LG Soft India Private Limited, Bangalore V. Deputy Commissioner Of Income Tax, Circle-4(1)(1), Bangalore

ITA 263/BANG/2022

AI Insights

The case involves M/s. LG Soft India Private Limited appealing against the final assessment order passed by the Deputy Commissioner of Income Tax, which was claimed to be barred by limitation. The Tribunal examined the timeline of events, including the dates of draft and final orders, and the digital signatures affixed on these orders. The key legal contention was whether the final assessment order was issued within the statutory time limit as prescribed under section 144C(13) of the Income Tax Act, 1961. The Tribunal found that the final order was signed and issued after the deadline, thus being barred by limitation. The Tribunal referenced several judicial precedents and legislative provisions to support its decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124870 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 28-05-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 17-04-2022
• Other Referred Cases: Pfizer Healthcare India Pvt. Ltd. Vs. JCIT, Chennai, M/s.Kontoor Brands India Private Limited vs. The Assistant Commissioner of Income-tax, Circle 4(3)(1) Bangalore, Sharad Garg vs. Income-tax Officer, Suman Jeet Agarwal vs. Income-tax Officer, Ramani Suchit Malushte Vs. UoI and Ors.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Time period of passing order; Cancellation of registration
• Section: 143(3); 144C; 292BB; 13; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER IT(TP)A No.263/Bang/2022 Assessment Year : 2018-19 M/s. LG Soft India Private Limited, Embassy Tech Square Sarjapur Outer Ring Road Marathalli Bengaluru – 560 103. PAN : AAACL 3009 P Vs. The Deputy Commissioner of Income Tax, Circle – 4(1)(1), Bengaluru. APPELLANTRESPONDENT Assessee by:Shri.K. R. Vasudevan, Advocate Revenue by :Shri.Sunil Kumar Singh,CIT-2(DR)(ITAT), Bengaluru. Date of hearing:29.05.2023 Date of Pronouncement:30.05.2023 O R D E R Per George George K, Judicial Member: This appeal at the instance of the assessee is directed against order of CIT(A), dated 28.02.2022, passed under section 143(3) r.w.s. 260 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2018-19. 2. The assessee has raised several grounds and sub-grounds on merits as well as on the legal issue. The legal issue that is raised is that the final Assessment Order is barred by limitation in terms of section 144C(13) of the Act. The grounds relating to the legal issue reads as follows: IT(TP)A No.263/Bang/2022 Page 2 of 11 1.Assessment Order passed by the learned Assessing Officer is bad in law 1.The order passed by the learned Assessing Officer (“AO”) is bad in law and liable to be quashed for the reason that the same is barred by limitation. 1.2The order passed by the learned Assessing Officer (“AO”) is bad in law and liable to be quashed for the reason that the same is not line with the statutory procedure prescribed in sections 144(C) 13 of the Act, wherein the assessment order shall be issued in conformity with the direction of the Honorable Dispute Resolution Panel (‘DRP’). 3. The learned DR had placed on record a report of the AO as regards the final assessment order whether it is time barred or not. The report of the AO reads as follows: “Ground No. 1: The order passed by the Ld. AO is bad in Law and liable to be quashed for the reason that the same is barred by limitation. Comments of AO: With regard to grounds raised by the assessee, the timeline of the case is as follows: Particulars Date Draft assessment Order ' 29.03.2021 Objection before DRP by assessee 26.04.2021 The assessee has uploaded/updated the objection 30.04.2021 FAO has passed the assessment order 30.04.2021 Order of Hon'ble Karnataka High Court 09.12.2021 Final order passed by NFAC 28.02.2022 Final order served on assessee 01.03.2022 2. In the assessee case, M/s. LG Soft India Pvt Ltd, it is noticed that from beginning assessee has disputed mainly on the procedural issues since department has a case on meiits. The events stand below shows that there was no passing of order on the next day as stated by the assessee and it is one contention that the final approval in the system was given on 28.02.2022 Is per the case history notings with the department. IT(TP)A No.263/Bang/2022 Page 3 of 11 3. The original draft order was passed on 28.03.2021 and it was the duty of the assessee to file the DRP objection within thirty days. The assessee filed DRP objection on 26.04.2021 but failed to intimate the AO with in time. As a result the final order was already passed by the AO on 30.04.2021. Assessee preferred a writ appeal before the l-Ion'ble High court which allowed assessee to file objection before DRP on 09.12.2021. DRP went through the objections and passed the order on 31.12.2021. The copy the DRP Objections was received in this office on 10th Jan 2022. The time barred date for giving effect to DRP direction was 28.02.2022. 