2019 (1) TMI 1999 - AT - Income Tax

TP Adjustment - international transaction of revenue nature between the assessee and the AE in the relevant financial year - submissions made by the assessee and evidences filed to justify its claim that there is no international transaction of revenue nature and also objecting to the transfer pricing adjustment made by the Transfer Pricing Officer were not considered by the DRP - HELD THAT - In our considered opinion, if for justifying its claim that no transfer pricing adjustment was required to be made in the given facts and circumstances of the case, the assessee makes certain submissions and furnishes evidences to support such claim, the Departmental authorities are duty bound to not only consider the submissions of the assessee but examine the evidences submitted. Non consideration of the submissions and evidences furnished by the assessee amounts to violation of rules of natural justice. We are inclined to restore all the issues raised in the present appeal to the DRP for de novo adjudication after due opportunity of being heard to the assessee. Grounds raised are allowed for statistical purposes.

Summary

Issues:
Challenge to assessment order under section 143(3) r/s 144C(13) for the assessment year 2011–12 based on transfer pricing adjustment.

Analysis:
The appellant, an Indian Company providing financial consultancy services, contested the assessment order dated 4th January 2016, challenging the transfer pricing adjustment made by the Assessing Officer based on international transactions with Associated Enterprises (AE). The Transfer Pricing Officer adjusted the arm's length price by ?9,08,60,000, which was added to the draft assessment order. The appellant raised objections before the Dispute Resolution Panel (DRP), which were rejected, leading to the confirmation of the adjustment in the final assessment order.

The appellant argued that no revenue transactions occurred with overseas AE during the relevant financial year, questioning the basis of the transfer pricing adjustment. Detailed submissions and additional evidences were presented to the DRP, but were allegedly not considered. The appellant also highlighted pending applications under section 154 of the Act pointing out these lapses. The Departmental Representative did not object to the issues being sent back to the DRP for fresh adjudication.

The Tribunal observed that the non-consideration of the appellant's submissions and evidences by the DRP amounted to a violation of natural justice. It emphasized that the Departmental authorities are obligated to examine the submissions and evidences provided by the appellant to justify their position. Therefore, the Tribunal decided to remand all issues raised in the appeal back to the DRP for a fresh adjudication after providing the appellant with a proper opportunity to be heard. The grounds were allowed for statistical purposes, and the appeal was allowed accordingly.

The Tribunal clarified that it did not express any opinion on the merits of the issues raised by the appellant in the appeal. The order was pronounced in the open Court on 30.01.2019.