GOLDMAN SACHS SERVICES PRIVATE LIMITED,BANGALORE V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), BANGALORE

ITTPA 836/BANG/2022

AI Insights

The case involves M/s. Goldman Sachs Services Pvt. Ltd., the appellant, challenging the final assessment order issued by the Deputy Commissioner of Income Tax, the respondent. The assessment pertained to the assessment year 2017-18 and involved international transactions that required a transfer pricing assessment. The case was initially referred to the Transfer Pricing Officer (TPO), who made adjustments that were contested by the assessee before the DRP. The DRP's directions were not adhered to within the statutory time frame by the AO, leading to the legal challenge on the grounds of limitation. The Tribunal's decision focused solely on the procedural aspect of the timing of the final assessment order, without delving into the substantive issues raised.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711354 (ITAT-BANGALORE)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 25-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Vodafone Idea Ltd. vs. CPC, Louis Dreyfus Company India (P.) Ltd. vs. DCIT, Rapiscan Systems Pvt. Ltd. vs. ADIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J DHIVYA
• Assessee Lawyers: MADHUR AGARWAL
• Keywords: Set aside; Opportunity of being heard; Transfer pricing; International transaction; Period of limitation; Time period of passing order; Procedural lapse

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE – PRESIDENT AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER IT(TP)A No. 836/Bang/2022 Assessment Year : 2017-18 M/s. Goldman Sachs Services Pvt. Ltd., Wing A, Wing B and Wing C (Ground Floor to 6th Floor), Helios Business Park, 150 Outer Ring Road, Kadubeesanahalli, Bangalore – 560 103. PAN: AACCG2435N Vs. The Deputy Commissioner of Income Tax, Circle – 3 (1)(1), Bangalore. APPELLANT RESPONDENT Assessee by : Shri Madhur Agarwal, CA Revenue by : Dr. K J Dhivya, CIT-DR Date of Hearing : 01-05-2025 Date of Pronouncement : 25-07-2025 ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER This is an appeal filed by the assessee challenging the final assessment order of the Assessment Unit, IT Department dated 20/07/2022. The assessee has raised the following grounds: Printed from counselvise.com Page 2 of 14 IT(TP)A No. 836/Bang/2022 Printed from counselvise.com Page 3 of 14 IT(TP)A No. 836/Bang/2022 Printed from counselvise.com Page 4 of 14 IT(TP)A No. 836/Bang/2022 Printed from counselvise.com Page 5 of 14 IT(TP)A No. 836/Bang/2022 2. The assessee filed their return of income on 30/11/2017. Thereafter the case has been selected for scrutiny and notices were issued on several dates. Since there are some international transactions made by the assessee, the case was referred to the TPO for computation of arms length price. The TPO proposed some adjustments and based on that, a draft Printed from counselvise.com Page 6 of 14 IT(TP)A No. 836/Bang/2022 assessment order was made by the assessing officer. The assessee filed their objections before the Ld.DRP in respect of the additions made in the draft assessment order. The Ld.DRP considered the objections and had issued directions to the AO on 29/01/2022. The intimation letter dated 29/01/2022 also exhibits the DIN No. was generated for the said order on 29/01/2022 itself. 3. The Ld.DRP had also communicated the order to the TPO and the TPO had also given effect to the directions on 21/02/2022. The AO had not passed any order based on the directions of the Ld.DRP. Finally the AO passed the order on 20/07/2022 based on the directions given by the Ld.DRP. The said order of the AO is under challeng before this Tribunal. The assessee raised a legal plea that the order of the AO dated 20/07/2022 is bad in law since the said order was not passed within the period prescribed u/s. 144C(13) of the Act. The assessee also raised several grounds on merits insofar as the other disallowances and adjustments. 4. At the time of hearing, the Ld.AR submitted that the final assessment order passed by the AO is barred by limitation and therefore on the sole ground, the assessment order can be set aside. 5. The Ld.AR also relied on the following judgments in support of his proposition that the final assessment order passed by the AO is barred by limitation: 1) Judgment of Hon’ble Bombay High Court in case of Vodafone Idea Ltd. vs. CPC reported in [2023] 156 taxmann.com 258 2) Judgment of Hon’ble Delhi High Court in case of Louis Dreyfus Company India (P.) Ltd. vs. DCIT reported in [2024] 159 taxmann.com 244 3) Judgment of Hon’ble Telangana High Court in case of Rapiscan Systems Pvt. Ltd. vs. ADIT in W.P. Nos. 44891 and 44915 of 2022 dated 09/01/2025. Printed from counselvise.com Page 7 of 14 IT(TP)A No. 836/Bang/2022 6. The Ld.AR also in support of their grounds on merits, filed a paper book and also filed an application for withdrawal of the transfer pricing grounds on account of signing of Advance Pricing Agreement. 