the contents of both the orders are same.

Further observed that the decision of the DRP cannot be taken to substitute the earlier order as there is no provision in the Act to issue two orders u/s.92CA. If the order dated 1.11.2019 is taken as a valid order for subsequent proceedings since it is issued with a DIN, then the issue of the order being barred by limitation should be considered.

In light of judicial precedents, the Tribunal observed that the issue of the time limit for passing the order u/s.92CA and held that the order should be passed before sixty days before the date on which the period of limitation referred to in section 153 of the act.

While allowing the appeal of the assessee, the Tribunal held that the order date 01.11.2019 is passed beyond the period of limitation and quashed the adjustment proposed by way of transfer pricing order u/s. 92CA(3) of the act.

To Read the full text of the Order CLICK HERE

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