Hon’ble Sri Justice v. Ramasubramanianandhon’ble Mrs Justice : Anis

IN THE HIGH COURT OF JUDICATURE AT HYDERBADFOR THE STATE OF TELANGANA AND THE STATE OF ANDHRAPRADERSHWRIT PETITION No.33342 of 2015 Between: M/s. Rain Cements Limited,rep. by its Chief Financial OfficerG.N.V.S.R.R. Kumar. …..Petitioner And 1.Deputy Commissioner of Income Tax, Circle-3(1), I.T. Towers,Masab Tank, Hyderabad – 500 004, and others.Masab Tank, Hyderabad – 500 004, and others. …… Respondent JUDGMENT PRONOUNCED ON : 31.08.2016 HON’BLE SRI JUSTICE : V. RAMASUBRAMANIANANDHON’BLE MRS JUSTICE : ANIS 1. Whether Reporters of local Newspapers may be allowed to see the Judgments? : 2. Whether the copies of judgment may be marked to Law Reporters/ Journals? may be marked to Law Reporters/ Journals? 3. Whether their Ladyship/Lordship wish to see the fair copy of the judgment? : judgment? : HON’BLE SRI JUSTICE V.RAMASUBRAMANIAN AND HON’BLE SMT. JUSTICE ANIS + Writ Petition No.33342 of 2015 % 31-8-2016 M/s. Rain Cements Ltd., (Formerly M/s Rain CII Carbon (India) Ltd., Hyderabad-73, Rep. by its Chief Financial Officer, GNVSRR Kumar Vs. … Petitioner $ Deputy Commissioner of Income Tax, Circle-3(1), I.T. Towers, Masab Tank, Hyderabad-04; and 4 others ! Counsel for the Petitioner: Mr. Deepak Chopra … Respondents Counsel for the Respondents: Mr. B.Narasimha Sarma, Senior Standing Counsel. < Gist: > Head Note: ? Cases referred: Nil. HON’BLE SRI JUSTICE V.RAMASUBRAMANIAN AND HON’BLE SMT JUSTICE ANIS Order: (per V.Ramasubramanian, J.) The petitioner has come up with the above writ petitionseeking a declaration that the proceedings issued by the DeputyCommissioner of Income Tax under Section 143(3) read withSection 144-C (13) of the Income Tax Act, 1961, are null and voidand also for quashing the decision of the Disputes ResolutionPanel dated 22-6-2015. 2. We have heard Mr. Deepak Chopra, learned counselappearing for the petitioner and Mr. B.Narasimha Sarma, learnedSenior Standing Counsel for the respondents. 3. The petitioner is a wholly owned subsidiary of a company, by name Rain Industries Limited. It is engaged in thebusiness of manufacture of Calcinated Petroleum Coke and PowerGeneration in the State. 4. The petitioner filed its return of income on 30-9-2008 forthe Assessment Year 2008-09 declaring a loss ofRs.23,71,90,124/- after claiming exemption of an amount ofRs.84,87,05,352/- under Section 10B. The petitioner was liable topay taxes under Section 115JB on its book profits. 5. The case of the petitioner was taken up for scrutiny andafter considering the documents, an order under Section 143(3) was passed on 25-01-2012. By this order, theJoint Commissioner of Income Tax allowed deduction underSection 10B to a lesser extent than what was claimed in theoriginal return of income. 6. Aggrieved by the order dated 25-01-2012 passed underSection 143(3), the petitioner filed an appeal on 29-02-2012 before the Commissioner of Income Tax (Appeals). The appeal is stated to be pending for the past more than fouryears. 7. In the meantime a notice dated 21-3-2013 was issuedunder Section 148, calling upon the petitioner to file its return ofincome. The petitioner submitted a letter dated 16-4-2013 requesting the Department to treat the return of incomefiled on 30-9-2008 as the return. Thereupon, the Assessing Officersent a communication dated 31-7-2013, stating the reasons forreopening of assessment. The petitioner submitted its objections on 19-8-2013. 8. Thereafter the Deputy Commissioner, passed a draftassessment order dated 26-3-2014 computing the total income atRs.34,62,48,597/-, as against the loss originally returned by thepetitioner. 29-02-2012 before the Commissioner of Income Tax (Appeals). The appeal is stated to be pending for the past more than fouryears. 7. In the meantime a notice dated 21-3-2013 was issuedunder Section 148, calling upon the petitioner to file its return ofincome. The petitioner submitted a letter dated 16-4-2013 requesting the Department to treat the return of incomefiled on 30-9-2008 as the return. Thereupon, the Assessing Officersent a communication dated 31-7-2013, stating the reasons forreopening of assessment. The petitioner submitted its objections on 19-8-2013. 8. Thereafter the Deputy Commissioner, passed a draftassessment order dated 26-3-2014 computing the total income atRs.34,62,48,597/-, as against the loss originally returned by thepetitioner. 9. According to the petitioner, the draft assessment orderdated 26-3-2014 was not served on them, for a full period of aboutfive months. It is claimed by the petitioner that the draftassessment order was served by hand on the petitioner only on22-8-2014. 10. Within 30 days of receipt of the draft assessment order,the petitioner filed their objections before the Disputes ResolutionPanel, at Hyderabad on 18-9-2014. This was in terms of Section144-C (2) (b). 