ROLLS-ROYCE INDIA PRIVATE LIMITED ,DELHI V. DCIT TP 3(2)(1), DELHI

ITA 252/DEL/2022

AI Insights

The case involves Rolls Royce India Pvt. Ltd., which appealed against the final assessment order passed by the DCIT, TP 3(2)(1), Delhi, under the directions of the Dispute Resolution Panel (DRP). The assessment included significant adjustments to the income declared by the appellant, primarily concerning transfer pricing adjustments and other corporate tax grounds. The Tribunal's decision focused on the procedural validity of the final assessment order, particularly its compliance with the statutory time limits set under Section 144C(13) of the Income-tax Act, 1961.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705917 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: APM Terminals India Private Limited vs. DCIT, BBC World Service India Pvt. Ltd. vs. ACIT (Delhi), Honda R&D (India) Pvt. Ltd Vs. ACIT, Shell India Markets (P.) Ltd vs. ACIT, Louis Dreyfus Company India (P.) Ltd. v. Dy. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.K. JADHAV
• Assessee Lawyers: NIKHIL TIWARI
• Keywords: Set aside; Opportunity of being heard; Transfer pricing; International transaction; Period of limitation; Rectification of order; Initiation of penalty proceedings
• Section: 144; 143(3); 92

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘H’: NEW DELHI) BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:- 252/Del/2022 (Assessment Year- 2017-18) Rolls Royce India Pvt. Ltd.,2nd floor, Birla Tower (West),25 Barakhamba Road, New Delhi-110001. Vs. DCIT, TP 3(2)(1), Delhi. PAN No: AABCR5277Q APPELLANT RESPONDENT Assessee by : Shri Nikhil Tiwari, Adv. Revenue by : Shri S.K. Jadhav, CIT-DR Date of Hearing : 13.05.2025 Date of Pronouncement : 04.07.2025 ORDER PER SUDHIR PAREEK, JM Present appeal has been preferred by the assessee against the Final Assessment Order dated 18.11.2021 passed by the Assessing Officer (AO) under Section 143(3) read with Sections 144C(13) and 144B of the Income-tax Act, 1961 (“the Act”), pursuant to the ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 2 directions of the Hon'ble Dispute Resolution Panel (DRP) order dated 21.09.2021 for the assessment year 2017-18. 1.1 The Assessee has raised the following grounds of appeal: “That on the facts and in circumstances of the case and in law, the Ld. Assessing Officer ('AO\")/Ld. Transfer Pricing Officer (\"Ld. TPO') based on directions of the Hon'ble Dispute Resolution Panel (\"DRP\") has: General Ground 1. erred by making adjustment/ disallowances of INR 6.96.67,905 to the total income filed the Appellant. Final assessment order is invalid 2. erred in passing the final assessment order dated 18 November 2021 by the Ld. AO u/s Section 143(3) r.w.s 144C(13) r.w.s 144B of the Income-tax Act, 1961 ('the Act\") pursuant to the directions passed by the Hon'ble DRP u/s 144C(5) of the Act dated 21 September 2021 beyond the time limit prescribed and thereby making the entire assessment as vold-ab-initio and liable to be quashed. Transfer Pricing Grounds Determination of Arm's Length Price (\"ALP\") for Provision of engineering support services 2 erred in not accepting the economic analysis conducted by the Appellant in accordance with the provisions of the Act read with Income-tax Rules, 1962 (\"the Rules\"), and modifying the economic analysis for determination of ALP in connection with the international transaction pertaining to \"provision of engineering support services by the Appellant and holding that the international transactions are not at arm's length 3. erred in applying inappropriate search filter and rejecting Accuspeed Engineering Services India Pvt Ltd solely on account of persistent losses i.e. losses in 2 years out of total 3 years (i.e current year plus previous 2 years) 4. erred in considering functionally dissimilar company i.e. L&T Technologies Services Ltd as comparable to the Appellant for determining ALP. ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 3 5. erred in rejecting Neilsoft Ltd and Sphinx Worldbiz Ltd which were not considered as comparable in the TP documentation basis insufficient financial information at the time of preparation of TP documentation and proposed by the Appellant as additional comparables during the course of DRP proceedings basis financial information was available, without providing any justification on functionality of the comparables. 