7. The Ld.AR also enclosed the copy of the bilateral agreement signed between the CBDT and the assessee on 30/01/2023. The Ld.AR also filed some additional details enclosing the modified return of income filed subsequent to entering into unilateral APA between the CBDT and the assessee. 8. The Ld.DR submitted that the AO had viewed the order on 16/06/2022 and therefore the order passed by the AO on 20/07/2022 is within the period prescribed u/s. 144C(13) of the Act. The Ld.DR also sought for time on 01/08/2024, 19/08/2024, 29/10/2024, 26/02/2025 and 17/04/2025 on the ground that the report from the AO is awaited. Finally the Ld.DR filed a loose sheet and based on that, the Ld.DR submitted that the AO had passed the final assessment order pursuant to the directions of the Ld.DRP in time. Therefore the Ld.DR prayed that the legal ground raised by the assessee may be dismissed and submitted further arguments on merits by relying on the final order of the AO. 9. We have heard the arguments of both sides and perused the materials available on record. 10. The main argument advanced by the Ld.AR is that the final assessment order dated 20/07/2022 is barred by limitation. To appreciate the said arguments, we have perused the order of the Ld.DRP dated 29/01/2022 and the intimation letter dated 29/01/2022 for the order passed u/s. 144C(5). The said documents exhibits that the document identification number generated for the above said order was dated 29/01/2022. In the paper book filed by the assessee dated 29/05/2024, Printed from counselvise.com Page 8 of 14 IT(TP)A No. 836/Bang/2022 the assessee also enclosed the email communication sent by the Ld.DRP on 02/02/2022. As seen from the said email communication we notice that the said order of the Ld.DRP passed u/s. 144C(5) of the Act was uploaded in the portal on 29/01/2022 itself. Once the directions of the DRP has been uploaded on 29/01/2022, we can presume that the said order was received by the AO on the very same date. 11. We have also considered the fact that the entire assessment proceedings are governed by the faceless assessment under the e- assessment Scheme, 2019. In the said e-assessment Scheme, it was clearly mentioned in para no. 4 (1)(ii) which reads as follows: “4. E-assessment Centres.– (1) For the purposes of this Scheme, the Board may set up- (i) a National e-assessment Centre to facilitate the conduct of e-assessment proceedings in a centralised manner, which shall be vested with the jurisdiction to make assessment in accordance with the provisions of this Scheme; (ii) Regional e-assessment Centres as it may deem necessary to facilitate the conduct of e-assessment proceedings in the cadre controlling region of a Principal Chief Commissioner, which shall be vested with the jurisdiction to make assessment in accordance with the provisions of this Scheme; 12. Therefore the directions once uploaded in the portal of the department, it will be immediately available to the National e-Assessment Centre and therefore it is deemed that the Faceless Assessment Officer has received the said communication on the date of uploading the said directions. We have also gone through the mail dated 14/02/2022 in which we came to know that the said directions were received by the assessee through speed post on 14/02/2022. Further, as stated in the final assessment order in para 4.2, the TPO after receiving the directions from the Ld.DRP, had also given effect to the said directions by passing an order on 21/02/2022 itself. The above said facts, which are borne out from the records, would establishes the fact that the directions of the Ld.DRP was deemed to be received by the National e-Assessment Centre on 29/01/2022 Printed from counselvise.com Page 9 of 14 IT(TP)A No. 836/Bang/2022 itself. When the said directions were uploaded on 29/01/2022 and DIN has been generated for the said documents, the normal presumption would be that the said order was communicated to the National E-Assessment Centre on 29/01/2022 itself. In the e-Assessment Scheme, we cannot accept that the directions would be forwarded by physical mode. Moreover, the documents filed by the assessee would also show that the DIN was generated on 29/01/2022 itself and therefore the document would be available in the portal on the said date. 13. Apart from filing a loose sheet that too without any authentication and without any affidavit in support of the said loose sheets, the department cannot rely on the loose sheets to show that the AO had not viewed the directions of the DRP in an earlier period of time. It is not the case of the revenue that there are some glitches in the portal. Even assuming that there are some glitches, it should be brought