TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 1172
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.... CIT u/s 263 is bad in law and without any basis as the same has been done on mere assumption and therefore, the assessment order under Section 143(3) of the Act "issued by the learned AO is not erroneous and there is no prejudice to the interest of Revenue. 3. On facts and in the circumstances of the case and in law, the Pr. CIT has erred in exercising its jurisdiction under Section 263 to hold that the AO should have mandatorily referred the matter to the Transfer Pricing Officer ("TPO"). The Pr. CIT has failed to appreciate that the words "he may" as used in Section 92CA are preceded by "necessary and expedient". Hence, by not making reference to the TPO, no error has been committed by the AO. 4. On facts and in the circumstances of the case and in law, the learned Pr. CIT has erred on facts and in law in assuming jurisdiction under Section 263 of the Act when the assessment order was passed after making inquiries and hence the notice and order issued under section 263 of the Act are illegal, bad in law and without jurisdiction. 3. Brief facts of the case are that the Pr. CIT in this case has observed as under: On verification of the assessment records for A.Y.2014-15, it ....
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....iated Enterprises were called for by the assessing officer and the same were examined by him. The assessing officer therefore has duly applied his mind in examining the International Transactions during the course of the assessment proceedings. 6.2 The assessee has further stated that since no TP adjustment was made in his case for AY 2011-12 and AY 2012-13, and the International Transactions being of similar nature in the present AY no material change in facts has occurred and therefore the AO did not feel it necessary to refer the matter to the TPO. 6. However, the Pr. CIT was not convinced. He rejected the assessee's submissions and held as under: 7.1 The contention of the assessee that the details relating to International Transactions were called for by the AO and examined, therefore proving that the AO has applied his mind to the matter holds no merit, as the CBDT Instruction 3/2016 dated 10th March 2016 has made it very clear that the AO is only supposed to look into the fact that whether a reference to a TPO is required to be made or not. The Income Tax Act 1961 has vested all powers of deciding the ALP in matters of International Transaction with the TPO. Therefore th....
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....the Delhi ITAT decision in the case of M/s. Amira Pure Foods Pvt. Ltd. vs. The Pr. CIT (in SA No. 451/Del/2017 & ITA No. 3205/Del/2017 vide order dated 29.11.2017). 9. Per Contra, learned departmental representative submitted that there is no whisper whatsoever in the assessment order that the assessing officer has made any enquiry whatsoever on the subject. He relied upon the order of the Pr. CIT. 10. We have carefully considered the submissions. We find that the Pr. CIT in this case has exercised his power u/s. 263 of the Act as in his opinion the issue before the A.O. required reference to the Transfer Pricing Officer (TPO for short), which the A.O. has failed to do. In this connection, the Pr. CIT has referred to CBDT Circular No.3/2016 in this regard. In this regard, we may gainfully refer to the paragraph 3.1 to 3.3 of the above said Circular which reads as under: 3.1 The power to determine the Arm's Length Price (ALP) in an international transaction or specified domestic transaction is contained in sub-section(3) of section 92C. However, section 92CA provides that where the Assessing Officer (AO) considers it necessary or expedient so to do, he may refer the computat....
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....orded by the Investigation Wing or the AO. 11. In this regard, the ld. Counsel of the assessee has submitted that the CBDT in the above said Circular had provided in para 3.2 above that firstly the cases which are selected for sscrutiny on the basis of transfer pricing risk parameters, they have to be referred to the TPO by the A.O. mandatorily. Para 3.3 of the above Circular mentions that the cases which are selected for scrutiny on non transfer pricing risk parameters but also have international transaction or specified domestic transactions shall be referred to the TPO only in a certain circumstances as mentioned above. The grievance of the ld. Counsel of the assessee is that the Pr. CIT has not specified as to in which of the clause of the said Circular the assessee's case is falling into. From a reading of the Pr. CIT's order, it is apparent that he has mentioned para 3.2 of the Circular. Hence, the grievance of the assessee is not at all relevant. In this regard, we note that the Pr. CIT in his order has noted paragraph 2 as under: On verification of the assessment records for A.Y.2014-15, it was noticed that assessee company entered into large international transacations w....