11. When the objections of the petitioner were pendingbefore the Disputes Resolution Panel, at Hyderabad, the CentralBoard of Direct Taxes issued instructions dated 01-01-2015, reconstituting the jurisdiction of the DisputesResolution Panel. As per these instructions, the DisputesResolution Panel, Bengaluru assumed jurisdiction over the Statesof Andhra Pradesh and Telangana. Therefore the objections raised by the petitioner were transferred to the Disputes ResolutionPanel, Bengaluru. 12. The Disputes Resolution Panel, Bengaluru, issued a notice of hearing and the petitioner participated in the hearing on18-6-2015. The petitioner also made written submissions on 22-6-2015. 13. However, the Disputes Resolution Panel, Bengaluru,passed an order dated 22-6-2015 holding that the period of ninemonths fixed by Section 144-C (12) had expired by 31-12-2014 and that since the DRP, Bengaluru assumedjurisdiction only from 1-1-2015, they did not have jurisdiction topass any orders on the objections of the petitioner. 14. Immediately the Assessing Officer passed a finalassessment order dated 28-8-2015. Aggrieved by the finalassessment order and the decision of the Disputes ResolutionPanel, Bengaluru, the petitioner is before us. 15. The main grounds on which the petitioner challenges thedecision of the Disputes Resolution Panel, and the consequentialorder of assessment are as follows: (1) that the period of nine months stipulated in sub-section (12) of Section 144-C has to be reckoned only fromthe date on which the draft assessment order is forwarded to theassessee and not from the date on which the draft assessmentorder was passed, (2) that when the Disputes Resolution Panel, Hyderabadforwarded the papers to the Disputes Resolution Panel, Bengaluru,they themselves indicated that the time limit available for DisputesResolution Panel, Bengaluru to issue directions under sub-section(5), was up to June 2015, but the Disputes Resolution Panel,Bengaluru, wrongly thought that the time limit expired on 31-12- 2014, (3) that the Disputes Resolution Panel’s order to the effectthat Form 35A was not filed, was factually incorrect, (4) that the Assessing Officer complicated matters bypresuming the order of the Disputes Resolution Panel dated 22-6-2015 to be a direction under sub-section (5), and (5) that if the petitioner had not filed their objections to thedraft assessment order within time, the Assessing Officer couldhave passed the final assessment order under sub-section (3), immediately after the expiry of 30 days availablefor filing the appeal and the very fact that the Assessing Officerdid not do so, makes it clear that the Assessing Officer waited fora direction from the Disputes Resolution Panel. 16. We have carefully considered the above submissions. 2014, (3) that the Disputes Resolution Panel’s order to the effectthat Form 35A was not filed, was factually incorrect, (4) that the Assessing Officer complicated matters bypresuming the order of the Disputes Resolution Panel dated 22-6-2015 to be a direction under sub-section (5), and (5) that if the petitioner had not filed their objections to thedraft assessment order within time, the Assessing Officer couldhave passed the final assessment order under sub-section (3), immediately after the expiry of 30 days availablefor filing the appeal and the very fact that the Assessing Officerdid not do so, makes it clear that the Assessing Officer waited fora direction from the Disputes Resolution Panel. 16. We have carefully considered the above submissions. 17. As rightly pointed out by the learned counsel for thepetitioner, Section 144-C is a complete code in itself, as itincorporates, all the dos and don’ts for the Disputes ResolutionPanel as well as the Assessing Officer. Therefore it is necessaryto extract Section 144-C. It reads as follows: “144C. (1) The Assessing Officer shall, notwithstandinganything to the contrary contained in this Act, in the firstinstance, forward a draft of the proposed order of assessment(hereafter in this section referred to as the draft order) to theeligible assessee if he proposes to make, on or after the 1stday of October, 2009, any variation in the income or lossreturned 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 AssessingOfficer; or (b) file his objections, if any, to such variation with,— (i) the Dispute Resolution Panel; and (ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment onthe 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 insub-section (2). (4) The Assessing Officer shall, notwithstanding anythingcontained insection 153orsection 153B, pass theassessment order under sub-section (3) within one monthfrom 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 