IN INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER I.T.A. No.1929/M/2014 (Assessment Year: 2009-2010) MSM Satellite (Singapore) Pte. JDIT (IT) Range -4, Ltd., (Formerly known as SET 133, Scindia House, Ballard Vs. Satellite (Singapore) Pte Ltd), Pier, Mumbai 400 038. C/o. SRBC & Associates LLP, 14 t h Floor, Ruby 29, Senapati Bapat Marg, Dadar (W), Mumbai 400 028. PAN : AABCS9229H (Appellant) (Respondent) Appellant by : Shri P.J. Pardiwalla Respondent by : Shri Jabir Chgouhan, CIT-DR Date of Hearing : 28.09.2016 /Date of Pronouncement : 19 .10.2016 O R D E R PER D. KARUNAKARA RAO, AM: This appeal filed by assessee on 21.3.2014 is against order of AO / DRP for assessment year 2009-2010. 2. In this appeal, assessee raised twenty grounds in toto. Bringing our attention to grounds of appeal, Ld Counsel for assessee submitted that Grounds no.1 to 4 relate to preliminary issue relates to decision of DRP in dismissing assessee s Application in Form No.35A in limine. Referring to Grounds no.5 to 20, Ld counsel for assessee submitted that DRP did not adjudicate said grounds and therefore, to start with, Bench may adjudicate said preliminary issue raised in Grounds no.1 to 4 and remand other grounds to file of DRP / AO for decision. Therefore, to start with, we proceed to adjudicate first four grounds which are reproduced as under:- 2 1. On facts and circumstances of case and in law, Hon bel DRP erred in dismissing application filed by appellant in Form 35A in limine by holding that application is invalid and non-est. 2. On facts and circumstances of case and in law, Hon ble DRP erred in not adjudicating appellant s case on merits. 3. On facts and circumstances of case and in law, Hon ble DRP failed to appreciate that defect pointed out was curable defect and should have so held when appellant had filed corrected Form 35A. 4. Without prejudice to above, Hon ble DRP failed to appreciate that treating appellant s application as non-est rendered assessment as time barred. 3. In connection with above four grounds, relevant facts are that assessee filed return of income declaring total income of Rs. 19.08 Crs (rounded off). There was revised return of income with additional claims. other facts include that assessee was having transactions with Associated Enterprises (AEs) and therefore, same were referred to TPO for determining Arms Length Price (ALP). TPO did not make any adjustments. However, there were other issues raised by AO in assessment relating to advertisement, business connections, existence of PE, taxability of interest income etc and draft assessment was made vide draft assessment order dated 25.3.2012 u/s 143(3) read with section 144C(13) of Act. Eventually, AO determined total income of assessee at Rs. 282.48 Crs (rounded off). Otherwise, assessee is engaged in Media business. 4. Assessee filed its objections to DRP in Form No.35A on 23.4.2013. However, Form No. 35A filed by assessee is only scanned copy containing signature of concerned person. Before DRP, maintainability of scanned copy of Form No.35 (said application) came up for discussion in very first hearing on 13.11.2013. For first time, DRP gave show cause notice to assessee proposing to treat said scanned copy of application in Form No.35A as non-est and proposed to dismiss same in limine. Assessee was given time till 2.12.2013 to respond to said show cause notice. In response, vide letter dated 28.11.2013, Assessee s Representative submitted that original Form No.35A could not be furnished to replace scanned copy which is already with DRP, within prescribed time of 30 days for reasons viz (i) assessee geographically located in Singapore; (ii) signed original application could not be received in India in time; (iii) to meet dead lines, assessee filed application with colour scanned copy of Form No.35 with intention to replace same with 3 original one at time of hearing before DRP; (iv) there was change in tax consultant / AR of assessee and responsibility of replacing scanned copy with original application has missed inadvertently. Assessee also argued strongly on curability of said lapse / irregularity / defect. In this regard, assessee relied on various decisions and argued that said defect is rectifiable u/s 292B of Act. Assessee was ready to furnish application in original Form No.35A which was not accepted by DRP. On hearing above, DRP decided priliminary issue about maintainability of such application being scanned copy of original Form No.35A. DRP discussed assessee failure to replace scanned copies with original signed documents and debated on negligence of assessee. They also discussed responsibility of citizen to abide by rules and procedures prescribed in law. DRP equated this defect / mistake to fact of return of income filed without signature. He also mentioned that proceedings before DRP constitute pre-assesssment proceedings . Further, stating that when assessee failed to remove defect in return of income, said return of income will be treated as non-est and similar fact is attributed to failing to file Form No.35A in original. Further, responding to assessee s corrected application in Form No.35A, DRP is of opinion that same is not proper as proceedings before DRP are different from thus before appellate authority under Statute and they are only pre- assessment proceedings . Therefore, decisions cited by assessee which primarily relates to proceedings before CIT (A) are distinguishable on facts. Further, responding to AR s argument to treat assessment proceedings as time barred as copy of Form No.35A filed before AO was also scanned copy and AO should have considered same as non-est and therefore, completed assessment by