6. erred in rejecting the claim of Appellant for making suitable adjustments to account for differences in the risk profile of the Appellant vis-à-vis the comparables”erred in adopting an inconsistent approach in treatment of following items of expense/ income wherein the same has been treated as operating while computing the margins of tested party and non- operating while computing margins of comparables:  gain/loss on foreign exchange fluctuation.  bank charges, and  provision for bad/doubtful debt created and written back Addition on account of interest on inter-company receivable 8. erred in treating receivables outstanding for more than 30 days from the Associated Enterprises ('AEs\") as deemed loan advanced by the Appellant to AE and computing notional transfer pricing adjustment for excess credit period (over and above 30 days) as deemed loan and interest adjustment has been made by taking SBI Prime Lending Rate (\"PLR\") plus 2 percent i.e. 16.45 percent 9. erred by exceeding jurisdiction while erroneously re- characterizing inter-company receivables as advancing of loan in the absence of any statutory provision and thereby entire adjustment is without any mandate of law and liable to be quashed. 10. erred in not appreciating the impugned transaction arises in normal course of business and the same is intrinsically linked with main transaction and the same cannot be artificially separated out to benchmark which is against the settled principle that closely linked transaction has to be benchmarked by following aggregate benchmarking approach. 11. erred in inappropriate application of Comparable Uncontrolled Price (\"CUP\") method by computing interest on receivables using SBI PLR as the base rate for transactions undertaken in foreign currency. ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 4 Corporate Tax Grounds Disallowance of late payment of employees' contribution to provident fund 12. erred in upholding addition made in respect of Employees' contribution to Provident Fund of Rs. 90,00657/- (out of which Rs 42,04,777 for the month of September 2016 was paid on 17 October 2016 and Rs 47,95,880 for the month of December 2016 was paid on 17 January 2017) without appreciating the fact that these dues were paid before the due date of filing the return of income and hence the same are to be allowed as deduction in the computation of income. 13. should have appreciated that Employees contribution to Provident Fund was made after the statutory due date but within the same Financial Year and hence the same should be allowed as deduction in computation of income. 14. erred in considering the due date for payment of provident fund under The Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (herein after referred to as 'EPF Act') for the month of December 2016 as 15 January 2017 (i.e. within 15 days from the close of the month) thereby ignoring the grace period of 5 days granted by Employees' Provident Fund Organization ('EPFO') vide Circular No. WSU/9(1)2013/Settlement of Claims/26308 dated 12 January 2017. 15. erred in not allowing credit of tax collectedat source (TCS) of INR 19,633 as claimed by the Appellant in its return of income. Initiation of Penalty proceedings under section 270A of the Act 16. erred in proposing initiation of penalty proceedings under section 270A of the Act. The above grounds of appeal are without prejudice to each other. That the Appellant reserves its right to add, alter, amend or withdraw any ground of appeal either before or at the time of hearing of this appeal.” ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 5 2. Facts of the case may be concisely described as that the assessee/appellant is a private limited company and part of Rolls Royce Group engaged in Aero Engine Products and Services. It carries out liaison activities for the Rolls Royce Group in India including Marketing Support, Engineering and Design Services and other support Services. Return of income was filed 17.11.2017 declaring total income of Rs. 14,00,62,060/- which was processed u/s 143(1) of the Act, at an income of Rs. 14,90,62,720/-. Thereafter the case was selected for scrutiny for verification of a few issues including verification of large value of International Transactions. Since the issue was related to determination of Transfer Pricing, a reference was made to the Transfer Pricing Officer for determination of Arm's Length Price u/s 92CA(3) of the Act. 3. The Learned TPO unit-3(2)(1), New Delhi vide its order dated 27.01.2021 passed u/s 92CA(3) of the Act made adjustment of Rs. 10,96,24,191/- on account of Marketing support Services, Engineering and Design Services, supply chain management ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 6 services and interest amount on delayed average receivable.In view of these adjustments draft order U/s 144C of the Act was issued on 24.03.2021 by proposing adjustment of Rs. 10,96,24,191/- to the total income. Aggrieved with the same, assessee filed objections and the Learned DRPvide its order dated 21.09.2021 issued directions to the Learned TPO. (The adjustments proposed by the Learned TPO in the original order dt.27.01.2021 amounting to Rs. 10,96,24,191/- were revised in rectification order passed by the Learned TPO U/s 154/92CA(5)dt. 15.09.2021 vide order no.ITBA/COM/F/17/2021-22/1035593341(1) and the adjustments were rectified to Rs. 11,11,80,266/-). 