anyobjection is received under sub-section (2), issue suchdirections, as it thinks fit, for the guidance of the AssessingOfficer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directionsreferred 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 orTransfer 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. (7) The Dispute Resolution Panel may, before issuing anydirections referred to 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-taxauthority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce orenhance the variations proposed in the draft order so,however, that it shall not set aside any proposed variation orissue any direction under sub-section (5) for further enquiryand passing of the assessment order. Explanation.—For the removal of doubts, it is hereby declaredthat the power of the Dispute Resolution Panel to enhance thevariation shall include and shall be deemed always to haveincluded the power to consider any matter arising out of theassessment proceedings relating to the draft order,notwithstanding that such matter was raised or not by theeligible assessee. (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-taxauthority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce orenhance the variations proposed in the draft order so,however, that it shall not set aside any proposed variation orissue any direction under sub-section (5) for further enquiryand passing of the assessment order. Explanation.—For the removal of doubts, it is hereby declaredthat the power of the Dispute Resolution Panel to enhance thevariation shall include and shall be deemed always to haveincluded the power to consider any matter arising out of theassessment proceedings relating to the draft order,notwithstanding that such matter was raised or not by theeligible assessee. (9) If the members of the Dispute Resolution Panel differ inopinion 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 Panelshall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unlessan opportunity of being heard is given to the assessee and theAssessing Officer on such directions which are prejudicial tothe interest of the assessee or the interest of the revenue,respectively. (12) No direction under sub-section (5) shall be issued afternine months from the end of the month in which the draft orderis forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub-section(5), the Assessing Officer shall, in conformity with thedirections, complete, notwithstanding anything to the contrarycontained insection 153orsection 153B, the assessmentwithout providing any further opportunity of being heard to theassessee, within one month from the end of the month inwhich such direction is received. (14) The Board may make rules for the purposes of theefficient functioning of the Dispute Resolution Panel andexpeditious disposal of the objections filed under sub-section(2) by the eligible assessee. 48b[(14A)The provisions of this section shall not apply to anyassessment or reassessment order passed by the Assessing Officer with the prior approval of the49[PrincipalCommissioner or] Commissioner as provided in sub-section(12)ofsection 144BA.] (15) For the purposes of this section,— (a) "Dispute Resolution Panel" means a collegium comprisingof three[49][Principal Commissioners or] Commissioners ofIncome-tax constituted by the Board for this purpose; (b) "eligible assessee" means,— (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of theTransfer Pricing Officer passed under sub-section (3) ofsection 92CA; and (ii) any foreign company.” History and object behind Section 144-C:- 18. Section 144-C was inserted in the Income Tax Act byFinance (No.2) Act, 2009 with effect from 01-4-2009. The reason for the insertion of Section 144-C was given in theNotes on Clauses, Finance Bill, 2009, as under: “The subjects of transfer pricing audit and the taxation of foreigncompanies are at nascent stage in India. Often the AssessingOfficer and the Transfer Pricing Officers tend to take aconservative view. The correction of such view takes very longtime with the existing appellate structure. With a view to provide speedy disposal, it is proposed to amendthe Income Tax Act so as to create an alternative disputeresolution mechanism within the Income Tax Department andaccordingly Section 144C has been proposed to be inserted soas to provide inter alia the Dispute Resolution Panel as analternative dispute resolution mechanism.” 19. It appears that from the time Section 144-C wasinserted, there have been some misgivings andmisunderstandings. The Government notified the DisputeResolution Panel Rules by S.O. No.2958 (E), dated 20-11-2009. Thereafter, an Explanatory Circular for Finance (No.2)Act, 2009 was issued in Circular No.5/2010, dated With a view to provide speedy disposal, it is proposed to amendthe Income Tax Act so as to create an alternative disputeresolution mechanism within the Income Tax Department andaccordingly Section 144C has been proposed to be inserted soas to provide inter alia the Dispute Resolution Panel as analternative dispute resolution mechanism.” 