TaxTMI 
TaxTMI 
2026 (1) TMI 551
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....ssessment year 2011-12, whereby the reassessment order passed under section 143(3) read with section 147 of the Act was set aside. The assessee has challenged the assumption of jurisdiction under section 263 as well as the legality and sustainability of the directions issued therein. 2. The controversy, though projected as one arising from transfer pricing provisions, essentially turns on the correct understanding of the statutory architecture governing sections 92CA and 263, and the legal limits within which revisional powers may be exercised, particularly where the very foundation for revision is predicated on the alleged non-consideration of a Transfer Pricing Officer's order which, on admitted facts, was never passed. 3. The mater....
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....g Officer under section 92CA. During the pendency of reassessment, the assessee approached the Hon'ble jurisdictional High Court and obtained interim protection. Subsequently, the writ petition was withdrawn and the stay stood vacated, whereafter proceedings resumed. 6. It is an admitted and incontrovertible position on record that the Transfer Pricing Officer did not pass any order under section 92CA(3). The reassessment was thereafter completed under section 143(3) read with section 147 without making any transfer pricing adjustment. 7. The learned Principal Commissioner thereafter initiated proceedings under section 263 on the premise that the reassessment order is erroneous and prejudicial to the interests of the Revenue, principa....
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....mpugned revisional order on this touchstone, what emerges with clarity is that its central plank is the learned Principal Commissioner's assertion that the reassessment order is erroneous because it was passed "without considering the order of the Transfer Pricing Officer under section 92CA(3)". This singular premise, however, falters at the threshold for a reason that is not merely technical but foundational: there exists no order under section 92CA(3) on record at all. The Transfer Pricing Officer did not pass any arm's length determination. The position is not disputed by either side; indeed, it is an admitted fact. Once that is so, the allegation that the Assessing Officer failed to consider such an order becomes self-contradictory and ....
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....cer did not "consider" a non-existent order and did not "incorporate" a determination which was never made. This, in effect, punishes the Assessing Officer for not doing what the law did not permit him to do. The Assessing Officer, having made the reference, could not have proceeded to determine the arm's length price on his own, for that would have amounted to transgressing the statutory allocation of functions. Thus, far from being an "error", the course adopted by the Assessing Officer reflects adherence to the statutory discipline. 12. It is in this context that the invocation of Explanation 2 to section 263 by the learned Principal Commissioner requires close scrutiny. Explanation 2, particularly clause (a), creates a deeming fictio....
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....rence. 14. The question then arises: can the learned Principal Commissioner set aside the reassessment order so as to compel a fresh arm's length determination? Here again, the legal difficulty is insurmountable. The revisional jurisdiction cannot be exercised to create jurisdiction where none exists, nor can it be utilised as an instrument to revive a function that has lapsed by operation of limitation. The statute prescribes timelines for passing an order under section 92CA(3) through section 92CA(3A), which mandates that such order must be passed at least sixty days prior to the expiry of the limitation for completion of assessment or reassessment. If the Transfer Pricing Officer does not pass an order within that statutorily carved t....
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.... of a transfer pricing order, by itself, does not automatically translate into prejudice. Prejudice cannot be presumed; it must be demonstrated. Section 263 is not a roving commission to conduct exploratory enquiries in the hope of discovering something adverse. 17. Thus, on both counts error and prejudice the impugned revisional order fails to meet the statutory threshold. The reassessment order cannot be termed erroneous for not considering a non-existent order of the Transfer Pricing Officer, and prejudice to the interests of the Revenue has not been established on any tangible material. The assumption of jurisdiction under section 263, therefore, rests on a contradiction: it alleges non-consideration of an order which is admitted not....