Facts of the Case

The petitioner, Huawei Telecommunications India Company Private Limited, filed its return of income for Assessment Year 2012–13 declaring a loss. The return was selected for scrutiny and assessment was completed under Section 143(3) on 03.10.2017 making multiple additions including transfer pricing adjustments, disallowance of advertisement expenses, provision for customer claims, advances written off, and PF-related disallowance. A demand of ₹45,51,85,614/- was adjusted against the refund otherwise due to the petitioner.

The petitioner preferred an appeal before the Income Tax Appellate Tribunal. By order dated 24.02.2021, the ITAT remanded the transfer pricing issue to the Transfer Pricing Officer for fresh determination and deleted several other additions, some subject to verification by the Assessing Officer.

Despite the remand, no fresh assessment order or order giving effect to the ITAT decision was passed by either the TPO or the Assessing Officer within the time prescribed under Section 153 of the Income-tax Act, 1961. The petitioner, by letter dated 04.04.2024, asserted that the proceedings had become time barred and sought refund of the amount earlier adjusted, which was not processed.

Issues Involved

Whether the assessment proceedings stood time barred for failure of the Assessing Officer and Transfer Pricing Officer to pass an order pursuant to ITAT remand within the limitation prescribed under Section 153, and whether the petitioner was entitled to refund of the amount adjusted along with statutory interest.

Petitioner’s Arguments

The petitioner contended that the ITAT order was pronounced on 24.02.2021 in open court and the statutory limitation for passing a fresh order or giving effect to the remand had expired. It was argued that once the limitation period elapsed, the return of income had to be treated as accepted and the Revenue had no authority to retain the amount adjusted against the refund. Refund with interest under Section 244A was therefore mandatory.

Respondent’s Arguments

Despite opportunities granted by the Court, the Revenue did not file any counter affidavit disputing the facts pleaded by the petitioner. The factual assertions regarding expiry of limitation and non-passing of orders after remand thus remained uncontested.

Court Order / Findings

The Delhi High Court examined Sections 153(3) and 153(5) of the Act and held that the limitation period commenced from 24.02.2021, the date on which the ITAT pronounced its order in open court, especially since the Revenue was duly represented at the time of pronouncement.

Relying on the Full Bench decision in Commissioner of Income Tax-7 v. Odeon Builders (P.) Ltd. and earlier judgments including CIT v. Sudhir Choudhrie, the Court reiterated that pronouncement of the ITAT order in open court constitutes receipt for limitation purposes and internal administrative delays cannot extend statutory timelines.

The Court held that since no order was passed by the TPO or AO within the period prescribed under Section 153, further proceedings pursuant to the ITAT remand were barred by limitation and the petitioner’s return was required to be treated as accepted.

Important Clarification

The Court clarified that once statutory limitation under Section 153 expires, the Revenue loses jurisdiction to proceed further on remand, and amounts recovered or adjusted pursuant to the original assessment cannot be retained. Limitation provisions must be strictly construed and enforced.

Final Outcome

The writ petition was allowed. The Delhi High Court held that the assessment proceedings for Assessment Year 2012–13 were time barred, directed that the petitioner’s return be treated as accepted, and consequently directed the Revenue to process and grant refund of ₹45,51,85,614/- along with applicable statutory interest. Pending applications were disposed of accordingly.

 

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769850697_HUAWEITELECOMMUNICATIONSINDIACOMPANYPRIVATELIMITEDVsASSISTANTCOMMISSIONEROFINCOMETAXCENTRALCIRCLE2.pdf

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