19. It appears that from the time Section 144-C wasinserted, there have been some misgivings andmisunderstandings. The Government notified the DisputeResolution Panel Rules by S.O. No.2958 (E), dated 20-11-2009. Thereafter, an Explanatory Circular for Finance (No.2)Act, 2009 was issued in Circular No.5/2010, dated 03-6-2010. Paragraph 45 of the said Circular explained the newSection 144-C and the consequential amendments made in theother Sections of the Act. While doing so, the Circular dated 03-6-2010 wrongly indicated that the amendments, made applicable witheffect from 01-10-2009, will apply in relation to assessment year2010-11 and subsequent assessment years. 20. In order to set right the above mistake, another Circularbearing No.9/2013 was issued on 19-11-2013. By this Circular it was clarified that Section 144-C is applicable toany order which proposed to make variation in income or lossreturned by an eligible assessee on or after 01-10-2009, irrespective of the assessment year to which itpertains. 21. Nevertheless, paragraphs 45.1 to 45.4 of CircularNo.5/2010, dated 03-6-2010, sought to explain the substance ofthe provisions of Section 144-C. In brief, the contents of paragraphs 45.1 to 45.4 can be summarised as follows: (1) The Dispute Resolution Mechanism presently in place, istime consuming and finality in high demand cases is attained afterlong drawn litigation to the Supreme Court. Therefore in order toaddress the concern of the multi-national companies and toprovide mechanism for speedy disposal of their cases, this newprovision was inserted to facilitate expeditious resolution ofdisputes. (2) The Dispute Resolution Panel is vested with the samepowers as are vested in a Court under the CPC. This was done by amending Section 131(1). (3) An order passed under Section 143(3) or Section 147 inpursuance of the directions of the DRP, is not made appealableunder Section 246A(1) to the Commissioner or under Section253(1) to the Appellate Tribunal. It means a finality was sought to be attached to the directions issued by theDispute Resolution Panel. (4) Since the Dispute Resolution Panel is provided as analternative mechanism for the resolution of disputes, the choice isupon the assessee whether to file an objection against the draftassessment order before the DRP or to pursue the normal channelof filing of appeal against the assessment order before theCommissioner (Appeals). 22. An interesting aspect to be taken note of from CircularNo.5/2010, dated 03-6-2010, is that as per para 45.4 of the Circular, “once the option of filing an objection against the draft assessment order before the DRPhas been exercised, the assessee cannot withdraw the objectionand opt for the normal channel of filing an appeal before CIT(Appeals)”. Irrespective of whether the understanding of the Government in para 45.4 of Circular No.5/2010 is correct or not,the Circular seems to proceed on the footing that the availing ofthe remedy to go before the DRP, would take away the right ofappeal. Therefore, it is clear that the option exercised by anassessee to avail the alternative mechanism of disputeresolution, by going before the DRP, cannot be rendered anexercise in futility, by throwing the objections out, on flimsygrounds. an objection against the draft assessment order before the DRPhas been exercised, the assessee cannot withdraw the objectionand opt for the normal channel of filing an appeal before CIT(Appeals)”. Irrespective of whether the understanding of the Government in para 45.4 of Circular No.5/2010 is correct or not,the Circular seems to proceed on the footing that the availing ofthe remedy to go before the DRP, would take away the right ofappeal. Therefore, it is clear that the option exercised by anassessee to avail the alternative mechanism of disputeresolution, by going before the DRP, cannot be rendered anexercise in futility, by throwing the objections out, on flimsygrounds. 23. As a matter of fact, the Central Board of Direct Taxeshad already issued a set of rules known as Income Tax (DisputeResolution Panel) Rules, 2009, in exercise of the powersconferred by Section 144-C (14). Under these Rules, provisionsare made for the constitution of Dispute Resolution Panels, themethod of filling up vacancies arising in the Panels, theestablishment of a Secretariat attached to each Panel etc. Rule4(1) of these Rules stipulates that the objections to a draftassessment order should be filed in Form No.35A. The objections are to be accompanied by theevidence relied upon by the assessee. As per Rule 5 of theseRules, the Panel should issue a notice of hearing to the assessee,as per Rule 6 the Panel should call for the records and as per Rule7 the Panel should hear both parties and thereafter pass an order.Rule 9 empowers the Panel to call for or permit any additionalevidence. 