TaxTMI 
TaxTMI 
2025 (7) TMI 961
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....the case and in law, the Ld. CIT(A) has erred in directing the AO to consider average profit of A.Y. 2012-13, Α.Υ. 2013-14 & Α.Υ. 2014-15 and adopt the same for arriving at profitability of the assessee and accordingly rework the disallowance on account of purchase from the related parties, especially when the assessee could not demonstrate that the purchases had been made from the related parties at an arm length price." 2. "The Appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored." 3. "The appellant craves leave to amend, or alter any grounds or add a new ground, which necessary." 2. The brief facts of the case, as emer....
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....arties. The disallowance was computed with reference to the shortfall in the gross profit rate over the declared turnover of Rs. 55,69,46,287/-. 2.3 In the appellate proceedings before the CIT(A), the assessee did not comply with the notices issued and remained unrepresented. However, the Ld. CIT(A) directed the Assessing Officer to adopt an average gross profit rate for the three assessment years-2012-13 to 2014-15-for determining the extent of excessive payment. Aggrieved by the said direction, the Revenue is in appeal before us. 3. It is noted from the records that notice of hearing was served upon the assessee through registered post as well as through departmental process. However, there was no appearance on behalf of the assesse....
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...., shall be made in respect of a specified domestic transaction referred to in section 92BA, if such transaction is at arm's length price as defined in clause (ii) of section 92F.]" 5. On perusal of the record and the applicable provisions, we note that Section 92BA, which defines specified domestic transactions and attracts transfer pricing documentation requirements, was inserted with effect from Assessment Year 2013-14 but was made applicable for certain transactions only from Assessment Year 2017-18 onwards. Therefore, for the year under consideration, the assessee was not mandatorily required to maintain documentation as per transfer pricing regulations. Nonetheless, the transaction remains amenable to scrutiny under Section 40A(....
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.... obligation of the AO to conduct proper scrutiny of the material, given the fact that the two appellate authorities above are also forums for fact-finding, in the event of AO failing to discharge his functions properly, the obligation to conduct proper inquiry on facts would naturally shift to the door of the said appellate authority. For such purposes, we only need to point out one step in the procedure in appeal as prescribed in Section 250 of the Income Tax Act wherein, besides it being obligatory for the right of hearing to be afforded not only to the assessee but also the AO, the first appellate authority is given the liberty to make, or cause to be made, "further inquiry", in terms of sub-section (4) which reads as under:- "T....
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....ation must itself be wholesome or not untrue. It is only when the explanation and the material offered by the assessee at this stage passes this muster that the initial onus placed on him would shift leaving it to the AO to start inquiring into the affairs of the third party. 40. The CIT (Appeals), as also the ITAT, in the case at hand, in our view, unjustifiably criticized the AO for not having confronted the assessee with the facts regarding return of some of the summons under Section 131 or not having given opportunity for the identity of all the share applicants to be properly established. The order sheet entries taken note of in the order of CIT (Appeals) seem to indicate otherwise. The order of CIT (Appeals), which was confir....