4. In the faceless Scheme of assessment, the AO actually passed the order well before time, but the same order goes through multiple iterations of approval and review. From case history notings, it is clear that draft assessment to be sent to the assessee was done on 26.02.2022. Assessee was given the draft assessment order on 27.02.2022 along with the computation sheet. The final order is issued to the assessee post review unit approval which was done on 28.02.2022. On the same day 28.02.2022, the AO had approved on the system for generation of order and with this his role ends in the faceless scheme of assessment. Since many orders would have been in queue, there is a probably chance that the order issued by the AO was served next date. A bare perusal of section 144C(13) clearly mention that Assessing officer shall in conformity with the direction complete the assessment. In this case the AO has completed the assessment. Unlike section 143(2), where words "Serve on the assessee" is mentioned, the same is not available in Section 144C(13). It is also the case of the department that draft order sent to assessee on 27.02.2022 and final order sent to assessee on 28.02.2022 axe the same order. 5. The act envisages completion of assessment and remains silent on service in Section 144C(13). This makes it clear that the assessee should not raise such procedural issues when the same is not expressly provided in the act. The provision u/s Section 292BB is squarely applicable in the case and it is clear that the assessee has cooperated throughout the assessment proceedings and replied to all hearings from the beginning of assessment. Assessee never raised any objection to any jurisdictional fact before and hence the assessee as per section 292BB is precluded from taking up a view that notice was served upon him in time. It is also brought to your goodself's notice that in faceless assessment the procedure is covered by 144B (XXIX), the section of which is reproduced as below: Section 144B (XXIX): IT(TP)A No.263/Bang/2022 Page 4 of 11 "77w assessment unit shall, in conformity with the directions issued by the DRP under sub-section (5) of section 144C, complete the assessment within the time allowed in sub-section (13) of section 144C and initiate penalty proceedings, if any, and send a copy of the assessment order to the National Faceless Assessment Centre;” The compliance of 30 days can be done as per section 144B paiX). However as per 144(0a), the extract of which are reproduced as below: Section 144B (X0(iX) "The National Faceless Assessment Centre shall, upon receipt of the assessment order referred to in clause (xxvi), as the case may be, serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice, specifying the sum payable by, or the amount of refund due to, the assessee on the basis of such assessment;" As seen from the above, no time is given to NFAC to serve the order passed by the NFAC. In view of the same it can be seen that the order was passed well within the time before the time barring dated of 28.02.2022. Therefore, the objection raised by the assessee that the assessment order passed is beyond the time period prescribed under section 143(3) r.w.s. 144C(13) of the Act is not tenable and is bound to be rejected.” 4. The assessee has filed a rejoinder to the AO’s report. The rejoinder of the assessee to the AO’s report reads as follows: 4 Counter submissions on the AO’s Report 4.1 The fact that the impugned order was passed on 1.03.2022, as evidenced by the digital signature affixed on the order, has not been countered by the AO in his report. It clearly establishes that the impugned order is barred by limitation. 4.2 At Para 2 of the AO’s report, it is contended that the final approval in the system was given on 28.02.2022. This does not absolve the legal requirement of passing the order before the due date of 28.02.2022, which has not been done in this case thereby rendering the impugned barred by limitation. IT(TP)A No.263/Bang/2022 Page 5 of 11 4.3 At Para 3 of the AO’s report, the AO has accepted that the time barring date for passing the impugned order was 28.02.2022. 4.4 At Para 4 of the AO’s report, the AO has outlined the process involved before passing of the final assessment order and has contended that the approval for the assessment order was given on 28.02.2022 and has imputed that the delay may be due to technical reasons. This submission of the Ld AO is wrong, due to the following: i) The assessment proceedings get completed by passing of the final assessment order, which is evidenced by signing of the order. The fact of the instant case, as explained above, is that the impugned order was digitally signed on 1.03.2022, which is beyond the limitation date. ii) The signing of the impugned order has nothing to do with any system issue of many orders in queue, as the uploading of the order arises only after signing of the order. Affixing the digital signature on the order has nothing to do with any system issue, as has been imputed. iii) The issue raised involves “issue of notice” and not “service of notice” as contended by the Ld AO. An order gets issued only it is signed. Since the impugned order has been signed on 1.03.2022, it could not have been issued on 28.02.2022, as claimed by the Ld AO. iv) The contention of the Ld AO that the approval in the system was given on 28.02.2022 and that should be reckoned for limitation is legally untenable. The Law requires the AO to pass the order by 28.02.2022, which has not been done thereby rendering the order barred by limitation. 4.5 At Para 5 of the AO’s report, the Ld AO has contended that the issue raised is a procedural issue and is covered u/s 292BB of the Act. The contention of the Ld AO is wrong. As submitted at Para 3.8 above, passing of the order beyond the limitation date is a fundamental error and is not a curable defect under Section 292B of the Act. Completion of the assessment proceedings within time, by affixing the signature on the order within the limitation period is a fundamental requirement, which has not been waived u/s 144B of the Act, as imputed by the Ld AO. IT(TP)A No.263/Bang/2022 Page 6 of 11 5. PRAYER In view of the above, it is humbly submitted that the final assessment order passed by the learned AO was barred by limitation and is liable to be quashed.” 