2023 (5) TMI 255 - AT - Income Tax

Tribunal quashes Pr. CIT's order citing repealed provision, allowing assessee's appeal

Shri Durga Loha Bhandar Pvt. Ltd. Versus Pr. CIT, Dehradun.

Shri Durga Loha Bhandar Pvt. Ltd. Versus Pr. CIT, Dehradun. - TMI Issues Involved:1. Whether the assessment order passed under section 143(3) of the Income Tax Act, 1961 was erroneous and prejudicial to the interest of the Revenue.2. The necessity of referring specified domestic transactions to the Transfer Pricing Officer (TPO) for determining the Arm's Length Price (ALP).Summary:Issue 1: Erroneous and Prejudicial to Revenue- The appeal was filed by the assessee against the order of the Principal Commissioner of Income Tax (Pr. CIT) Dehradun, which held that the assessment order passed under section 143(3) was erroneous and prejudicial to the interest of the Revenue.- The Pr. CIT set aside the assessment order, directing a fresh assessment after due verification, as the Assessing Officer (AO) failed to refer the specified domestic transactions to the TPO for determining the ALP.Issue 2: Necessity of Referring to TPO- The assessee contended that the AO had conducted proper enquiry and verification of related party transactions and that it was not mandatory to refer every case to the TPO.- The assessee argued that section 92BA(i) was repealed by the Finance Act, 2017 w.e.f. 01.04.2017, and thus, any pending proceedings under this section should be considered null and void.- The assessee cited multiple judicial precedents to support the argument that the omission of a provision without a saving clause implies that the provision was never in existence.Tribunal's Findings:- The Tribunal noted that sub-clause (i) of section 92BA was repealed with effect from 01.04.2017, before the completion of the assessment and the passing of the order by the Pr. CIT.- Citing various judicial decisions, including those from the Supreme Court and ITAT benches, the Tribunal observed that the omission of section 92BA(i) implied that it was never part of the statute.- The Tribunal held that the Pr. CIT could not exercise jurisdiction under section 263 based on the omitted provision, as it was deemed to have never existed.- Consequently, the Tribunal quashed the order of the Pr. CIT passed under section 263 and allowed the appeal of the assessee.Conclusion:- The appeal of the assessee was allowed, and the order of the Pr. CIT was quashed, reaffirming that the omission of section 92BA(i) rendered any proceedings under it invalid.