24. Interestingly Rule 8 of these Rules stipulates that if theeligible assessee dies or adjudicated as insolvent or wound up (inthe case of a limited company) after the filing of objections, theproceedings before the Panel shall not abate. 25. With regard to the power of the Panel to issuedirections, Rule 10(2) makes it clear that the Panel need not consider itself bound by the grounds set out in the objections, butshall have the power to consider any matter or grounds arising outof the proceedings. 26. Rule 13 confers a power upon the Panel, both suo motu and on an application from the assessee or theAssessing Officer, to rectify any mistake or error found in thedirections issued under sub-section (5). 27. Another important aspect of the Rules is that under Rule14 of these Rules, an appeal against the assessment order passedin pursuance of the directions issued by the Panel under sub-section (5), should be filed before the Appellate Tribunal in FormNo.36B. Therefore para 45.4 of Circular No.5/2010, has to beunderstood to convey a limited meaning that an assessee is notentitled to file an appeal against the draft assessment order. Butonce a final assessment order is made as per the directionsissued by DRP, the same can be the subject matter of an appealbefore the Tribunal. Fact Situation on Hand: 28. Having seen the history and object of Section 144C andthe manner in which the Department had understood the same, letus now come to the facts of the case on hand. 29. Admittedly the draft assessment order was passed on26-3-2014. According to the petitioner, it was received by themonly on 22-8-2014. But according to para 3 of the proceedingsdated 22-6-2015, they did not find any credible evidence placed onrecord as to the date of service of the draft order. Therefore theDRP has wondered in para 3 as to how it could have taken fivelong months for the draft assessment order to be served on theassessee. 30. But unfortunately, the Tribunal, in our considered view, misdirected the above question to the assessee. We have alreadyextracted Section 144C. Sub-section (1) of Section 144C makes itmandatory for the Assessing Officer to forward a draftassessment order to the assessee. What is the meaning of theexpression “forward” appearing in sub-section (1) ? 31. The answer to this question would depend upon theconsequences that would flow out of the compliance or 30. But unfortunately, the Tribunal, in our considered view, misdirected the above question to the assessee. We have alreadyextracted Section 144C. Sub-section (1) of Section 144C makes itmandatory for the Assessing Officer to forward a draftassessment order to the assessee. What is the meaning of theexpression “forward” appearing in sub-section (1) ? 31. The answer to this question would depend upon theconsequences that would flow out of the compliance or non-compliance with the obligation “to forward”. Sub-section (2) ofSection 144C obliges the assessee to file objections within 30days, before the DRP. While sub-section (1) which speaks of theobligation of the Assessing Officer, uses the expression “forward”,sub-section (2) which speaks of the entitlement of the assessee,uses the phrase “on receipt of the draft order”. The word “receipt”is used twice in sub-section (2). Sub-section (2) begins with thewords “on receiptof the draft order, the eligible assessee shall,within 30 days of the receiptby him of the draft order”. 32. Therefore the word “forward” appearing in sub-section (1) cannot have a meaning that is completely contraryto the words and expressions found in sub-section (2). Unless the word “forward” is understood to meanactual service of the copy of the draft assessment order on theassessee, the word “receipt” found in sub-section (2) would loseits meaning. 33. Therefore it is clear that the obligation on the part of theAssessing Officer under sub-section (1) is to serve the draftassessment order on the assessee. It is not enough for theAssessing Officer merely to pass a draft assessment order andkeep it in his almirah. It is necessary for him to send the same in amanner known to law and serve the same on the assessee. The period of 30 days available to the assessee to file objections,would start running only from the date on which the assesseereceives the draft assessment order. 