5. We have heard the rival submissions and perused the material on record. The undisputed facts are that the DRP had passed order on 31.012.2021. The copy of the DRP’s directions was received by the AO on 10.01.2022. Therefore, the time barring date for passing the Final Assessment Order was admittedly on 28.02.2022 (this fact is also admitted by the AO in para 3 of the report referred supra). However, the digital signature in the Final Assessment Order has been affixed only on 01.03.2022, which is beyond the limitation date. The Hon’ble Madras High Court in the case of Pfizer Healthcare India Pvt. Ltd., Vs. JCIT, Chennai (2021) 433 ITR 28, while deciding the issue of validity and issue of limitation of TPO’s order has held as under: “30. Now, coming to the question of how 60 day period is to be computed, the critical question would be whether the period of 60 days would be computed including the 31" December or excluding it. Section 153 states that no order of assessment shall be made at any time after the expiry of 21 months from the end of assessment year in which the income was first assessable. The submission of the revenue is to the effect that limitation expires only on 12 am of 1.1.2020. However, this would mean that an order of assessment can be passed at 12 am on 1.1.2020, whereas in my view, such an order would be held to be barred by limitation as proceedings for assessment should be completed before 11.59.59 of 31.12.2019.” 6. Applying the above judgment to the facts of the instant case, the impugned order had got barred by limitation by 11.59.59 on 28.02.2022. The AO has digitally passed the impugned order on 1.03.2022 at 2.00 am, which is beyond the limitation time and hence the impugned order is bad in law and is liable to be quashed. Reliance is also placed on the following judicial precedents including the order of IT(TP)A No.263/Bang/2022 Page 7 of 11 the Bangalore Bench of ITAT wherein in the context of issuance of notice, it has been held that the date of issue of notice is not important, it is date of signing the notice which is important, hence, where notice was dated 31-3-2021 but had been digitally signed on 1-4-2021, date of notice will be 1-4-2021. M/s.Kontoor Brands India Private Limited vs. The Assistant Commissioner of Income-tax, Circle 4(3)(1) Bangalore(IT(TP)A No.214/Bang/2022) - Bangalore ITAT Sharad Garg vs. Income-tax Officer (136 taxmann.com 36) - Delhi High Court Suman Jeet Agarwal vs. Income-tax Officer (143 taxmann.com 11) - Delhi High Court 7. Applying the principles laid down in the judicial precedents, the date of the order is the date on which the order is digitally signed, i.e., 01.03.2022, which is beyond the time limit and hence the impugned order is barred by limitation. 8. An order passed contrary to the provisions of Section 144C of the Act and failure to follow the binding procedure would render the order without jurisdiction and void-ab-initio. Passing of the order beyond the limitation date is a fundamental error and is not a curable defect under Section 292B of the Act. In this context, we rely on the judgment of the Hon'ble Delhi High Court in the case of PCIT Vs. Citi Financial Consumer Finance India, ITA No. 275/2015, wherein the Hon'ble Court has held that Section 292B of the Act cannot save an order not passed in accordance with the Act by holding that "the issue involved is not about the mistake in the said order but the power of the AO to pass the order". The fact that the impugned order was passed on 01.03.2022, as evidenced by the digital signature affixed on the order, has not been countered by the AO in his report. It clearly establishes that the impugned order is barred by limitation. IT(TP)A No.263/Bang/2022 Page 8 of 11 9. At Para 2 of the AO's report, it is contended that the final approval in the system was given on 28.02.2022. This does not absolve the legal requirement of passing the order before the due date of 28.02.2022, which has not been done in this case thereby rendering the impugned Final Assessment Order barred by limitation. 10. At Para 3 of the AO's report, the AO has accepted that the time barring date for passing the impugned order was 28.02.2022. At Para 4 of the AO's report, the AO has outlined the process involved before passing of the final assessment order and has contended that the approval for the assessment order was given on 28.02.2022 and has imputed that the delay may be due to technical reasons. This statement of the AO is wrong, due to the following reasons: i)The assessment proceedings get completed by passing of the final assessment order, which is evidenced by signing of the order. The fact of the instant case, as explained above, is that the impugned order was digitally signed on 1.03.2022, which is beyond the limitation date. ii)The signing of the impugned order has nothing to do with any system issue of many orders in queue, as the uploading of the order arises only after signing of the order. Affixing the digital signature on the order has nothing to do with any system issue, as has been imputed. iii)The issue raised involves "issue of notice" and not "service of notice" as contended by the AO. An order gets issued only it is signed. Since the impugned order has been signed on 1.03.2022, it could not have been issued on 28.02.2022, as claimed by the AO. iv)The contention of the AO that the approval in the system was given on 28.02.2022 and that should be reckoned for limitation is legally untenable. The Law requires the AO to pass the order by 28.02.2022, which has not been done thereby rendering the order barred by limitation. 