holding that assessee had not opted for filing objections before DRP. In reply, DRP took notice of assessee s intimation to AO about its intention to file objections before DRP and concluded that assessment order is not time barred. Eventually, DRP held that scanned copy application of Form No.35A is invalid and non-est. Accordingly, DRP dismissed application in limine. Relevant lines from DRP s direction dated 4.12.2013 (at page 10 and 11) are extracted as under:- 4 ...............It is trite law that application made before any authority under prescription of law has to be dealt with by that authority itself. In instant matter it means that application filed before DRP in number 35A, in all respects and aspects of application, was to be dealt with by DRP itself. assessing officer, therefore, could not have taken view on maintainability of application or on merits of each of objections raised before DRP. This was within sole purview of this DRP. This decision is now being taken and AO will complete assessment in compliance of these directions being issued. Based on discussion in paras supra, and in facts and circumstances of case and in law, we hold assessee s application in form number 35A as invalid and non-est. It is accordingly dismissed in limine. 5. However, DRP did not adjudicate other grounds raised by assessee on merits. Subsequently, assessment order dated 10.1.2014 u/s 143 (3) read with section 144C(13) of Act was passed assessing total income of assessee at Rs. 282,48,09,813/-, after making various additions on accounts of royalty income, interest income, advertisement income, treating distribution income as royalty income etc. Aggrieved with above order of AO and DRP, assessee is in appeal before Tribunal. 6. During proceedings before us, Shri P.J. Pardiwalla, Ld Counsel for assessee narrated above cited facts, submissions and legal propositions etc. Ld Counsel for assessee s arguments revolve around following: (i) filing application before DRP by way of scanned copy of From no.35A is curable defect / irregularity. provisions of section 292B of Act support same; (ii) assessee could not furnish application in original due to limitation of 30 days and it took time for sending original application from Singapore to India. After receipt in India, same could not be filed before DRP due to fact of change of Authorized Representative in India to represent before DRP; (iii) no defect notice / show cause notice was received by assessee with intimation to remove defects, if any, till first hearing of application by DRP. Otherwise, Ld Counsel for assessee brought our attention to various decisions and suggested institution of DRP was incorporated in Statute to do away with well existed proceedings before first appellate authority ie CIT (A). DRP proceedings constitute appellate proceedings in substance and therefore, events relatable to removable of defects are equally applicable to DRP. Referring to assessee s efforts in sending scanned copies of application to DRP, Ld Counsel for assessee submitted that assessee s intention is undisputedly clear 5 and they want to exploit right of filing application before DRP seeking directions to AO. Taking clue from DRP s order, Ld Counsel for assessee argued by stating that assessment order made by AO on 10.1.2014 should be treated time barred if impugned application to DRP is treated as non-est . Elaborating same, Ld Counsel for assessee submitted that DRP cannot dismiss application as non-est and treated assessment order as valid one. He also mentioned that this issue has come up for judicial scrutiny for first time and they are not binding / persuasive precedents on this issue. Finally, he submitted that application filed on 13.4.2013 is otherwise complete in all respects as it is validly signed by Authorized Signatory and filed in time ie before expiry of 30 days limited prescribed in Act. He also summed up by saying that it is curable defect and assessee s attempt to file original Form No.35A was not accepted by DRP for reasons not knows to assessee. 7. Per contra, Ld DR for Revenue relied heavily on order of AO, DRP and conclusions drawn by these authorities in their respective orders. Ld DR submitted that DRP followed same analogy and likely effect of validly filed return of income. He prayed for confirming order of AO and directions of DRP. 8. We have heard parties and also perused orders of revenue, relevant pages of assessee's paper book , judgments cited before us. main issue for adjudication before us revolves around correctness of decision of DRP in dismissing application of Assessee in limine by treating scanned copy of application in Form No.35A as non-est. core reason for such dismissal relates to furnishing of scanned copy of Form No.35A as non-est before DRP and not in original. Otherwise, there is no dispute on facts relating to this issue. Assessee filed scanned copy of duly signed application in Form No 35A before expiry of 30 days time given in statute, before DRP and same was accepted by DRP. No defect notice was issued by Revenue for period of at least 6 months (23.4.2013 to 13.11.2013). For first time, show cause notice was issued only during hearing proceedings ie after hearing notice was issued in response to said Form No. 35A, scanned copy. Assessee replied to same and he wanted to file application in original and 6 replace existing scanned copy of same. But, same was rejected by DRP. With above said factual matrix, now, we need to decide if DRP is justified in treating said scanned copy of application as non-est and also dismissing application in limine. 