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TMI Blog2016 (1) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... aganesh, Accountant Member For The Appellant : Shri Manoneet Dalal, FCA and Ms.Gunjan Khanna, FCA, ld.ARs For The Respondent : Shri R.R. Das, CIT, ld.DR ORDER SHRI M.BALAGANESH, AM This appeal of the assessee arises out of the order of the Dispute Resolution Panel (DRP) dated 25.3.2015 and final order passed by the Learned AO u/s 143(3) read with section 147 and 144C of the Act on 6.4.2015 making transfer pricing adjustment of ₹ 7,51,20,484/-. 2. The brief facts of this case are that the assessee is a company engaged in rendering maintenance services on heavy mining equipments and trading on spare parts. The sequence of events would explain the proceedings better:- a) For the Asst Year 2010-11, the assessee filed its original return of income on 25.9.2010 declaring a loss of ₹ 4,36,97,339/-. Later the same was revised on 26.3.2012 declaring loss of ₹ 3,78,75,426/-. This revised return was filed within the due date prescribed u/s 139(5) of the Act. b) The assessment was completed u/s 143(1) of the Act on 29.5.2012. c) Admittedly, no notice u/s 143(2) of the Act was issued selecting the case for scrutiny by the Learned AO. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case. 3. Shri.Manoneet Dalal, FCA, the Learned AR argued on behalf of the assessee and Shri.R.R.Das, the Learned CIT DR argued on behalf of the revenue. 4. We have heard the rival submissions and perused the materials available on record. We find that the whole scheme of assessment proceedings have to be looked into for deciding the case before us. Normally when a return is filed by the assessee, it would either get completed u/s 143(1) of the Act by receiving intimation from the Assessing Officer. If the case is selected for scrutiny by issuance of notice u/s 143(2) of the Act within the prescribed time, then the assessment would get completed u/s 143(3) or 144 of the Act. Hence it is well settled that when no scrutiny notice u/s 143(2) is served on the assessee, the assessment would deemed to be completed based on intimation u/s 143(1) of the Act, if served on the assessee, or the acknowledgement of return itself would be deemed to be the assessment order. Hence practically the assessment gets completed at this stage itself in the belief of the assessee unless otherwise reopened by issuing separate notice u/s 148 of the Act. The reference to Learned TPO for determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ternational transactions exceeds ₹ 5 crores, the case should be picked up for scrutiny and reference under section 92CA be made to the TPO. If there are more than one international transaction with an associated enterprise or there are transactions with more than one associated enterprises the aggregate value of which exceeds ₹ 5 crores, the transactions should be referred to the TPO. Before making reference to the TPO, the Assessing Officer has to seek approval of the Commissioner / Director as contemplated under the Act. Under the provisions of section 92CA reference is in relation to the international transaction. Hence all transactions have to be explicitly mentioned in the letter of reference. Since the case will be selected for scrutiny before making reference to the TPO, the Assessing Officer may proceed to examine other aspects of the case during pendency of assessment proceedings but await the report of the TPO on the value of international transaction before making final assessment. The threshold limit of ₹ 5 crores will be reviewed depending upon the workload of the TPOs. The work relating to selection of cases for scrutiny and reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of notice u/s 92CA of the Act, no valid return was pending on the basis of which notice u/s 92CA of the Act could have been issued. Since no notice u/s 143(2) of the Act was issued pursuant to filing of the original return, the assessment is deemed to have become final. In reply to the notice issued u/s 148 of the Act, the assessee filed a letter dated 21.4.2004 requesting the Assessing Authority to treat the return filed on 31.10.2002 as return in compliance with the notice u/s 148 of the Act. Infact the TPO on 20.1.2005 passed an order u/s 92CA of the Act accepting the pricing of the Assessing Authority. However, the CIT invoking his power u/s 263 of the Act initiated proceedings and set aside the order of the Assessing Authority on the ground that it is erroneous and prejudicial to the interest of the revenue. It is against that order, the assessee preferred an appeal to the Tribunal. The Tribunal has held that when two views are possible and when the TRP has accepted valuation by the Assessing Authority determining the arm s length price, the commissioner had no jurisdiction to interfere with the said order u/s 263 of the Act and moreover on the day the reference was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as such it could be a good basis for coming to the conclusion that wealth has escaped assessment. Rejecting this plea, their Lordships observed that . a report called by an authority having no jurisdiction would be a nullity at law and consequently proceedings based solely on such report considering the requirement of section 17 would be illegal and will have to be quashed. In effect thus, it is held that when reference itself is invalid, the report received as a result of the said reference cannot constitute material for forming the belief that an income or wealth tax has escaped assessment. The order passed by the Learned TPO passed pursuant to an illegal reference cannot be used in the reassessment proceedings by the Learned AO as both the proceedings are separate and independent of one another. In view of the above, we hold that the reassessment proceedings initiated based on the TPO s order dated 28.1.2014 suggesting an adjustment of ₹ 7,51,20,484/- to ALP (which was based on an illegal reference ) by the Learned AO is void ab initio and bad in law. 6. Maintainability of appeal u/s 253(1)(d) of the Act before Tribunal It is observed that the assessee had ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and sequence of events in this case, more particularly , on the validity of the Learned AO to adopt the order passed by the Learned TPO on 28.1.2014 based on an illegal reference. We find that the CBDT Instruction No. 3 of 2003 is very clear on this subject. It will be relevant to look into Section 144C(15) of the Act:- (15) For the purposes of this section ,- (a) Dispute Resolution Panel means a collegiums comprising of three Principal Commissioners or Commissioners of Income Tax constituted by the Board for this purpose ; (b) eligible assessee means , - (i) any person in whose csae the variation referred to in sub-section(1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any foreign company. Admittedly, the assessee company is not a foreign company. Hence the only point to be seen is whether at all any order has been passed u/s 92CA(3) of the Act by the TPO in the hands of the assessee which has been complied with in the instant case. Hence the assessee being an eligible assessee is accepted by the Learned AO itself by referring the case to TPO (though illegal) a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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