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TMI Blog2023 (6) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... edings, which is the only process known to the Act, whereby the assessment of total income is done. Therefore, Tribunal was correct to hold that when reference was made to the TPO by AO for determination of arm s length price in relation to the international transaction, no assessment proceedings were pending and hence it was invalid reference. The subsequent order passed by the TPO determining the assessment to the international transaction was a nullity in law and void ab initio. AO could not have relied upon an order of the TPO which is a nullity to form a belief that certain income chargeable to tax has escaped the assessment for the relevant Assessment Year. No substantial questions of law arise. - K.R. SHRIRAM M.M. SATHAYE, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer by issuance of notice u/s 143(2) of the Act ? 2. Respondent is engaged in the business of manufacturing diapers and sanitary napkins. Respondent also markets the consumer tissue products. Respondent had filed return of income declaring total income at Rs. 30,01,43,006/- on 31st October 2007 for Assessment Year 2007-08. 3. The return of income was processed under Section 143(1) of the Income Tax Act, 1961 (the Act). The Assessing Officer made reference under Section 92CA of the Act to the Transfer Pricing Officer (TPO) on 26th October 2009. The TPO passed an order under Section 92CA(3) of the Act on 29th October 2010 making an adjustment on account of arms length price of the international transaction at Rs. 12,17,43 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CA(1) of the Act was invalid and consequently the order passed by the TPO under Section 92CA(3) of the Act could not be the basis for recording the reasons for re-opening the assessment, i.e., initiating re-assessment proceedings. Mr. Pardiwalla submitted that where the Assessing Officer had re-opened the assessment by merely making a reference to the order of the TPO which admittedly was passed without any jurisdiction, then there was no independent application of mind by the Assessing Officer to commence the re-assessment proceedings and in the absence of the same, the assessment proceedings could not be re-opened. The reasons recorded for re-opening the assessment read as under : M/s. Kimberly Clark Lever Pvt. Ltd. A.Y. 2007-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... international transaction and no notice under Section 143(2) of the Act was issued before making the said reference to the TPO. When no assessment proceedings were pending in relation to the relevant assessment year, in our view the Assessing Officer was precluded from making a reference to the TPO under Section 92CA(1) of the Act for the purpose of computing arms length price in relation to the international transaction. 7. The relevant provisions relating to the transfer pricing assessment are contained in Section 92 to 92 F of the Act. Section 92(1) of the Act provides that any income arising from an international transaction between associated enterprises shall be computed having regard to the arm s length price. Sections 92A and 92B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking into account the material before him, pass an order in writing under Section 92CA(3) of the Act determining the arms length price in relation to an international transaction. On receipt of this order, Section 92CA(4) of the Act requires the Assessing Officer to compute the total income of the assessee in conformity with the arms length price so determined by the TPO. This means that the determination of the arms length price wherever a reference is made to him is done by the TPO under Section 92CA(3) of the Act but the computation of total income having regard to the arms length price so determined by the TPO is required to be done by the Assessing Officer under Section 92CA(4) read with Section 92C(4) of the Act. 9. It is theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s length price in relation to an international transaction to the TPO under Section 92CA of the Act. The relevant portion of the Instructions No. 3/2003 reads as under : The Central Board of Direct Taxes, therefore, have decided that wherever the aggregate value of international transaction exceeds Rs.5 crores, the case should be pricked up for scrutiny and reference under section 92CA be made to the TPO. If there are more than one transaction with an associated enterprise or there are transactions with more than one associated enterprises the aggregate value of which exceeds Rs. 5 crores, the transactions should be referred to TPO. Before making reference to the TPO, the Assessing Officer has to seek approval of the Commissioner/Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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