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TMI Blog2021 (10) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... wder (MCCP), Crosscarmellose Sodium (CCS), Sodium Starch Giycolate (SSG) etc. ii. During the F.Y 2012-13, the assessee company had entered into various international transactions with its associated enterprises for which the company had obtained an Accountant's report in Form No. 3CEB under Section 92E of the Act determining the Arm's Length Price ('ALP' for short) of the international transactions entered with its associated enterprises. iii. The assessee Company filed its return of income on 16.09.2013 for the A.Y. 2013-14, declaring total income at Rs. 17,35,26,420/-. Initially, the case was processed under Section 143(1) of the Act and thereafter, was selected for scrutiny assessment and accordingly, on 18.03.2016, assessment was framed under Section 143(3) of the Act determining total income Rs. 17,89,32,690/- disallowing the expenditure of commission expenses paid to nonresidence and the same had been added back to the total income. iv. During the scrutiny proceedings, the AO had issued notice under Section 92(C) read with Section 142(1) of the Act dated 05.02.2016 for A.Y. 2013-14 and called for various details and information and the same was complied with by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y after 14th March, 2016 because of which the AO could not refer the matter to the TPO nor could he examine the issue. In this view of the matter, the assessee had exported goods its AE's at lower price then to other unrelated parties, I have reason to believe that income has escaped assessment. (iii) In this case not more than four years have lapsedfrom the end of assessment year under consideration. Hence, necessary sanction to issue notice U/s 148 is obtained separately from the Joint Commissioner of Income-tax as per provision of Section 151 of the Act. In view of the matter, | have reason to believe that income of Rs. 7,40,57,709/- has escaped for the A.Y. 2013-14 in the spirit of provision of Section 147 of the Income Tax Act, 1964." 3. Being aggrieved by the disposal of the objections against the notice for reopening of the assessment, the writ applicant has come up before this Court with the present writ application. 4. We have heard Mr. Saurabh Soparkar, learned Senior Counsel assisted by Mr.Bandish Soparkar, learned advocate appearing for the writ applicant and Mr. Manish Bhatt, learned Senior Counsel assisted by Mrs. Mauna Bhatt, learned Senior Standing Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of sales to its associated enterprises is less than the rate at which it sells to another related parties is baseless and without any basis and contrary to the material on record and there was complete non-application of mind on the part of the AO to the materials available on record, prior to reopening of the assessment. Thus, basic requirement of law to confer jurisdiction under Section 147 of the Act for reopening of assessment is not satisfied and on this ground, the notice deserves to be quashed. iv. Placing reliance on the decision of the Apex Court in the case of CIT Vs. Kelvinator of India Ltd. [(2010) 2 SCC 723], it was submitted that, during the course of scrutiny assessment, all the necessary information with respect to international transactions were submitted by the assessee Company and all the materials like original Form No.3CEB, Transfer Pricing Study Report, revised Accountant's Report and TPS report were available on record. However, the AO did not refer the issue to the Transfer Pricing Officer to determine the Arm's Length Price and relying on the Circular consciously thought it fit not to determine the price or refer the matter to the Transfer Pricing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the assessment proceedings and as such, no opinion on the issue being formed by the AO and therefore, the principles of change of opinion would not applicable to the facts of the present case. 8. In view of the aforesaid contentions made by the learned Senior Counsel for the revenue, it is prayed that, the present writ application being meritless, deserves to be dismissed. 9. Having heard learned counsel for the respective parties and having gone through the materials on record, the only question falls for our consideration is that, whether the revenue is justified in reopening the assessment for the year under consideration? 10. Before adverting to the rival contentions raised by the respective parties, it is relevant to refer to the provisions of Section 147 of the Act, which provides that, if the assessing officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may subject to the provisions of Sections 148 to 153 of the Act, assess or reassess such income. In view of the aforesaid provisions, to confer jurisdiction under Section 147 of the Act, the primary condition to be satisfied is that, the AO must have r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee vide its letter dated 19.02.2016, whereby, the assessee had furnished a copy of the audit report in Form No.3CEB containing the complete details of international transactions and also submitted Transfer pricing Study report and thereafter, on 18.03.2016, the revised Transfer Pricing Study report and Accountant's report were submitted and finally, the AO has framed the assessment vide its order dated 18.03.2016. 13. It is relevant to refer to the observations made by the AO in the assessment order. The relevant extracts of para 3 reads as under:- "As per instruction No.3/2016 dated 10th March, 2016, which state in para 3.7 that for administering the transfer pricing regime in an efficient manner, it is clarified that though AO has the power under Section 92C to determine the ALP of international transactions or specified domestic transactions, determination of ALP should not be carried out at all by the AO in a case where reference is not made to the TPO. However, in such cases, the AO must record in the body of the assessment order that due to the Board's instruction on this matter, the transfer pricing issue has not been examined at all. In accordance with the above instr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have examined the revised reports to verify the sale transactions and average rate of sale, but, relying on the instructions, he did not either himself examined the issue of determination of Arm's Length Price, nor referred to Transfer Pricing Officer. Thus, it was his conscious decision not to examine the issue. In these circumstances, reference can be made to the case of Commissioner of Income Tax Vs. Usha International Ltd., [(2012) 348 ITR 485], wherein, a full bench of the Delhi High Court held that, reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings, but thereafter, the AO does not make any addition in the assessment order. In such situation, it should be accepted that the issue was examined, but the AO did not find any ground or reason to make addition or reject the stand of the assessee and he forms the opinion as a result, the reassessment will be invalid because the AO had formed an opinion in the original assessment, though he has not recorded his reasons. 16. In a case of CIT Vs. Kelvinator of India Ltd., the Apex Court while interpreting language of Section 147 of the Act, h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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