9911796707
TMI Blog2022 (11) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... rther stated in the said Board Instruction that the power to determine the ALP of the international transaction should not be carried out at all by the A.O. Therefore, inspite of the assessment being picked up for scrutiny on account of transfer pricing risk parameter, the A.O. having not referred the matter to the TPO to determine the ALP of the international transaction undertaken by the assessee with its AE, was in direct contravention / non adherence to the Board Instruction, cited supra. Clause (c) of Explanation 2 to section 263(1) states that the assessment order made not in accordance with any order, direction or instruction issued by the Board u/s 119 of the I.T.Act is erroneous order and prejudicial to the interest of the revenue. The Board Instruction No.3/2016 has been issued u/s 119 - Therefore, non-compliance of the above said Instruction by the A.O. will render the said assessment order as erroneous and prejudicial to the interest of the revenue. Hon ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. [ 2011 (11) TMI 196 - DELHI HIGH COURT] had held that when Board Instruction No.3/2016 has been validly upheld, it is binding on the Assessing Officer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and the circumstances of the case, the learned Pr.CIT erred in concluding that the reference to the TPO is a mandatory requirement in case of selection of scrutiny assessment is based on TP risk parameter. 7. That on the facts and circumstances of the case and in law, the learned Pr.CIT erred in not ruling on the assessee's contentions that instruction no.3/2016 mandating the requirement to make a reference to the TPO is contrary to the provisions of the Act. The Appellant craves leave to add to and / or to alter, amend, rescind, modify the grounds herein above or produce further documents before or at the time of hearing of this Appeal. 3. The brief facts of the case are as follows: The assessee is a company engaged in Teleconferencing and web related communications. For the assessment year 2015-2016, the return of income was filed on 30.11.2015 declaring total income of Rs.10,73,11,330. The assessment u/s 143(3) of the I.T.Act was completed vide order dated 25.10.2017 accepting the returned income. Subsequently, it was noticed by the PCIT that one of the reasons for assessment being taken up for scrutiny was on account of transfer pricing risk parame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there was no appearance. Moreover, we find that the issue raised is prima facie decided by the Hon ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. v. CIT reported in ITA 504 of 2008 (judgment dated 18.11.2011). 5. The learned Departmental Representative submitted that since the reason for selection of the case for scrutiny is on account of transfer pricing risk parameter necessarily the A.O. ought to have referred the matter to the TPO, after obtaining the approval of the jurisdictional PCIT or CIT. In this context, the learned DR relied on the Board Instruction No.3/2016 (supra). The learned DR submitted that the issue in question is squarely covered by the judgment of the Hon ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. v. CIT (supra) and the order of the Mumbai Bench of the Tribunal in the case of Bank of Baroda v. JCIT in ITA No.3699/Mum/2018 (order dated 05.10.2020). 6. We have heard the learned DR and perused the material on record. The admitted fact is that one of the reasons for selection of the assessment for scrutiny is transfer pricing risk parameter. In the assessment completed u/s 143(3) of the I.T.Act, there is no discussion abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer will not be abused. 16. We thus agree with the view taken by the Tribunal that the judgment of Special Bench in Aztec Software (supra) is not in conflict with Sony India (supra) once the validity of said instruction is upheld by this Court. The follow up thereof is that the Assessing Officer was supposed to refer the matter to the TPO having regard to the fact that Specialized Cell was created by the Revenue Department to deal with the complicated and complex issues arising out of the transfer mechanism. The Tribunal was right in holding that even the instant case itself provides a good example for need to refer the matter to TPO in such cases. When circular is issued under Section 119 of the Act and its validity is upheld it is binding on the Assessing Officer. Not taking recourse thereto and passing the order amounted to making assessment without conducting proper inquiry and investigation as enjoyed by law which was also warranted in the facts of this case and, therefore, the Commissioner was right in holding that such assessment was erroneous and prejudicial to the interest of the Revenue in the light of law laid down by the Apex Court in Malabar Industrial C ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
