TaxTMI 
TaxTMI 
2021 (9) TMI 1436
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.... to the AO to pass fresh assessment order with the following direction: (a) To make reference to TPO for computation of ALP after approval of PCIT as required u/s 92CA in respect of International Transaction of Rs. 725.42 crores with AEs and obtain report form him, thereafter modify the assessment order by making such addition. (b) To examine the write off of bad debts of Rs. 23.99crores in the books against the provisions for doubtful debts made in the earlier years, which was added back in the total income of the respective earlier year and directed to him to add back in the total income if the amount is not written off in the year. (c) To examine the net loss of Rs. 6.66 crores on account of foreign currency loan on fixed assets u/s 43A of the IT Act. (d) To make to the total income and/ or to the book profit u/s 115JB wherever required in accordance with the provisions of the Income Tax as discussed in para 14 of the order u/s 263. 3. That the order passed originally by the assessing Officer under section 143(3) of the Income Tax was neither erroneous nor prejudicial to the interest of Revenue, therefore the impugned order passed u/s 263 by the ld. Principal Comm....
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....e revenue. 5. The assessee further pleaded that a bare statement to the effect that the AO has not done proper inquiries per se doesn't constitute a valid basis for assuming jurisdiction u/s 263 of the Act. It is a settled law that the provisions of section 263 cannot be invoked on mere presumptions or suspicion that an inquiry might have unearthed any escaped taxable income as held by the Hon'ble Delhi High Court in its judgment in the case of CIT vs. Leisure Wear Exports Ltd. (2010) 46 DTR (Del) 97wherein the Hon'ble Court while relying upon the principle laid down by the Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd 243 ITR 83 (SC) has held that in the entire order emphasis laid by the CIT is that in respect of four issues mentioned by him, no queries were raised by the AO. On this premise, though it is observed that there was no application of mind on the part of the AO and the AO has not recorded any reasons to justify the omission to consider the said facts, the CIT does not take the said order to its logical conclusion which was the prime duty of the CIT in order to justify exercise of power under s.263. There is not even a whisper thatthe order is erroneous....
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....v. Deepak Real Estate Developers (India) Pvt. Ltd. (DBITA 581/2011 dated 03.03.2014 Rajasthan High Court) e. CIT v. Reliance Communication Ltd. (2016) 76 Taxmann.com 226 (SC), f. CIT vs. Mahavir Spinning Mills Ltd. (2008) 303 ITR 353 g. CIT vs. PANKAJ DHIRAJLAL DHRUVE (2008) 305 ITR 332 h. CIT vs. Nahar Exports Ltd. (2008) 173 TAXMAN 3 i. Virendra Kumar Jhamb vs. CIT (2009) 222 CTR (Bom) 88 j. CIT V/s. GirdhariLal (2002) 258 ITR 331 (Raj) (DB) k. CIT V/s. ArvindJewllers (2002) 259 ITR 502 l. CIT V/s. Shiv HariMadhu Sudan (1998) 233 ITR 649 (Raj) m. CIT V/s. Mehsana District Co-operative Milk Producers Union Ltd. (2003) 263 ITR 645 (Guj) 9. In regard to the reference to the TPO is concerned, the assessee referred to para 3 of the CBDT Instruction No.3/2016, F.No.500/9/2015-APA-II Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, Foreign Tax and Tax Research Division-I, APA-II Section, New Delhi, dated 10th March, 2016, which read as "3. Reference to Transfer Pricing Officer(TPO)" 3.1 The power to determine the Arm's Length Price (ALP) in an international transaction or specified domestic transaction is con....
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....e the AO comes to know that the taxpayer has entered into international transactions or specified domestic transactions or both but the taxpayer has either not filed the Accountant's report under Section 92E at all or has not disclosed the said transactions in the Accountant's report filed; (b) where there has been a transfer pricing adjustment of Rs.10 Crore or more in an earlier assessment year and such adjustment has been upheld by the judicial authorities or is pending in appeal; and (c) where search and seizure or survey operations have been carried out under the provisions of the Income-tax Act and findings regarding transfer pricing issues in respect of international transactions or specified domestic transactions or both have been recorded by the Investigation Wing or the AO. 12. The assessee mentioned that the assessee case does not attract any of the condition stipulated above and therefore, no reference was required to be made to the TPO. The assessee also mentioned that each of the query of the AO was replied, the fact which is not denied by the PCIT in his order. The assessee submitted that in the course of assessment proceedings, the assessee submitted letters....
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....ade attracting the provision of transfer pricing (sec 92 and related sections) is not applicable and the assessment order cannot be said to be erroneous and prejudicial to the interest of revenue on this aspect. The assessee further submitted that the observation that gross total income of Rs. 778,404,660 is less than the value of foreign remittance sent at Rs. 5,168,404,794/- has no relevance. These foreign remittances were for purchase of raw material, consultancy and other business purposes etc.All the Specified domestic transactions (SDT) worth Rs. 264,524,412 are reported in form 3CEB. The assessee further submitted that all other queries are replied during the assessment and are on records, which have also been agreed by the PCIT in his order. 18. The assessee further submitted that the AO had considered all the submissions, examined the books of accounts and after proper application of mind did not draw any adverse inference therefrom. The AO's observations in para-1 of the assessment order wherein he has categorically stated the assessee had duly submitted replies to the queries issued. 19. On the other hand, the ld CIT DR relied on the PCIT's order and submitted that i....
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....d that none of the situation is applicable in the case of the assessee. The clause (a) states where there are international transactions or specified transactions or both and the taxpayer has not filed any report required to be submitted under section 92E. This is not a situation in the case of the assessee and report was submitted and also during the assessment the same was submitted. The second situation where in previous assessments if any addition on account of transfer pricing adjustment of more than ten crores and addition being upheld in appellate proceedings is also not applicable in the case of the assessee, and this is not a case where search or seizure or survey operations had been carried out. In such a situation it cannot be said that the assessment is erroneous as reference to TPO was not made. 21. We also find that on similar issue the Delhi Bench of ITAT had occasion to examine this issue in the case of M/s Amira Pure Foods Private Limited vs. PCIT in ITA No. 3205/Del/2017, in which following the decision of Hon'ble Delhi High Court in the case of Delhi Airport Metro Express Ltd. reported in (2017) 398 ITR 8 (Delhi) in which it has been held as under : It is se....
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....re Foods Private limited reported in (2018) 63 ITR (Trib) 355 (Delhi) in which it has been observed as under : "29. We are also of the view that as per instruction No. 3 of 2016, it was not mandatory for the AO to make a reference to TPO. The assessee had explained before the learned Principal CIT that its case does not fall under the conditions referred to in the instruction No. 3 of 2016 and as such it wasn't obligatory for the AO to make a reference to TPO. The learned Principal CIT has not dealt with this contention of the assessee and has given a bald finding that AO should have referred to TPO as per instruction No. 3 of 2016. The learned Principal CIT has not specified under which condition of instruction No. 3 of 2016, the AO should have referred to TPO. The argument of the learned Departmental Representative that selection under CASS was made because of mismatch in foreign remittent and Form 15CA, also doesn't help the cause of the Revenue. As per r. 37BB, the reporting in Form 15CA is in respect of payment made to non-resident not being a company or to a foreign company. The reporting is not limited or is not particularly in respect of payment made to associated enterp....