Transfer pricing reference lapse held procedural, so assessment quashing was reversed and matter restored for fresh consideration.

Failure to refer specified domestic transactions to the TPO and to issue a draft assessment order was treated as a procedural irregularity, not an incurable illegality. Reading Section 92CA(1), Section 92C(3), Section 144C(1) and CBDT Instruction No. 3/2016 together, ITAT Delhi held that the assessment could not be quashed solely on that basis. The order quashing the assessment was reversed on this issue, and the matter was restored to the Assessing Officer for de novo consideration after proper transfer pricing reference in accordance with law.

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Issues: Whether the assessment order was liable to be quashed for want of reference to the Transfer Pricing Officer and for non-issuance of a draft assessment order, and whether the matter required restoration for de novo assessment.

Analysis: The assessee's specified domestic transactions exceeded the monetary threshold, but the Assessing Officer computed the arm's length price himself instead of making a reference under Section 92CA(1) of the Income-tax Act, 1961. The Tribunal read Section 92CA(1), Section 92C(3), Section 144C(1) of the Income-tax Act, 1961 and CBDT Instruction No. 3/2016 dated 10.03.2016 together and held that the lapse was a procedural irregularity rather than an incurable illegality. The assessment could not, therefore, be quashed merely on that ground, and the issue needed fresh consideration after proper transfer pricing reference.

Conclusion: The order quashing the assessment was reversed on this issue, and the matter was restored to the Assessing Officer for de novo consideration in accordance with law.

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