4. Consequent to the Learned DRP's direction the DCIT TPO 3(2)(1), Delhi, passed giving effect order on 29.10.2021. Accordingly, the arm's length price adjustment of Rs. 11,11,80,266/-proposed u/s 154/92CA(5) of the Act has been revised to Rs.6,06,67,245/ and in view of these facts final order passed and the income is assessed as under: Total income as per order u/s 143(1) : 14,90,62,720/- Add Adjustment made by the TPO : 6,06,67,245/- Total Income Assessed : 20,97,29,965/- Rounded off : 20,97,29,970/- ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 7 5. Heard rival contentions and perused the material available on record. 6. The Ld. AR submitted that the Learned AO erroneously passed the final assessment order dated 18.11.2021 U/s 143(3) r.w.s. 144C(13) of the Act, pursuant to the directions passed by the DRP u/s 144C(5) of the Act, dated 21.09.2021, beyond the prescribed time limit and thereby making the entire assessment as void-ab- initio and liable to be quashed and also submitted that by way of ground number 2, validity of the final assessment order have been challenged, which is the root of the case and sufficient to disposal of present appeal. 7. Per contra, the Ld. DR relied upon the impugned orders of the authorities below. 8. In the course of hearing, the Ld. AR relied upon the orders of the Co-ordinate Bench in ITA No. 829/Mum/2022, in the case of APM Terminals India Private Limited vs. DCIT, dated 08.03.2023, in which held that where the final assessment order is passed beyond prescribed limit, the same is liable to be quashed ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 8 and also relied upon the order of the Co-ordinate Bench in ITA No. 1627/Del/2022, in the case of BBC World Service India Pvt. Ltd. vs. ACIT (Delhi), in which held that the final assessment order passed by the Ld. AO u/s 143(3) read with Section 144C(13) of the Act is liable to be quashed as time barred. The relevant para no. 4 of the order is reproduced as under: “ 4. The draft assessment order was passed u/s 143(3) read with Section 144C of the Act on 31.03.2021 in which transfer pricing in adjustment of Rs. 2,19,68,636/- as suggested by the Id TPO was added to the total income. The assessee filed its objection before the Id DRP. The Id DRP issued direction u/s 144C(5) of the Act on 16.09.2021 upholding the draft assessment order. The said DRP order was intimated to the Id AO on 22.09.2021. There is absolutely no dispute with regard to this fact of date of intimation to the Id AO on 22.09.2021. Hence, the time available to the Id AO to pass the final assessment order in terms of Section 144C(13) would be one month from the end of the month in which order is received which would expire on 31.10.2021. Whereas, in the instant case, the final assessment order has been passed by the Id AO u/s 143(3) read with Section 144C(13) of the Act on 26.05.2022 which is much beyond the prescribed time limit provided u/s 144C(13) of the Act. This issue is no longer res integra in view of the decision of the coordinate bench of this Tribunal in the case of Honda R&D (India) Pvt. Ltd Vs. ACIT reported in 207 ITD 278 (Delhi Tribunal) wherein it was observed as under:- S.No. Events Nikon Present 1 Directors of DRP issued under section 144(c)5 17.03.2022 08.04.2022 2 Assessment case transferred from Faceless AO to JAO under Section 144B(8) of the Act 22.04.2022 Present case transferre d on 25.04.20 22 ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 9 3 DRP order received by JAO 02.05.2022 18.05.2022 4 Final Assessment order passed 30.06.2022 30.06.2022 5 Limitation from April 2022 will end on 31.05.2022 31.05.2022 17. In the context of faceless assessment process time and place of dispatch and receipt of electronic document (in this case DRP order) is required to be ascertained by reference to section 13 of Information Technology Act, 2000 which is the basis prescribed under section 144B of Income Tax Act