AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 831
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....ome was e-filed on 13.03.2022, declaring NIL income and loss of INR 24,82,46,516/- was carried over to next year. Since there were international transactions with the Associated Enterprises ("AEs"), the matter was selected for scrutiny under CASS and a reference was made to the Transfer Pricing Officer ("TPO") for determination of Arm's Length Price ("ALP") of the international transactions. The TPO vide order dated 26.12.2022 has made the adjustment under trading segment of international transactions of INR 13,35,00,268/-. Thereafter, the AO passed the draft assessment order dated 29.11.2023 proposed the addition to the extent of adjustments in ALP of INR 13,35,00,268/- to the total income of the assessee. 3. Aggrieved by the said order, the assessee filed objections before Ld. DRP wherein Ld. DRP disposed off all the objections by partly accepted the contention of the assessee and direct the AO/TPO to re-work out the adjustment of ALP of international transactions. Thereafter, AO/TPO has passed the order giving effect dated 20.09.2024 and on the same day without considering the said order of giving effect to the directions of Ld. DRP, AO passed the final assessment order vide ....
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....o complete the assessment u/s 144C(13) of the Act without waiting for the order giving to such directions. Sub-section 10 of section 144C of the Act provides that "Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer." Further Sub-section (13) of section 144C is reproduced as under:- 144C. ............... (13) "Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received." 10. The conjoint reading of sub-section (10) and (13) of section 144C of the Act would make it clear that no order under subsection (13) could be passed without the conformity with the directions given by Ld. DRP as per sub-section (5) of section 144C of the Act. Further, sub-section (10) made such directions binding on the AO. In the instant case, AO while passing the assessment order u/s 144C(13) had not followed such directions given by Ld. DR....
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....rved that ld. DR for the Revenue objected to the grounds raised by the assessee and submitted that the order passed by the Assessing Officer is only mistaken belief considering the directions passed by the ld. DRP on intra group services and he heavily relied on the case laws submitted by him to pray that the relevant assessment order be remitted back to Assessing Officer for proper rectification. After considering various case laws relied by the ld. DR, we observed that they are distinguishable to the facts of the case and not relevant for the issues raised by the assessee. At the same time, we observed that in the case of Hexaware Technologies Ltd. (supra), Hon'ble Bombay High Court has dealt with the issue of section 148/148A and section 151A of the Act. Ld. DR for the Revenue relied on the decision of Hon'ble Supreme Court in the case of Ashish Agarwal (supra). The facts involved in this case are issue of reassessment proceeding notices issued by the Revenue approximately 90000 u/s 148 of the Act, so in order to protect the rights of the Revenue as well as respective assessee's and for public exchequer, the same was remitted back to Assessing Officer to pass relevant orders u/s....
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....he Scheme remains. What is covered in clause 3(a) of the Scheme is already provided in Section 144B(1) of the Act, which Section provides for faceless assessment, and covers assessment, reassessment or recomputation under Section 147 of the Act. Therefore, if Revenue's arguments are to be accepted, there is no purpose of framing a Scheme only for clause 3(a) which is in any event already covered under faceless assessment regime in Section 144B of the Act. The argument of respondent, therefore, renders the whole Scheme redundant. An argument which renders the whole Scheme otiose cannot be accepted as correct interpretation of the Scheme. The phrase "to the extent provided in Section 144B of the Act" in the Scheme is with reference to only making assessment or reassessment or total income or loss of assessee. Therefore, for the purposes of making assessment or reassessment, the provisions of Section 144B of the Act would be applicable as no such manner for reassessment is separately provided in the Scheme. For issuing notice, the term "to the extent provided in Section 144B of the Act" is not relevant. The Scheme provides that the notice under Section 148 of the Act, shall be issued ....
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....the Act." The issuance of notice is not through automation but through "automated allocation". The term "automated allocation" is defined in clause 2(1)(b) of the said Scheme to mean random allocation of cases to Assessing Officers. Therefore, it is clear that the Assessing Officer are randomly selected to handle a case and it is not merely a case where notice is sought to be issued through automation. (ii) It is further erroneously stated in paragraph 3 of the Office Memorandum that "To this end, as provided in the section 148 of the Act, the Directorate of Systems randomly selects a number of cases based on the criteria of Risk Management Strategy." The term 'randomly' is further used at numerous other places in the Office Memorandum with respect to selection of cases for consideration/issuance of notice under Section 148 of the Act. Respondent is clearly incorrect in its understanding of the said Scheme as the reference to random in the said Scheme is reference to selection of Assessing Officer at random and not selection of Section 148 cases as random. If the cases for issuance of notice under Section 148 of the Act are selected based on criteria of the risk management....
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....ls, including artificial intelligence and machine learning, with a view to optimise the use of resources'. The said definition does not provide that the automated allocation of case to the Assessing Officer is based on the risk management criteria. The reference to risk management criteria in clause 3 of the Scheme is to the effect that the notice under Section 148 of the Act should be in accordance with the risk management strategy formulated by the board which is in accordance with Explanation 1 to Section 148 of the Act. In our view, the Revenue is misinterpreting the Scheme, perhaps to cover its deficiency of not following the Scheme for issuing notice under Section 148 of the Act. (iv) In paragraph 3.1 of the Office Memorandum, it is stated that the case is selected prior to issuance of notice are decided on the basis of an algorithm as per risk management strategy and are, therefore, randomly selected. It is further stated that these cases are 'flagged' to the JAO by the Directorate of Systems and the JAO does not have any control over the process. It is further stated that the JAO has no way of predicting or determining beforehand whether the case will be 'flagged' ....
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...., a completely unsustainable and illogical submission has been made that Section 151A of the Act takes into account that procedures may be modified under the Act or laid out taking into account the technological feasibility at the time. Reading the said Scheme along with Section 151A of the Act makes it clear that neither the Section or the Scheme speak about the detailed specifics of the procedure to be followed therein. This argument of the Revenue is clearly contrary to the Scheme as the Scheme is very specific to provide, inter alia, that the issuance of notice under Section 148 of the Act shall be through automated location and in a faceless manner. Therefore, the Scheme is mandatory and provides the specification as to how the notice has to be issued. Further the argument of the Revenue that Section 151A of the Act takes into account that the procedure may be modified under the Act is without appreciating that if the procedure is required to be modified then the same would require modification of the notified Scheme. It is not open to the Revenue to refuse to follow the Scheme as the Scheme is clearly mandatory and is required to be followed by all Assessing Officers. ....