34. In the case on hand, the Department has no doubtproduced a letter dated 26-3-2014, by which the draft assessmentorder was purportedly forwarded to the assessee. But it is notindicated anywhere as to how the service of the same on theassessee was sought to be effected. In an Additional Counter Affidavit filed by the Joint Commissionerof Income Tax, she has indicated that the office copy of theforwarding letter dated 26-3-2014 contains an endorsement of theNotice Server to the effect that the door of the petitioner-company’s office was locked. Therefore the Assessing Officerseeks to contend that the service of the draft assessment ordershould be deemed to be complete. 35. But we fail to understand as to why the draftassessment order was sought to be sent through a Notice Server,rather than by post. Interestingly the endorsement of the NoticeServer, by name Venkataiah does not even contain a date. Eventhe Tear off acknowledgment slip that contains the endorsement ofthe Notice Server on the reverse, does not bear a date. On thecontrary, the Tear off acknowledgment slip relating to the copy ofthe draft assessment order actually served on the writ petitioner,contains the date 22-8-2014. Therefore the claim made in theAdditional Counter Affidavit by the Assessing Officer that the draftassessment order was sent on 26-3-2014, is completely contraryto truth. 36. Moreover the letter dated 15-4-2016 sent by the TaxRecovery Officer (Former Secretary, DRP, Hyderabad) to theAssessing Officer, which is filed along with the Additional Counter Affidavit of the respondents, discloses that the objections filed bythe petitioner in Form 35A was forwarded to DRP, Bengaluru on31-3-2015. As per the proceedings dated 31-3-2015, a copy ofwhich is filed by the Department itself, the DRP had time up toAugust, 2015 to issue directions under sub-section (5) on theobjections filed by the petitioner to the draft assessment order. 37. Therefore it is clear (1) that even as per the “Tear offacknowledgment slip” produced by the Department, the draftassessment order was received by the assessee only on 36. Moreover the letter dated 15-4-2016 sent by the TaxRecovery Officer (Former Secretary, DRP, Hyderabad) to theAssessing Officer, which is filed along with the Additional Counter Affidavit of the respondents, discloses that the objections filed bythe petitioner in Form 35A was forwarded to DRP, Bengaluru on31-3-2015. As per the proceedings dated 31-3-2015, a copy ofwhich is filed by the Department itself, the DRP had time up toAugust, 2015 to issue directions under sub-section (5) on theobjections filed by the petitioner to the draft assessment order. 37. Therefore it is clear (1) that even as per the “Tear offacknowledgment slip” produced by the Department, the draftassessment order was received by the assessee only on 22-8-2014 (2) that even as per the Secretary of the DRP,Hyderabad, the time prescribed under sub-section (12) of Section144-C, was to expire only in June or August, 2015 and (3) thattherefore the stand taken by DRP, Bengaluru in its impugnedcommunication that the jurisdiction to pass orders lapsed on 31-12-2014 was completely contrary to facts as well as law. 38. Once it is found that the order of the DRP dated 22-6-2015 rejecting the objections as incapable of beingconsidered, to be contrary to law, then the next question thatarises for consideration is as to what would follow logically as aconsequence of the same. 39. On first principles of law, if the rejection of an appeal or a set of objections by the Appellate or the OriginalAuthority, on pure technicalities (and not on merits) is found to benot in accordance with law, then the normal course to be adoptedby a Court would be to send the matter back to the same Authorityfor a consideration on merits. Therefore once we find that theDRP, Bengaluru had wrongly rejected the objections of thepetitioner without going into the merits, the logical consequence ofsuch a finding would be to set aside the order of rejection of theDRP and to send the matter back to the DRP for a consideration of the objections on merits and in accordance with law. 40. But in this case, sub-section (12) of Section 144C, on the face of it, appears to pose an obstacle. Under sub-section (12), no direction can be issued by the DRP undersub-section (5), after the expiry of nine months from the end of themonth in which the draft assessment order was forwarded to theeligible assessee. In this case we have found the date offorwarding of the draft assessment order to be 22-8-2014. Hence, the period stipulated under sub-section (12)would expire by 31-5-2015. But the DRP passed an order on 22-6-2015 holding that it had lost jurisdiction to pass an order on 31-12-2014 itself. Even though the date mentioned is not correct, thefact remains that the DRP could not have issued any directionafter 31-5-2015, even on undisputed facts. 