Facts of the Case

The petitioner, Acuity KP Solutions (India) Private Limited, filed its return of income for Assessment Year 2007-08 declaring Nil income and claimed a refund of ₹67,86,402. The return was selected for scrutiny and notice under Section 143(2) was issued on 16.09.2008. A reference was made to the Transfer Pricing Officer on 11.10.2010, who proposed an upward adjustment of ₹2,48,74,395. A draft assessment order dated 06.12.2010 proposed an addition of ₹2,44,67,485. The Dispute Resolution Panel, by order dated 01.08.2011, directed recomputation of margins, following which a final assessment order dated 18.10.2011 was passed making an addition of ₹2,48,74,395.

The petitioner appealed to the ITAT, which by order dated 20.07.2012 set aside the assessment for violation of principles of natural justice and remanded the matter to the Assessing Officer for fresh consideration after providing complete information and opportunity of hearing. Despite the remand, no fresh assessment order was passed. During the writ proceedings, the Revenue conceded that relevant files were untraceable and could not confirm passing of any appeal effect order.

Issues Involved

Whether assessment proceedings pursuant to the ITAT’s remand dated 20.07.2012 had become time-barred due to failure to pass a fresh assessment order within the prescribed limitation, and whether the petitioner was entitled to refund of taxes along with statutory interest.

Petitioner’s Arguments

The petitioner contended that no assessment order was passed after the ITAT remand and that the statutory period for completing assessment had long expired. It was submitted that any further proceedings were barred by limitation and that the petitioner was entitled to acceptance of the return and refund of amounts paid along with interest. Reliance was placed on the Delhi High Court decision in Nokia India (P) Ltd. v. DCIT.

Respondent’s Arguments

The Revenue sought adjournments to obtain instructions and ascertain whether any appeal effect order had been passed but failed to file a counter affidavit. It was ultimately submitted that the relevant records were untraceable.

Court Order / Findings

The Delhi High Court noted that it was undisputed that no fresh assessment order had been passed pursuant to the ITAT’s remand dated 20.07.2012. The Court held that the time prescribed for completing assessment had elapsed and any further proceedings for AY 2007-08 were barred by limitation. Relying on its earlier decision in Nokia India (P) Ltd. v. DCIT, the Court held that in such circumstances the return filed by the petitioner was required to be accepted and the refund claimed, along with further payments made, was liable to be refunded with statutory interest.

Important Clarification

The High Court clarified that once an assessment is set aside and remanded by the ITAT, the Assessing Officer must pass a fresh assessment order within the statutory limitation. Failure to do so renders further proceedings non est, and the assessee is entitled to acceptance of the return and refund with interest. Administrative difficulties such as missing files cannot extend limitation prescribed by law.

Final Outcome

The writ petition was allowed. The assessment proceedings for Assessment Year 2007-08 pursuant to the ITAT’s remand were held to be time-barred. The Assessing Officer was directed to refund the amounts due to the petitioner along with statutory interest, preferably within twelve weeks.

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1769594368_ACUITYKPSOLUTIONSINDIAPRIVATELIMITEDVsDEPUTYCOMMISSIONEROFINCOMETAXCIRCLE11DELHIORS..pdf

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