to the notice of the concerned authorities in time. In the present case, there is no such defence raised by the revenue and also no such documentary evidences were furnished before us to show that there are some glitches. Further, the Ld.DR filed several adjournment requests citing the reason that the report from the AO is awaited but no such report has been furnished by the AO except the loose sheet which was also not authenticated by any of the authorities. Therefore we are of the view that the AO had not passed the final assessment order within 30 days from the end of the month in which the directions were communicated to him. 14. In the present case, the directions were communicated to the National e-Assessment Centre by uploading the DRP directions on 29/01/2022 and therefore the final assessment order should have been passed on or before 02/03/2022. But in the present case, the final assessment order was passed on 20/07/2022 and therefore the said final assessment order is beyond the period prescribed u/s. 144C(13) of the Act. Printed from counselvise.com Page 10 of 14 IT(TP)A No. 836/Bang/2022 15. We have also perused the judgment of Hon’ble Delhi High Court in case of Louis Dreyfus Company India (P.) Ltd. vs. DCIT reported in [2024] 159 taxmann.com 244 wherein it was held as follows: “17. As is manifest from a reading of sub-section (13) of Section 144C of the Act, the AO is not accorded any discretion in the framing of an order of assessment once directions have come to be framed by the DRP. In fact, the provision requires the AO to frame an order of assessment in conformity with those directions and without providing any further opportunity of hearing to the assessee. This principle of law has been affirmed by the Bombay High Court in the aforenoted paragraphs of Vodafone Idea and in Shell India Markets Private Limited v. Additional Commissioner of Income Tax Officer, National Faceless Assessment Centre & Ors10. The relevant paragraph of the decision in Shell India are extracted hereinbelow: “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 direction 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 assessee. This means that the moment the Assessing Officer receives the directions under sub- section (5), he has to straightaway complete the assessment and he does not even have to hear the assessee. 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.” 18. In this backdrop, we note that both the judgments of the Bombay High Court in Shell India and Vodafone Idea construe the time lines as provided in Section 144C to be mandatory in character. In our considered opinion, this interpretation is in accord with the intent behind insertion of that provision and the bare text and spirit of that section. Thus, we accord our approval to the interpretation as set out in the aforenoted decisions of the Bombay High Court. 21. We, however note that paragraph 4(2) of the E-as, 2019 makes the following salient provisions:- “4(2). All communication among the assessment unit, review unit, verification unit or technical unit or with the assesse or any other person with respect to the Printed from counselvise.com Page 11 of 14 IT(TP)A No. 836/Bang/2022 information or documents or evidence or any other details, as may be necessary for the purposes of making an assessment under this Scheme shall be through the National e-assessment Centre.” 22. It is thus manifest that as per the provisions of E-as, 2019, all orders, notices and decisions have to be necessarily uploaded on the ITBA portal and as part of the larger faceless assessment regime which now holds the field. The uploading of the directive of the DRP on the ITBA portal would thus constitute valid and sufficient service and the period of limitation as prescribed in Section 144C(13) of the Act would be liable to be computed bearing that crucial date in mind. Once the aforesaid position becomes clear, it is evident that the order of assessment, if at all could have been framed lastly by 31 July 2022. There has thus been an abject failure on the part of the first respondent to comply with the mandatory timelines as incorporated in the aforenoted provisions. Accordingly, the writ petition is liable to be allowed and the impugned order of assessment and the consequential penalty proceedings are thus liable to be set aside on this short score alone.” 