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TMI Blog2022 (11) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... her. 1. That, the order of the learned Principal Commissioner of Income-tax - 5, Bangalore ['Pr.CIT'), dated 27 February 2020 passed under section 263 of the Income-tax Act, 1961 ("the Act") to the extent prejudicial to the Appellant, is bad in law and liable to be quashed. 2. That, on the facts and the circumstances of the case, the learned Pri.CII' has erred in regarding the order dated 25 October 2017 passed under section 143(3) of the Act as erroneous and prejudicial to the interests of the Revenue. 3. That, on the facts and the circumstances of the case, the learned Pri.CIT erred in disregarding the fact that the AO had, after due verification of documents available on record and assessment of the same, taken a dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 parameter. The PCIT further noticed that the A.O. did not refer the matter to the Transfer Pricing Officer (TPO) to determine Arm's Length Price (ALP) of the international transactions undertaken by the assessee with its Associated Enterprises (AEs), in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess, he comes across other such transactions which have not been reported therein, then he shall make a reference in respect of these transactions too. The findings of the TPO, needless to say, shall be adopted by the Assessing Officer in the revised assessment order." 4. Aggrieved by the order passed u/s 263 of the I.T.Act, the assessee has filed the present appeal before the Tribunal. None was present on behalf of the assessee, though in the earlier round, the representative of the assessee had appeared before the Tribunal and has sought for adjournment. During the course of this week, the cases were posted several times, however, there was no appearance. Moreover, we find that the issue raised is prima facie decided by the Hon'ble Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c transactions has not been disclosed in the return or the audit report, and the Assessing Officer comes to know about the same during the course of scrutiny proceedings which have otherwise been selected on non TP risk parameter, then also the A.O. has to mandatorily refer the transactions for examination by the TPO. It was further stated in the said Board Instruction (at para 3.7) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w 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 Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rify the international transactions. This is clearly against the provisions of Section 92CA of the Act and CBDT Circular in force and it is binding on the Assessing Officer to refer this issue to the TPO even though he may be of the opinion that the international transactions carried by the assessee are within arm's length. The statute and instructions of CBDT are to the Assessing Officer to refer the matter to TPO clearly indicates that the order passed by the Assessing Officer under Section 143(3) of the Act is without proper inquiry and investigation particularly on the issue of computation of 'ALP' in relation to international transactions and ld. PCIT is right in treating the order passed under Section 143(3) of the Act as erroneous in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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