TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 38
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....ity of the notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 (For Short "the Act") for Assessment Year 2013-14. After filing of the petition and issuance of the notice by this Court on 29.03.2022, ad-interim relief was granted in terms of paragraph 7(b) whereby, implementation and operation of the notice dated 31.03.2021 was stayed. However, the respondent Assessing Officer passed the Assessment Order on 30.03.2022. The petitioner has, therefore, also challenged the Assessment Order dated 30.03.2022 by amendment, which was allowed. 5. The brief facts of the case are that the petitioner filed return of income on 29.11.2023 for the Assessment year 2013-14 declaring total income of Rs. 29,62,71,500/-. Thereafter the case of the petitioner for the year under consideration was selected for scrutiny and after detailed scrutiny, reference was made under Section 92CA (1) of the Act to the Transfer Pricing Officer to ascertain Arm's Length Price of various international transactions undertaken by the petitioner. The notices under Section 92CA(2) of the Act were issued on 24.08.2015, 22.04.2016 and 13.06.2016 which were replied by the petitioner on 07.10.2015, 20.....
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....ration. Following filters were applied by the assessee company in its TP study for the FY 2012-13 i.e. Α.Υ.2013-14. a) Product search - manufacturing valve. b) Companies having data for 2010-11, 2011-12, & 2012-13. c) Companies having sales more than Rs.1 crore. d) Ownership screening-independent, non governmental, non-cooperative. e) manufacturing as a percentage of sales more than 90%. f) Companies with positive net worth. 3. It is observed that in A.Y.2010-11, during transfer pricing proceedings, the assessee company itself has objected to inclusion of comparables which have export sales less than 50% of the of the total turnover as company was having almost 100% export turnover. Further the Hon'ble DRP also accepted the contention of the assessee company and port sales less than 50% of total sales: As directed to TPO to reject the com per this direction of Hon'ble DRP, the following companies were removed from the final set of comparables (1) KAR Mobile Limited: 12) Rage: Engine Valve Limited and accordingly final order was passed. However, in TP documents for FY 2012-13 (A.Y.2013-14), Assessee Company itself included the above mentioned tw....
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....lso directed by the Hon'ble DRP in both the cases that the single company GTN Engineering (India) Limited should be considered as comparable as it matches 100% export res revenue, which is the same as that of the assessee and because all the remaining companies, enter consideration have exports less than 50%. However, in the present case of the assesse for assessee has not applied the expY2013-14, it was observed that the 5. As discussion above has not show consistency in applying filter. During the year under consideration, the assessee has applied export filter while the same was not applied by the assessee during the year under consideration. Assessee company has to show consistency in application of filters for the selection of comparable. It has to justify the reason for exclusion or inclusion of any filters/comparables. Assessee company should have submitted proper justification for its inclusion in current year when it was not fulfilling the criteria laid down by the Hon'ble DRP as well as objection of company itself in preceding year and for the application of single or multiple year data. It is observed that the 4 comparables selected by the assessee have exp....
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....eration. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded above (refer paragraphs 6). I have carefully considered the assessment records, containing the submissions made by the assessee in response to various notices issued during the assessment proceedings and have noted that the assessee has not fully and truly disclosed the material facts necessary for his assessment for the under consideration * The Assessee company has not show consistency in selection of comparables. * The Assessee company has not shown consistency in application of export filter. * The assessee company had not submitted any justification for its non-inclusion of GTN Engineering (India) Limited having export more than 50% which was applied in earlier years. It is evident from the facts that the assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration thereby necessitating reopening u/s.147 of the Act. It is true that the assessee has filed a copy of annual report and audited P&L A/c and balance sheet along with return of income where various inf....
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....ent no. 2 about the order passed by this Court vide e-mail communication dated 29.03.2022. However, the respondent no.2 passed the Assessment Order on 30.03.2022 despite the stay granted by this Court as the limitation was expiring on 31.03.2022 by issuing notice of demand of Rs. 3,31,43,820/- along with notice for levy of penalty under Section 274 read with Section 271(1)(c) of the Act. 6. Learned advocate Mr. B.S. Soparkar for the petitioner submitted that the respondent no. 1 does not have jurisdiction to reopen the assessment pertaining to the issue of Arm's Length Price on the information received from the Dispute Resolution Panel for the earlier Assessment Year. It was submitted that sub-section (4) of Section 92CA of the Act has been substituted by the Finance Act, 2007 with effect from 01.06.2007 and accordingly, the Transfer Pricing Officer has exercised jurisdiction to determine Arm's Length Price once the reference is made and the Assessing Officer cannot deviate from it. 6.1. It was submitted that during the course of regular assessment, reference was made to the Transfer Pricing Officer and by order dated 30.09.2016, the Transfer Pricing Officer has not made any orde....
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....pening is based upon the information received from the Dispute Resolution Panel order of the earlier year which clearly shows that the petitioner has failed to show consistency in selection of comparable as well as application for export filters and the petitioner has not disclosed as to why GTN Engineering (India) Limited having export more than 50% was excluded which was in the year under consideration. It was, therefore, submitted that the respondent - Assessing Officer has rightly come to the conclusion that he has reason to believe that an income of Rs. 4,90,02,917/- chargeable to tax has escaped the assessment. It was further submitted that during the year under consideration, the Assessing Officer has recorded the reasons in detail which clearly shows that the reopening is done after application of mind and the respondent - Assessing Officer was justified in assuming jurisdiction to reopen in view of the fact that there was failure on the part of the petitioner to fully and truly disclose all the material facts for the year under consideration. 7.1. It was submitted that the impugned notice cannot be said to have been issued on mere change of opinion as the petitioner was s....
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....nal transaction referred under sub-section (1), comes to the notice of the Transfer Pricing Officer during the course of the proceedings before him, the provisions of this Chapter shall apply as if such other international transaction is an international transaction referred to him under sub-section (1). (2B) Where in respect of an international transaction, the assessee has not furnished the report under section 92E and such transaction comes to the notice of the Transfer Pricing Officer during the course of the proceeding before him, the provisions of this Chapter shall apply as if such transaction is an international transaction referred to him under sub-section (1). (2C) Nothing contained in sub-section (2B) shall empower the Assessing Officer either to assess or reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year, proceedings for which have been completed before the 1st day of July, 2012. (3) On the date specified in the notice under sub-section (2), or as soon thereafter as may be, after hearing such evidence as the assessee....
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.... provisions and to have procedural uniformity is stipulated. After considering the guidelines in detail, the Hon'ble Apex Court has held that in view of the guidelines issued by the CBDT in Instruction No. 3 of 2003 with reference to Transfer Pricing Officer, the Assessing Officer had breached the mandatory instructions issued by the CBDT and has observed as under :- "6. However, the following expressions employed in Instruction No.3/2003 put the matter in a different perspective: - "The Assessing Officer can arrive at prima facie belief on the basis of these details whether a reference is considered necessary. No detailed enquiries are needed at this stage and the Assessing Officer should not embark upon scrutinizing the correctness or otherwise of the price of the international transaction at this stage... ... If there are more than one transaction with an associated enterprise or there are transactions with more than one associated enterprise the aggregate value of which exceeds Rs.5 crores, the transactions should be referred to the TPO. ... ... Since the case will be selected for scrutiny before making reference to the TPO, the Assessing Officer may proceed to examine othe....