16. We have also perused the judgment of Hon’ble Bombay High Court in case of Vodafone Idea Ltd. vs. CPC reported in [2023] 156 taxmann.com 258 wherein it was held as under: “20. Section 144C of the Act is a self contained provision which carves out a separate class of assessees, i.e., 'eligible assessee'. Section 144C of the Act was inserted in the Finance Act of 2009 and came into effect from 1st October 2009. In the notes on clauses to the Finance Bill, 2009 (Budget 2009-2010), the reason for insertion of Section 144C is given as under : “The subjects of transfer pricing audit and the taxation of foreign company are at nascent stage in India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view. The correction of such view take very long time with the existing appellate structure. With a view to provide speedy disposal, it is proposed to amend the Income-tax Act so as to create an alternative dispute resolution mechanism within the income-tax department and accordingly, section 144C has been proposed to be inserted so as to provide Printed from counselvise.com Page 12 of 14 IT(TP)A No. 836/Bang/2022 inter alia the Dispute Resolution Panel as an alternative dispute resolution mechanism.” 21. Thus, if the provisions of Section 144C as mandated by the Statute are not strictly adhered the entire object of providing for an alternate redressal mechanism in the form of DRP stand defeated. That is not the intention of the legislature when the provision was introduced in the Act. Section 144C(10) of the Act provide that the directions of DRP are binding on the AO. By failing to pass any order Gitalaxmi 18/20 903-oswpl-15398-2023-J.doc in terms of the provision, the AO cannot be permitted to defeat the entire exercise and render the same futile. When a Statute prescribes the power to do a certain thing in a certain way, then the thing must be done in that way and other methods of performance are forbidden. Once the statute has prescribed a limitation period for passing the final order, it is expected that the internal procedure of the department should mould itself to give meaning to and act in aid of the provision. Any procedural defect (there is none in this case) in the internal mechanism of the working of E- assessment Scheme, cannot operate against the interest of assessee. Hence, the FAO cannot be believed that the DRP direction was received by him only on 23rd August 2023 despite being uploaded on the ITBA portal on 25th March 2021. The failure on the part of department to follow the procedure under Section 144C of the Act is not merely a procedural irregularity, but is an illegality and vitiates the entire proceeding.” 17. We have also perused the judgment of Hon’ble Telangana High Court in case of Rapiscan Systems Pvt. Ltd. vs. ADIT in W.P. Nos. 44891 and 44915 of 2022 dated 09/01/2025 in which it was held as under: “31. The Income Tax Department through communication dated 30.06.2022 (Annexure P-19) informed that the order under Section 144C(5) dated 30.06.2022 is having Document No.(DIN) ITBA/DRP/M/144C(5)/2022- 23/1043689612(1). This is a system generated document and it does not require any signature. A conjoint reading of communications dated 30.01.2024 and 05.03.2024 (Annexure P-18) and communication dated 30.06.2022 (Annexure P-19) leaves no room for any doubt that DRP's directions were despatched on 30.06.2022 and also uploaded on the portal on the same date. Thus, the DRP/originator had lost control over it on the date and time the said directions were uploaded on the portal. Printed from counselvise.com Page 13 of 14 IT(TP)A No. 836/Bang/2022 Hence, same must be treated to be a 'receipt' by the recipient i.e., the assessing officer on the same day i.e., 30.06.2022. (See paragraph No.26.7 of Suman Jeet Agarwal v. Income-tax Officer 11, where the Delhi (2022) 449 ITR 517 SP,J & Dr.GRR,J Wps_44891 & 44915 of 2022 High Court poignantly held that the portal of the department is the 'computer resource in the control of the department'). 32. In view of forgoing discussion, there is no cavil of doubt that assessing officer received the DRP's directions on 30.06.2022 and therefore, the limitation must be counted from that date and not from 05.07.2022. The impugned assessment orders dated 30.08.2022 and 01.09.2022 that were issued counting the limitation from 05.07.2022 in both the Writ Petitions are liable to be set aside as the same are issued beyond permissible period of limitation.” 18. In the light of the principles laid down by the three Hon’ble High Courts and by following the said principles we are of the firm view that the final assessment order passed by the AO on 20/07/2022 is barred by limitation as per Section 144C (13) of the Act. We, therefore, set aside the final assessment order passed by the AO on the legal ground raised by the assessee. We have not adjudicated the other grounds raised by the assessee on merits in view of the order passed by us on the legal plea. 19. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 25th July, 2025. Sd/- Sd/- (PRASHANT MAHARISHI) (SOUNDARARAJAN K.) Vice – President Judicial Member Bangalore, Dated, the 25th July, 2025. /MS / Printed from counselvise.com Page 14 of 14 IT(TP)A No. 836/Bang/2022 Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file 6. CIT(A) By order Assistant Registrar, ITAT, Bangalore Printed from counselvise.com "