2024 (11) TMI 534 - AT - Income Tax

Transfer pricing adjustments - Additions to the total taxable income without issuing a show cause notice as per the provisions of the Act and thereby not providing DSV India an opportunity of being heard - HELD THAT - AO erred in disregarding the documentary evidence submitted by the Appellant to substantiate actual receipt of services and benefits derived therefrom and alleging that the Appellant has not submitted adequate documentation to substantiate the benefits received from availing of the intra- group services. The appellant also submitted a comprehensive Factual Paper Book containing detailed evidence including additional evidence which, according to the appellant, have not been considered either by the Ld. AO or by the Hon ble DRP Ld. DRP. Thus, we find it proper to send the matter back to the file of the Assessing officer with a direction to consider the details submitted by the appellant and decide the issues afresh by providing the appellant adequate opportunity of being heard to determine the correct income of the appellant. Appeal is allowed for statistical purpose.

Issues:
1. Transfer pricing adjustments made by the Assessing Officer.
2. Disallowance of business purchases as bogus.
3. Disallowance pertaining to reversal of lease rental accruals and profit on sale of asset.
4. Addition under Section 43B of the Act.
5. Short grant of credit of taxes deducted at source.
6. Non-grant of self-assessment tax.
7. Levy of interest under Section 234B of the Act.
8. Penalty proceedings under Section 270A of the Act.

Transfer Pricing Adjustments:
The appeal was filed against the Order of the Ld. CIT (Appeals) regarding transfer pricing adjustments made by the Assessing Officer under Section 92CA of the Income Tax Act. The appellant challenged the determination of the arm's length price (ALP) and the subsequent adjustments made. The appellant raised various grounds related to the reference to the Transfer Pricing Officer (TPO), rejection of economic analysis, inappropriate application of the Comparable Uncontrolled Price (CUP) method, and other issues. The Tribunal found merit in the appellant's contentions and directed the Assessing Officer to reconsider the details submitted by the appellant and provide an opportunity for a fresh determination of income.

Disallowance of Business Purchases:
The appellant contested the disallowance of business purchases amounting to Rs. 85,87,489 as bogus by the Assessing Officer. The appellant argued that the identified vendors had genuine transactions and provided documentary evidence to support the genuineness of the transactions. The Tribunal noted the appellant's submissions and directed the Assessing Officer to reevaluate the disallowance in light of the evidence presented by the appellant.

Disallowance of Reversal of Lease Rental Accruals and Profit on Sale of Asset:
The Assessing Officer disallowed an amount related to the reversal of lease rentals accruals and profit on the sale of a depreciable asset. The appellant contended that these amounts were already accounted for in previous years and should not be subject to double disallowance. The Tribunal directed the Assessing Officer to review these disallowances and consider the appellant's arguments regarding the treatment of these items in the computation of income.

Addition under Section 43B of the Act:
The appellant challenged the addition made under Section 43B of the Act due to alleged inconsistencies in the allowance between the return of income and the Tax Audit Report. The appellant provided documentary evidence to support the various dates of payments related to the amount in question. The Tribunal instructed the Assessing Officer to reexamine the addition and consider the evidence furnished by the appellant.

Other Grounds and Directions:
The appellant raised additional grounds related to short grant of credit of taxes deducted at source, non-grant of self-assessment tax, levy of interest under Section 234B of the Act, and penalty proceedings under Section 270A of the Act. The Tribunal did not delve into these issues in detail but allowed the appeal for statistical purposes. The Tribunal emphasized the importance of providing the appellant with an opportunity to be heard and directed the Assessing Officer to reconsider the issues raised by the appellant based on the evidence presented.

Conclusion:
The Tribunal allowed the appeal for statistical purposes and directed the Assessing Officer to reevaluate the various issues raised by the appellant, including transfer pricing adjustments, disallowances, additions, and other grounds, by considering the evidence submitted and providing the appellant with a fair opportunity to present their case.

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