also (refer section 144 B (6)(v)). Hon'ble Supreme Court in case of GS Chatha Rice Mills [(2021)2SCC 209-J para 85), interpreted this very provision. Applying principles laid down by Hon'ble Supreme Court, only relevant fact necessary for deciding Ground No. 4 in present appeal relating to time barred assessment, is time of uploading by DRP of DRP order onto ITBA portal. Intimation letter to DRP order unambiguously shows 27th April 2022 as date of uploading of DRP order. This fact cannot be disputed. Except this critical and relevant information everything else (like when order is visible to AO, date of uploading some document by DCIT/ACIT circle 2 (1) (1) Delhi) has been submitted by Respondents. It is fair to conclude that date of uploading DRP order on ITBA portal is 27.04.2022. As per section 144C(13) of the Act, assessment had to be completed on or before 31.05.2022. In present case the assessment is completed only on 30.6.2022 i.e., it is time barred null and void. Therefore, impugned assessment order dated 30.06.2022 is set aside being barred by limitation. Other grounds having become academic in nature are left open. 9. Likewise, in order to strengthen the plea , the Learned AR also relied upon the judgment(2022) 139 taxmann.com 335 (Bombay), in the caseof Shell India markets (P.) Ltd.vs. ACIT, National Assessment Centre, New Delhi, in which Hon’ble High Court of Bombay held that where the direction of DRP in case of assessee ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 10 were received by Ld. AO on 20.03.2021 and time limit for completion of assessment u/s 144C(13) was 30th April, 2021 and relaxation under TOLA would be inapplicable and, hence, assessment order passed on 30thSeptember, 2021 was time barred and the relevant para no. 22 to 24 is reproduced as under: “22.Even if for a moment we hold that Relaxation Act is applicable to petitioner's case, the time-limit provided by Notification No. 38/2021 expired on 30th June 2021. Notification No. 74/2021, on which respondents have relied upon to submit that time has been extended upto 30th September 2021, specifically excludes section 144C(13) of the Act. If that also was to be included, Notification No. 74/2021 would have expressly provided for it as it has provided in Notifications No. 20/2021 and 38/2021. 23. Notification No. 20/2021 and Notification No. 38/2021 specifically referred to the time-limit for passing the final assessment order under section 144C(13) of the Act. There is, however, no specific reference to the time-limit under section 144C(13) of the Act in Notification No. 74/2021. Therefore, it is clear that CBDT has not extended the time-limit for passing any order under section 144C(13) of the Act vide Notification No. 74/2021 dated 25th June 2021, and hence, there is no extension of time-limit to 30th September 2021 to pass the order under section 144C(13) of the Act. 24. In the circumstances, we are inclined to allow the 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 any other writ order or direction under Article 226 of the Constitution of India calling for the records of the case leading to and passing of the impugned assessment order (Exhibit I) dated 30th September 2021 under section 143(3) read with section 144C(13) and 144B of the Act for the assessment year 2016-17, Computation of Income (Exhibit 1-1) and the Demand Notice dated 30th September 2021 (Exhibit 1-2) issued under section 156 of the Act and Penalty Notice dated 30th September 2021 (Exhibit I-3) issued under section 274 read with section 270A of the Act and after going through the same and examining the question of legality thereof quash, cancel and set aside the impugned assessment order (Exhibit I) dated 30th September 2021 passed under section 143(3) read with section 144C(13) and 144B of the Act for the assessment year 2016-17, ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 11 Computation of Income (Exhibit I-1) and the Demand Notice dated 30th September 2021 (Exhibit 1-2) issued under section 156 of the Act and Penalty Notice dated 30th September 2021 (Exhibit 1-3) issued under section 274 read with section 270A of the Act.\" 11. In support of argument, the Ld. AR also emphasised upon another order of Co-ordinate Bench in ITA No.