Inadequate hearing by CIT(A) leads to remand for fresh arm's length price determination.

The Tribunal found that the CIT(A) did not provide adequate hearing opportunities to the assessee, leading to an ex-parte order. The Tribunal disagreed with the CIT(A)'s assessment of the appellant's conduct and remanded the case for a fresh determination of the arm's length price for international transactions, emphasizing the necessity for a detailed examination of the benchmarking method by the assessing officer.

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Issues Involved:
1. Adequacy of hearing granted by the CIT(A) to the assessee.
2. Arm's length price determination for international transactions.

Issue 1: Adequacy of hearing granted by the CIT(A) to the assessee:
The appellant contended that the CIT(A) did not provide sufficient opportunities for a hearing, leading to an ex-parte order despite the appellant's attendance and requests for jurisdiction transfer. The CIT(A) detailed the numerous notices issued for hearings and the appellant's adjournment requests. The Tribunal found that the appellant had valid reasons for seeking adjournments, contrary to the CIT(A)'s assertion of dilatory tactics. The Tribunal concluded that the CIT(A)'s observation was unwarranted, considering the circumstances.

Issue 2: Arm's length price determination for international transactions:
The assessee, engaged in computer-aided services, had a service agreement with its Associated Enterprise (AE) for rendering services at cost plus 10%. The AO rejected this agreement, citing all exports to the AE and a net profit rate of 24.72%. Consequently, an adjustment of Rs. 77,23,796 was made to the arm's length price. The CIT(A) merely upheld the AO's decision without providing any independent findings. The Tribunal noted the absence of a detailed examination of the appropriate benchmarking method by the AO. In the interest of justice, the Tribunal remanded the case to the AO for a fresh determination of the arm's length price, allowing the assessee to submit additional evidence if needed.

In summary, the Tribunal addressed the issues of hearing adequacy and arm's length price determination. It found the CIT(A)'s observation on the appellant's conduct unwarranted and remanded the case for a fresh determination of the arm's length price, emphasizing the need for a thorough examination of the benchmarking method.

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