2016 (1) TMI 167

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....of Rs. 3,78,75,426/-. This revised return was filed within the due date prescribed u/s 139(5) of the Act. b) The assessment was completed u/s 143(1) of the Act on 29.5.2012. c) Admittedly, no notice u/s 143(2) of the Act was issued selecting the case for scrutiny by the Learned AO. Hence the assessee was under the bonafide belief that the assessment for the Asst Year 2010-11 was completed u/s 143(1) itself on 29.5.2012. d) When no proceedings were pending for the Asst Year 2010-11 before the Learned AO, the case was referred to the Transfer Pricing Officer (TPO) for determination of Arm's Length Price (ALP) in respect of the International Transactions carried out by the assessee. e) The assessee co-operated with the proceedings of the TPO and order u/s 92CA(3) of the Act was passed on 28.1.2014 making an adjustment of Rs. 7,51,20,484/- to the ALP. f) The Learned AO realizing that he could not frame any assessment as no proceedings were pending for want of issuance of notice u/s 143(2) of the Act, treated the order of TPO suggesting an addition of Rs. 7,51,20,484/- as information and sought to reopen the assessment by issuance of notice u....

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.... the Act, if served on the assessee, or the acknowledgement of return itself would be deemed to be the assessment order. Hence practically the assessment gets completed at this stage itself in the belief of the assessee unless otherwise reopened by issuing separate notice u/s 148 of the Act. The reference to Learned TPO for determination of ALP of international transactions have been spelt out in the statute u/s 92CA of the Act. For the sake of convenience, the relevant provisions of section 92CA(1) is reproduced hereunder:- 92CA - Reference to Transfer Pricing Officer (1) Where any person, being the assessee, has entered into an international transaction or specified domestic transaction in any previous year, and the Assessing Officer considers it necessary or expedient so to do, he may, with the previous approval of the Principal Commissioner or Commissioner, refer the computation of the arm's length price in relation to the said international transaction of specified domestic transaction under section 92C to the Transfer Pricing Officer. 4.1. In this regard, the relevant Instruction No. 3 of 2003 dated 20.5.2003 issued by the Central Board of Direct Taxes re....

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....he case during pendency of assessment proceedings but await the report of the TPO on the value of international transaction before making final assessment. The threshold limit of Rs. 5 crores will be reviewed depending upon the workload of the TPOs. The work relating to selection of cases for scrutiny and reference to TPO on the above basis in respect of pending returns filed for the assessment year 2002-03 should be completed by June 30, 2003". From the aforesaid Instruction No. 3 of 2003 issued by CBDT which is binding on the officers of the income tax department, makes it crystal clear that a reference u/s 92CA of the Act could be made to the TPO only when the case is selected for scrutiny. In the instant case, the case is not selected for scrutiny which fact is also conceded by the Learned DR, and hence the scrutiny assessment proceedings per se had not commenced. Hence we hold that no case was pending before the Learned AO while making reference to Learned TPO and accordingly, the order passed by the Learned TPO on 28.1.2014 making an adjustment of Rs. 7,51,20,484/- to ALP is declared void ab initio and illegal and hence cannot be relied upon by the lower ....

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....ssee preferred an appeal to the Tribunal. The Tribunal has held that when two views are possible and when the TRP has accepted valuation by the Assessing Authority determining the arm's length price, the commissioner had no jurisdiction to interfere with the said order u/s 263 of the Act and moreover on the day the reference was made by the Assessing Authority, there was no return pending for consideration and therefore, the Tribunal has set aside the order of the Commissioner. It is against the said order, the revenue is before this Court. From the aforesaid facts, it is clear that on the day the reference was made by the Assessing Authority to the Transfer Pricing Authority, there was no return pending for consideration by him and therefore, the very reference was bad. Even otherwise, the said TPO did not find fault with the adjudication of determining arm's length price by the Assessing Authority. In those circumstances, the Commissioner committed an error in exercising his power u/s 263 of the Act and the Tribunal was justified in interfering with the said order. Therefore, we do not see any merit in appeal no. 842 /2008. Accordingly, it is dismissed. ....

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....the reassessment proceedings initiated based on the TPO's order dated 28.1.2014 suggesting an adjustment of Rs. 7,51,20,484/- to ALP (which was based on an illegal reference ) by the Learned AO is void ab initio and bad in law. 6. Maintainability of appeal u/s 253(1)(d) of the Act before Tribunal It is observed that the assessee had admitted before the DRP that it is not an eligible assessee. Accordingly DRP dismissed the objections of the assessee as not maintainable for want of jurisdiction. The findings of the DRP in this regard are reproduced herein below:- DRP has duly considered submissions of the assessee and relevant legal provisions. Section 144C(2) of the Act is reproduced as under: (2) On receipt of draft order, the eligible assessee shall within thirty days of the receipt by him of the draft order- (a) file his acceptance of the variations to the assessing officer ; or (b) file his objections, if any, to such variation with - (i) the Dispute Resolution Panel (ii) the assessing officer It is clear from sub section 2 of section 144C that it is the eligible assessee only who can file objections to draft asse....

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....ittedly, the assessee company is not a foreign company. Hence the only point to be seen is whether at all any order has been passed u/s 92CA(3) of the Act by the TPO in the hands of the assessee which has been complied with in the instant case. Hence the assessee being an eligible assessee is accepted by the Learned AO itself by referring the case to TPO (though illegal) and accepted the order passed u/s 92CA(3) of the Act and made an adjustment of Rs. 7,51,20,484/- as per the said order. Just because the assessee had stated before the DRP that it is not an eligible assessee for whatever reasons best known to it, the DRP cannot brush aside these facts and sweep it under the carpet on the roots addressed by the revenue itself. We also find that the case law relied upon by the Learned DR on the coordinate bench decision of Chennai Tribunal in the case of Intimate Fashions (India) P Ltd vs ACIT reported in (2013) 31 taxmann.com 306 (Chennai - Trib.) is distinguishable. In the facts before the Chennai Tribunal, the assessee preferred objections before DRP beyond the statutory time limit prescribed under the Act. Hence the DRP dismissed the objections of the assessee on the ground of....