TaxTMI 
TaxTMI 
2016 (5) TMI 323
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....CA(3) of the Income-tax Act, 1961 (in short "the Act"), the case was referred by the Assessing Officer to the Transfer Pricing Officer (TPO) under section 92 of the Act. 3. Before the Transfer Pricing Officer, the assessee filed a detailed transfer pricing report. However the Transfer Pricing Officer rejected the transfer pricing study maintained by the assessee and rejecting the comparables as adopted by the assessee in the transfer pricing study, carrying his own transfer pricing study, applying various filters, adopted some new comparable and recommended adjustment of an amount of Rs. 6,16,68,296. The Assessing Officer made the addition of this amount of Rs. 6,16,68,296 as proposed by the Transfer Pricing Officer on account of difference between the arm's length price as computed by the Transfer Pricing Officer and that computed by the assessee. 4. The assessee took the matter before the Commissioner of Income-tax (Appeals). The contentions of the assessee before the Commissioner of Income-tax (Appeals) were many fold. One of the contentions was that the Assessing Officer has not complied with the provisions of section 144C of the Act as no draft order was provided to ....
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.... of Rs. 6,16,68,296 made by the Assessing Officer as the transfer pricing adjustment under section 92CA in export of finished goods to the associated enterprises segments which is based on the report of the Transfer Pricing Officer duly confronted to the assessee during the course of assessment proceedings. 2. That the learned Commissioner of Income-tax (Appeals) has erred in law and facts for not appreciating the decision on computation of the arm's length price under section 92CA of the Income-tax Act, 1961. 3. That the order of the learned Commissioner of Income-tax (Appeals) be set aside and that of the Assessing Officer be restored. 4. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed of. 6. As against this the assessee has filed a cross objection and raised the following grounds : "1. That the learned Commissioner of Income-tax (Appeals)-I, Ludhiana, gravely erred in not holding the order passed by the learned Assessing Officer as void/invalid inasmuch as no reference was allowed to be made to the Dispute Resolution Panel regarding the variation in the income returned and the income pr....
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....ner of Income-tax (Appeals) and stated that the provisions of section 144C have been brought into the statute with effect from October 1, 2009, by the Finance (No. 2) Act, 2009, and, therefore, would not be applicable retrospectively to the assessment year 2008-09. Since the case pertains to the assessment year 2008-09 these provisions are not applicable to it. 10. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The provisions of section 144C of the Act read as under : "144C.(1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,- (a) file his acceptance of the v....
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....o, the Assessing Officer has power to pass the final assessment order and then the straight route of the filing appeal before the Commissioner of Income-tax (Appeals) is open to the assessee. Nowhere in any of the provisions the Assessing Officer has been given any option to pass or not to pass the draft assessment order. 15. Further, on a perusal of Circular No. 5 of 2010, dated June 3, 2010, ([2010] 324 ITR (St.) 293 ) issued by the Central Board of Direct Taxes being explanatory notes to the provision of the Finance (No. 2) Act, 2009, it has been very clearly stated that the provisions are applicable with effect from October 1, 2009. The relevant extract of the circular reads as under (page 338) : "45. Provision for constitution of alternate dispute resolution mechanism 45.1 The dispute resolution mechanism presently in place is time consuming and finality in high demand cases is attained after long drawn litigation till the Supreme Court. In order to address the concern of the multinational companies and to provide mechanism for speedy disposal of their cases so as to attain finality, a new section144C is inserted in the Income-tax Act to facilitate expedit....
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....nks fit ; or (b) cause any further enquiry to be made by any Income-tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to their interest. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer, shall, in conf....
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....ng Officer shall pass the assessment order. The assessee can file an appeal against such assessment order before the Commissioner of Income-tax (Appeals). Once the option of filing an objection against the draft assessment order before the Dispute Resolution Panel has been exercised, the assessee cannot withdraw the objection and opt for the normal channel of filing appeal before Commissioner of Income-tax (Appeals). 45.5 Applicability.-These amendments have been made applicable with effect from 1st October, 2009, and will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S. O. No. 2958(E), dated November 20, 2009." 16. It is also an undisputed fact that the order of the Assessing Officer in the present case is dated December 26, 2011, the order of the Transfer Pricing Officer is dated October 21, 2011. 17. In view of the above, the order passed by the Assessing Officer is without jurisdiction. Reliance placed by the learned counsel of the assessee on the judgment of High Court of Madras in the case of Vijay Television P. Ltd. v. DRP [2014] 369 ITR 113 (Mad) is not out of....