-812/Del/2022, in the case of Fiberhome India Pvt. Ltd. vs. DCIT, New Delhi in which date of order of the DRP was 16th December, 2021 and date of assessment order 26th February, 2022 and it is held that the final order passed by the Ld. AO was beyond the period of limitation as provided u/s 144C of the Act and liable to be dismissed as null and void. The Revenue has challenged above order by way of appeal and while deciding the appeal, the Hon’ble Jurisdictional High Court, Delhi, dismissed the appeal, by observing as follows: “ 3. We note that an identical question has been answered by us in [W.P(C) 15381 of 2022, dated 30-1-2024) titled as \"Louis Dreyfus Company India (P.) Ltd. v. Dy. CIT [2024] 159 taxmann.com 244 (Delhi)\" in favour of the assessee petitioner. While dealing with this question, we had observed as follows: \"14. The determination which the AO makes in the first instance is recognized to be a draft of the proposed order of assessment by virtue of section 144C(1) of the Act. If the assessee be aggrieved by the proposed order of assessment, it is entitled to file objections before the DRP in accordance with section 1440(2) of the Act. The power of the AO to complete the assessment on the basis of the draft order stands interdicted in case objections have come to be preferred within the 30 day period as contemplated in section 144C(2) of the ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 12 Act. It is the DRP which thereafter proceeds to decide the objections and frame directions to enable the AO to complete the assessment in accordance with section 144C(5) of the Act. 15. In terms of sub-section (13) of section 144C of the Act, the AO is mandated to complete the assessment \"in conformity with the directions\" as framed by the DRP. That very provision commands the AO to complete the assessment within one month from the end of the month in which such a direction is received. 16. This is evident from Section 144C of the Act which is extracted hereinbelow:- 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 & Ors. 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. ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 13 19. Further, the procedure of assessment as provided under Section 144C does not envisage or contemplate the interdiction or involvement of the TPO once a directive has been framed by the DRP. The role of the TPO comes to an end once an order as contemplated under Section 92 CA(4) of the Act has come to be framed and remitted to the AO. There was thus no occasion for the TPO having resumed proceedings post the passing of the direction by the DRP on 20 June 2022. 20. Undisputedly, the directive of the DRP came to be uploaded on the ITBA portal on 24 June 2022. It is additionally stated to have been dispatched through Speed Post to the third respondent (TPO) and the fourth respondent (Additional/Joint/Deputy/Assistant Commissioner of Income Tax, National Faceless Assessment Centre, New Delhi) on 27 June 2022. It is thereafter that the TPO appears to have passed the order dated 25 July 2022. * * 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.\" 4. We, consequently, find no merit in the instant appeal and the same shall stand dismissed.” 10. In support of arguments, the Learned AR also relied upon the judgment passed by the Hon’ble High Court of Delhi in the case of ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 14 Louis Dreyfus Company India Pvt. Ltd. vs. DCIT (W.P.(C) [2024] 159 taxmann.com 244 (Delhi), wherein observed as under: - “ 18. In this backdrop, we note that both the judgments of the Bombay High Court in Shell India Markets (P.) Ltd's case (supra) and Vodafone Idea Ltd's case (supro) construe the time lines as provided in Section 1440 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. 19. Further, the procedure of assessment as provided under section 144C does not envisage or contemplate the interdiction or involvement of the TPO once a directive has been framed by the DRP. The role of the TPO comes to an end once an order as contemplated under section 92 CA(4) of the Act has come to be framed and remitted to the AO. There was thus no occasion for the TPO having resumed proceedings post the passing of the direction by the DRP on 20 June 2022. 20. Undisputedly, the directive of the DRP came to be uploaded on the ITBA portal on 24 June 2022. It is additionally stated to have been dispatched through Speed Post to the third respondent (TPO) and the fourth respondent (Additional/Joint/Deputy/Assistant Commissioner of Income Tax, National Faceless Assessment Centre, New Delhi) on 27 June 2022. It is thereafter that the TPO appears to have passed the order dated 25 July 2022. 