DRP can’t condone delay in filing objections by assessee before Panel: Bangalore ITAT

Case Details: Lam Research (India) (P.) Ltd. v. ACIT [2021] 133 taxmann.com 279 (Bangalore - Trib.)

Judiciary  and Counsel Details

• • Chandra Poojari, Accountant Member and George George K, Judicial Member
  • Ajit Tolani, CA and Darpan Kirpalani, Adv. for the Appellant. 
  • Ms. Neera Malhotra, CIT-DR for the Respondent.

Facts of the Case

Assessee was a private limited company, a wholly-owned subsidiary of Novellus Systems International Inc., USA. It provides computer development services and IT-enabled services for its Associate Enterprises (AEs) on a cost-plus markup basis.
During assessment proceedings, the matter was referred by the Assessing Officer (AO) to the Transfer Pricing Officer (TPO) to determine the ALP of the international transactions. The TPO made a transfer pricing adjustment, and after that, passed a draft assessment order.

The assessee filed objections before the Dispute Resolution Panel (DRP) with the delay of 3 days. Thus, DRP rejected the assessee’s objections by stating that it does not have power to condone the delay in filing the objections. Later, the final order was passed by AO. Aggrieved-assessee filed the instant appeal before the Tribunal.

ITAT Held

The Bangalore Tribunal held that the DRP derives its authorities and powers from section 144C of the Income-tax Act, and its procedures are governed by Income-tax (Dispute Resolution Panel) Rules, 2009. The provisions of the Act or Rule do not give any power to the DRP to condone the delay in filing the objections by the assessee before the Panel.
If the Legislature had intended to give such powers, it had been expressly implied as in the case of powers with the CIT(A) under section 249(3) and ITAT under section 253(5). Therefore, the DRP was right in rejecting the request of condonation of delay in filing the objection. This view is also endorsed by the Hon’ble Madras High Court in the case of Inno Estates (P.) Ltd. [2018] 96 taxmann.com 646 (Madras).

Case Review

• • Inno Estates (P.) Ltd. v. DRP-2 [2018] 96 taxmann.com 646/258 Taxman 21/406 ITR 553 (Mad.) (para 6.2) followed.

List of Cases Referred to

• • National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) (para 2.2)
  • Yokogawa India Ltd. v. Asstt. CIT [IT (TP) Appeal Nos. 1715 & 692 (Bang.) of 2016, dated 11-3-2021] (para 4)
  • Inno Estates (P.) Ltd. v. DRP-2 [2018] 96 taxmann.com 646/258 Taxman 21/406 ITR 553 (Mad.) (para 5)
  • Himalayan Drug Co. v. Dy. CIT [2017] 84 taxmann.com 8 (Bang. – Trib) (para 5).