41. The question that then arises is as to whether this Courtcan now issue a direction to the DRP to consider the matter onmerits and pass an order. 42. While construing the provisions relating to limitation, theSupreme Court has made it clear that if the Statute has stipulatedeven the upper time limit up to which a delay in filing an appealcould be condoned by an Appellate Authority, the Courts cannotdirect the Appellate Authorities to consider the applications forcondonation of the delay of a period exceeding the upper limit. Ithas also been held that even the Court cannot condone such adelay. Therefore a doubt arises as to whether the prescriptioncontained in sub-section (12) is mandatory that goes to the root ofthe jurisdiction of the DRP to pass an order. If what is prescribedby sub-section (12) is a jurisdictional issue, then the Court cannotask the DRP to do something for which they have no jurisdiction. 43. But the bar under sub-section (12) of Section 144C does 43. But the bar under sub-section (12) of Section 144C does not appear to be one that goes to the root of the jurisdictionalissue. The reasons are two-fold. The first is that as per thescheme of Section 144C, the DRP is constituted as an alternativemechanism for resolution of disputes. Therefore it is conferredwith the powers of a Civil Court to take evidence, hold an enquiryand even correct mistakes or errors suo motu or on an applicationof either of the parties. The intention behind the insertion ofSection 144C is to provide a mechanism for speedy resolution ofdisputes and to ensure finality to litigation. Therefore the bar undersub-section (12) cannot be treated as one going to the root of thematter. 44. The second reason as to why we opine so is that theSupreme Court itself has understood Section 144C to be of suchnature. In Additional CIT v. HCL Technologies Ltd., decided on07-9-2009 and reported in (2010) 188 Taxmann 303, the SupremeCourt disposed of an appeal filed by the Revenue, directing theauthorities to take recourse to the alternative dispute resolutionmechanism suggested under Section 144C. Though the said orderof the Supreme Court is a brief order, which did not lay down anyratio, the same gives an indication as to how to understand thepurport of Section 144C. The order of the Supreme Court in thesaid case reads as follows: “3. We are of the view that in the peculiar facts andcircumstances of this case, particularly when the High Court hasremitted the matter to the Transfer Pricing Officer from whoseorder an appeal is pending before the CIT (A), it would be in theinterest of both sides to resort to alternative dispute resolutionmechanism suggested in the budget of 2009 circumstances of this case, particularly when the High Court hasremitted the matter to the Transfer Pricing Officer from whoseorder an appeal is pending before the CIT (A), it would be in theinterest of both sides to resort to alternative dispute resolutionmechanism suggested in the budget of 2009 (see Section 144C of the Income Tax Act, 1961). It is madeclear that the competent authority will not reject the applicationherein made by the assessee on the ground that the proposalhas come after the cut-off date.” 45. Therefore we are of the considered view that it is possible for this Court to set aside the order of the DisputeResolution Panel and remit the matter back to them for a consideration on merits, inspite of the fact that the periodstipulated in sub-section (12) would have expired by 31-5-2015. 46. In view of the above, the writ petition is allowed, theorder of the Dispute Resolution Panel, Bengaluru, dated 22-6-2015 is set aside and the DRP, Bengaluru is directed to takeup Form 35A filed by the petitioner along with the annexures andthe evidence for a consideration on merits. The DRP shall giveopportunity of hearing to both parties, follow the procedureprescribed in Section 144C and issue appropriate directions undersub-section (5), within a period of three months from the date ofreceipt of a copy of this order. As a consequence of our settingaside the DRP’s order dated 22-6-2015, the final assessmentorder passed by the Assessing Officer on 28-8-2015 is set aside.The Assessing Officer shall pass a final assessment order, afterand on the basis of the directions issued by the DRP, as per ourdirections. The miscellaneous petitions, if any, pending in this writpetition shall stand closed. There will be no order as to costs. 47. As a sequel, pending miscellaneous petitions, if any,shall stand closed. __________________________ V.RAMASUBRAMANIAN, J. 31[st] August, 2016.Note:- L.R. Copy to be marked.(B/o) Ak __________________________ ANIS, J. HON’BLE SRI JUSTICE V.RAMASUBRAMANIAN AND HON’BLE SMT JUSTICE ANIS Writ Petition No.33342 of 2015 (per VRS, J.) 31[st] August, 2016.(Ak)