9. On hearing parties, we find, following are some of list of inadequacies from assessee's side: They are: 1. Failure to file Form 35A ( kind of appeal memo) in original instead of scanned copy before DRP, 2. Failure to replace scanned copy by filing same in original immediately thereafter; 3. Notwithstanding, assessee fails to pray for condonation of delay, if any, in filing said Form No 35A, and 4. Failure of maintaining continued flow of information to newly appointed AR of assessee. Assessee changed AR for dealing with DRP related matters after scanned copy was filed. 10. Further, some of list of inadequacies from Revenue side include: 1. Failure to reject Form No.35A in scanned copy at threshold stage itself, and why officers have not taken any action on said defect Form No. 35A and also against erring officials / officers; 2. Failure to issue appropriate defect notice at appropriate time calling for removal of defect, if any, without waiting for more than 7 long months ie till date of hearing of application before DRP. DRP issued show cause notice for first time only during hearing proceedings, 3. Failure in appreciating same when scanned copy of Form No. 35A is otherwise in order in all respects bearing correct signature of person, who is duly authorised in this regard, etc. 11. In light of above stated factual position, we proceed to analyse provisions of section 292B of Act, intent in of assessee etc before deciding first four grounds of appeal. A. Legal Provisions: 11. Section 292B of Income Tax Act relates to "Return of income, etc., not to be invalid on certain grounds." and same read as under,- Sec. 292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other 7 proceeding is in substance and effect in conformity with or according to intent and purpose of this Act. 12. We have examined above provisions and highlighted in bold relevant expressions that may be of some use to issue under consideration. expressions 'other proceedings' that appear at three times in section distinctly imply proceedings other than return, assessment, notice, summons etc. How about furnishing of application to DRP? We have examined if this proceeding falls within scope /meaning of this expression. As such, there is no precedent in this regard for or against it. Considering same, we are of considered opinion that expression ie 'other proceedings', is residual and generic in nature and it is wide enough to include present issue under consideration viz proceeding of furnishing of application. Having held it so and in favour of assessee, we need to decide if furnishing of such scanned copy of duly signed application in Form No 35A, constitutes invalid one and not curable under this section. In this regard, we have examined if such scanned copy is in sync, in substance, with intent and purpose of Act. We find there is no dispute on that part of analysis and argument. Revenue's only objection is regarding furnishing of application in scanned copy. Otherwise, said scanned copy is meant for assessee and for purposes of Act in all respects. Further, we find it is undisputed fact that, in response to show cause notice, assessee attempts to file Form No 35A in original and however, same was not successfully allowed by DRP. Rather, DRP preferred to act on said scanned copy of Form No 35A unfairly and considered said scanned application as non-est. Further, it is relevant to mention that DRP failed to provide written reasons for rejecting Original Application attempted to be filed by assessee in response to show cause notice. 13. Thus, in our opinion, expression 'other proceedings' is wider enough to cover present defect or omission of replacing scanned copy with original in time. We order AO accordingly. B. Intension of Assessee: 14. We have analysed conduct and mind of assessee and find activities suggest inescapably that assessee wants to make use of benefits of 8 office of DRP. They are: preparedness of relevant papers in Form no 35A, signed same in time, scanned them, sent office in India for filing before DRP and ensured filing them before expiry of due date ie within 30 days from date of draft order of AO. In that case, why same was not replaced by assessee by filing Original Form No 35A. As discussed above, we find, same is not without reason and same being change in Representative. As such, furnishing of scanned papers and replacing them with hard copies or soft copies, if any, is now not new to Department. Further, now, Revenue started accepting e-filing of application / appeals these days. Why not this also should not be deemed as such but for procedural defects, if any. Considering same, we are of view that both decisions of first appellate authority in treating application non-est and dismissing same as in limine are unsustainable in law. We order accordingly. Thus, grounds no.1 to 4 raised by assessee are allowed. Considering our decision on preliminary issues raised in grounds no. 1 to 4, we are of view that rest of grounds raised in appeal are required to be remanded to file of DRP / AO for want of speaking order on each of issues raised in Grounds no. 5 to 20 of grounds of appeal. Revenue shall grant reasonable opportunity of being heard to assessee as per set principles of natural justice. Accordingly, Grounds no. 5 to 20 raised by assessee are allowed for statistical purposes. In result, appeal filed by assessee is allowed. Order pronounced in open court on 19th October, 2016. Sd/- Sd/- (RAVISH SOOD) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; 19.10.2016 OKK , Sr. PS Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A)- 9 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai MSM Satellite (Singapore) Pte. Ltd., (Formerly known as SET Satellite (Singapore) Pte Ltd) v. JDIT (IT) Range-4, Mumbai