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 on with the assesse or any other person with respect to the 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 b necessarily uploaded on the ITBA portal and as part of the larger faceless assessment regime which now hold the field. The uploading of the directive of the DRP on the ITBA portal would thus constitute valid ana sufficient service and the period of limitation as prescribed in Section 144C(13) of the Act would be liable t be computed bearing that crucial date in mind. Once the aforesaid ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 15 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 object failure on the part of the first respondent to comply with the mandatory timelines as incorporated in theaforenoted 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. 23. The writ petition is allowed. The order of assessment dated 24 August 2022 as well as the penalty show cause notice dated 24 August 2022 are quashed and set aside. For reasons aforenoted and consequent to a failure on the part of the respondents to implement the directives of the DRP, the return as submitted by the petitioner would be deemed to have been accepted and the tax liability worked accordingly.” 13. For the sake of convenience, we reproduced section 144Cof the Act: “144C (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the www/order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation which is prejudicial to the interest of such assessee. 2. On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order- a) file his acceptance of the variations to the Assessing Officer, or (b) file his objections, if any, to such variation with- (1) the Dispute Resolution Panel; and (i) the Assessing Officer, (3) The Assessing Officer shall complete the assessment on the basis of the draft order if (a) the assessee intimates to the Assessing Officer the acceptance of the variation; or (b) no objections are received within the period specified in sub-section (2). ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 16 (4) The Assessing Officer shall, notwithstanding anything contained in section 13 for section 153B), pass the assessment order under sub- section (3) within one month from the end of the month in which- (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. 6) The Dispute Resolution Panel shall issue the directions referred to in sub section (5), after considering the following, namely: (a) draft order, (b) objections filed by the assessee; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 17 (7) The Dispute Resolution Panel may, before issuing any directions referred in sub-section (5).- (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. Explanation. For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising our of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee.] (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 30 for section 153B), the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.” ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 18 13.1 As per section 144C(13), there is clear mandate that upon receipt of the directions issued u/s 144C(5), the Ld. AO shall supposed to complete the assessment inconformity with the directions of the Learned DRP without providing any further opportunity of being heard to the assessee, within one monthfrom the end of the month in which such directions was received and in the present case, it is factually established that the Ld. DRP, issued directions on 21.09.2021 and u/s 144C(13), the Ld. AO was supposed to complete the assessment on or before 31.10.2021but Ld. AO passed the impugned final assessment order on 18.11.2021, which is expressly time barred and as per judicial precedents mentioned hereinbefore, where the time barred final assessment passed, consequently assessment order itself reduced to be null and void and lost it’s legal value. 14. On the basis of foregoing fact situation and by following the principles of law laid down in the abovecited judicial precedents, we find that final assessment order dated 18.11.2021 has been framed beyond the prescribed time limit u/s 144C(13) of the Act and, so, it ITA No.- 252/Del/2022 Rolls- Royce India Pvt. Ltd. 19 is time barred, and accordingly, the impugned final assessment order is quashed being void ab initio. Consequently, the ground no. 2 is hereby deserves to be allowed. 15. Since the entire assessment quashed as barred by limitation, there is no need to adjudicate the other grounds. 16. Consequently, the appeal is allowed as indicated above. Order pronounced in the open court on 04.07.2025 Sd/- Sd/- (RAMIT KOCHAR) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 04.07.2025 Pooja/NEHA, Sr. PS/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, Delhi "