Appeal success due to invalid transfer pricing order in Income Tax Act reassessment case

The Tribunal quashed the reassessment order in an appeal against an assessment order under section 147 of the Income Tax Act, 1961, due to transfer pricing adjustment. The Assessing Officer's failure to wait for the Transfer Pricing Officer's decision and the subsequent invalid transfer pricing order rendered the proceedings void. The Dispute Resolution Panel found the assessment order to be wrong and illegal, lacking a valid reference to the Transfer Pricing Officer during reassessment. As the assessee was not considered an "eligible assessee," the Panel declined jurisdiction. The Tribunal allowed the appeal, citing the unsustainability of the final assessment order without a valid Transfer Pricing Officer reference.

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Issues:
Appeal against assessment order u/s 147 due to transfer pricing adjustment.

Analysis:
The appeal was filed against the assessment order passed by the Assessing Officer u/s 147 of the Income Tax Act, 1961, following a transfer pricing adjustment. The counsel for the assessee argued that the order was wrong, illegal, and void ab initio. The sequence of events revealed that the Assessing Officer passed the final assessment order before waiting for the TPO's decision, leading to objections from the assessee regarding the validity of subsequent proceedings. Despite objections, the TPO passed a transfer pricing order, and the Assessing Officer reopened the assessment without a valid reference to the TPO during reassessment. The Dispute Resolution Panel found the Assessing Officer's order to be wrong and illegal due to the lack of a valid reference to the TPO during reassessment, rendering the proceedings void. The Panel declined jurisdiction as the assessee was not considered an "eligible assessee" as per the Act's provisions. The Tribunal, citing a similar case, held that the final assessment order without a valid TPO reference and subsequent invalid TPO order was unsustainable. Consequently, the reassessment order was quashed, and the appeal was allowed.

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