TaxTMI 
TaxTMI 
2026 (6) TMI 546
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....e Resolution Panel ('the Hon'ble DRP'), erred in confirming the addition of INR 7,64,13,950/- to the income of the Appellant. The Appellant prays that the addition of INR 7,64,13,950/- be deleted. Validity of the assessment proceedings 2. On the facts and in the circumstances of the case and in law, the assessment order passed under section 143(3) read with section 144C(13) and 144B of the Income-tax Act, 1961 ('the Act') by the Ld. AO, being passed without a proper show-cause notice to the Appellant as required under mandatory procedure prescribed under section 144B of the Act, is in violation of the principles of natural justice and therefore, invalid, bad in law and liable to be quashed. 3. On the facts and in the circumstances of the case and in law, the Ld. AO under the directions of the Hon'ble DRP, erred in holding that the Intimation under section 143(1) of the Act, issued by the Learned Central Processing Centre ('the Ld. CPC') does not merge with the assessment order passed under section 143(3) read with section 144C(13) and 144B of the Act. The Appellant prays that the assessment proceedings be ....
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....rce (TCS') of INR 91,050 as claimed by the Appellant in the return of income. 3. The brief facts of the case are that the assessee is a wholly owned subsidiary of Inductotherm Technologies Inc., USA and is engaged in the business of manufacturing and sale of induction heating, welding and related industrial equipment and components. For the assessment year under consideration, the assessee filed its return of income on 13.02.2021 declaring total income of Rs175.94 crores. The case was selected for scrutiny and notice u/s 143(2) of the Act was issued. During the course of scrutiny proceedings, an intimation u/s 143(1) of the Act was issued by the CPC making an adjustment of Rs. 3,75,67,050/- on account of mismatch between the tax audit report and the return of income in respect of reversal of provisions. The assessee contended that the relevant provisions had already been disallowed in the year of creation in earlier assessment years and, therefore, the reversal thereof had been rightly reduced while computing income during the year under consideration, and any contrary view would result in double taxation of the same item. 3.1 During the relevant previous year, the assess....
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....icing Adjustment 5. The Ld. AR submitted that the rejection of TNMM by the TPO is contrary to settled principles of transfer pricing law and contrary to earlier decisions of the coordinate bench in assessee's own case for preceding assessment years where TNMM has been consistently upheld as the most appropriate method. The Ld. AR also submitted that there is no change in the functional, asset and risk profile of the assessee during the year under consideration. The Ld. AR contended that the TPO erred in selecting only 240 products out of a large product basket of approximately 9000 products without demonstrating strict comparability or making reasonably accurate adjustments as mandated under Rule 10B(3). The AR further submitted that the DRP failed to follow binding precedent of the Tribunal in assessee's own case and instead sought to keep the issue alive in the interest of revenue, which is impermissible in law. The assessee relied on earlier years' orders of the Tribunal in its own case from AY 2006-07 onwards, wherein identical issue was decided in favour of the assessee holding that internal CPM could not be applied where proper comparability adjustments were not possible a....
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..... It was contended that if the adjustment made by CPC is sustained, it would result in taxing the same expenditure twice. The AR also submitted that the intimation u/s 143(1) was issued without granting the mandatory 30 days' time as required under the second proviso to section 143(1) of the Act, thereby rendering the adjustment procedurally invalid. The Ld. AR, on merits, it was pointed out that the mismatch was subsequently rectified through a certificate from the tax auditor dated 06.06.2025 and revised tax audit report filed on 07.08.2025 confirming that the classification error was inadvertent and that the impugned amount was correctly reported under the relevant clause. Reliance was placed on various judicial precedents holding that procedural violations in section 143(1) adjustments render such additions unsustainable. 9. The Ld. DR, on the other hand, submitted that CPC is statutorily empowered to make adjustments under section 143(1) based on discrepancies between the return and audit report and that such processing is independent of scrutiny assessment proceedings under section 143(3). The Ld. DR also submitted that the assessee failed to correctly reconcile its tax au....