11. At Para 5 of the AO's report, the AO has contended that the issue raised is a procedural issue and is covered under section 292BB of the Act. The contention IT(TP)A No.263/Bang/2022 Page 9 of 11 of the AO is wrong. As mentioned in para 8 (supra), passing of the order beyond the limitation date is a fundamental error and is not a curable defect under Section 292B of the Act. The completion of the assessment proceedings within time, by affixing the signature on the order within the limitation period is a fundamental requirement, which has not been waived u/s 144B of the Act, as imputed by the AO. 12. The Hon’ble Mumbai High Court in the case of Ramani Suchit Malushte Vs. UoI and Ors. in WP No.933/2022 (judgment dated 21.09.2022), in the context of time limit for filing an appeal stated that “unless digital signature is put by issuing authority, that order will have no effect in eyes of law”. It was held by the Hon’ble Mumbai High Court that only on the date on which the signature is affixed by issuing authority, time to file appeal would commence. The relevant finding of the Hon’ble Mumbai High Court reads as follows: “3. It is petitioner's case that the order in original dated 14` 11 November 2019 which was impugned in the appeal filed before Respondent No.3 has not been digitally signed. Therefore, it was not issued in accordance with Rule 26 of the CGST Rules. Hence, the time limit for filing the appeal would begin only upon digitally signed order being made available. 4. Averments in paragraph Nos.6, 7 and 8 of the petition reads as under: 6.With respect to the issue of limitation, the order which is appealed against, which is the Order for Cancellation of Registration dated 14 November 2019, is not signed by the Respondent No.4 who has issued the order. The said order is merely uploaded on the GST Portal without any signature. The signature was affixed for the first time only on 19 May 2021 when Petitioner had to get an attestation from Respondent No.4 for the purposes of filing appeal. This attestation was required precisely because the Order for Cancellation of Registration dated 14 November 2019 was not signed. IT(TP)A No.263/Bang/2022 Page 10 of 11 7.Rule 26(3) of the Central Goods and Services Tax Rules, 2017 and the pari materia Maharashtra Goods and Services Tax Rules, 2017 requires orders issued under Chapter III of the rules to be authenticated by a digital signature certificate or through E-signature or by any other mode of signature or verification notified in this behalf. The Form GST- REG 19 which was notified under the Rules for the purposes of passing order for cancellation of registration specifically requires the signature of the officer passing the order 8.Thus, the limitation period for filing the appeal against the Order for Cancellation of Registration dated 14 November 2019 never began because the Order was not signed in accordance with the rules. Alternatively, the limitation period began only from 19 May 2021 which is the date on which the signature of the Respondent No.4 was put on the order for the purposes of "attestation". The Order of Cancellation of Registration dated 14 November 2019 as well as the First Appeal Order dated 4 August 2021 are therefore liable to be quashed and set aside. In the affidavit in reply it is not denied that the order in original dated 14 th November 2019 was not digitally signed. In the affidavit in reply it is specifically stated that the show cause notice was digitally signed by the issuing authority but when it refers to the order in original dated 14 th November 2019 there is total silence about any digital signature being put by the issuing authority. Conveniently, respondent stated that petitioner cannot take stand of not receiving the signed copy because the unsigned order was admittedly received by petitioner electronically. However, if this stand of respondent has to be accepted, then the Rules which prescribe specifically that digital signature has to be put will be rendered redundant. In our view, unless digital signature is put by the issuing authority that order will have no effect in the eyes of law. 5. In the circumstances, we have to agree with petitioner's stand that only on the date on which the signature of Respondent No.4 issuing authority was put on the order dated 14t h November 2019 for the purpose of attestation, time to file appeal would commence.” 13. In view of the aforesaid reasoning and the judicial pronouncement cited (supra), we allow ground No.1 and its sub-grounds. Since we have decided the legal issue by holding that the Final Assessment Order is barred by limitation, the grounds on merits are not adjudicated and the same are left open. IT(TP)A No.263/Bang/2022 Page 11 of 11 14. In the result, appeal of the assessee is partly allowed. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- (CHANDRA POOJARI) (GEORGE GEORGE K) Accountant MemberJudicial Member Bangalore. Dated: 30.05.2023. /NS/* Copy to: 1.Appellants2.Respondent 3.CIT4.CIT(A) 5.DR, ITAT, Bangalore.6.Guard file By order Assistant Registrar, ITAT, Bangalore.