TaxTMI 
TaxTMI 
2022 (1) TMI 1514
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....IT erred in law and on facts in setting aside the order of the AO passed u/s 143(3) of the Income Tax Act, 1961 and directing him to pass a fresh assessment order after referring the case to the Transfer Pricing Officer. On the facts and circumstances of the case, the Pr. CIT erred in disregarding the fact that the details of transactions as disclosed in Form 3CEB alongwith the documentary evidences and explanations furnished during assessment proceedings with regard to such transactions have been verified by the AO. 3. That the learned Pr. CIT erred in law and on facts in holding that the AO miserably failed in applying his mind in executing the prevailing law in its right perspective. On the facts and circumstances of the case, the clause (i) of Section 92BA of Income Tax Act was omitted by Finance Act, 2017 with effect from 1-4-2017 and therefore this sub clause shall be deemed not be on the statute since inception and hence the learned Pr. CIT cannot exercise the jurisdiction u/s 263 and the action is highly unjustified. 4. That for any other ground with kind permission of your honour at the time of hearing of appeal." 2. The brief facts of the case are tha....
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....n.com (568) (Kar.) vide order dated 12th December, 2019, held that when Clause (i) of Section 92BA having been omitted by the Finance Act, 2017, w.e.f. 1st July, 2017 from the statute the resultant effect is that it had never been passed and to be considered as a law never been existed. While holding so Honourable High Court followed the authoritative Principles enunciated by the Honourable Supreme Court in the case of Kolhapur Canesugar Works Ltd. Vs Union of India AIR 2000 SC 811 and in the case of General Finance Co. Vs Assistant Commissioner of Income tax 257 ITR 338 (SC) and Honourable Karnataka High Court in the case of GE Thermometrics India Pvt. Ltd. It is further informed that Bangalore tribunal in the case of Texport Overseas Private Limited Vs. Dy. CIT reached a conclusion that any amendment made in the Act which has the effect of omitting a provision/clause from the statute has to be read in line with Section 6 of the General Clause Act, if an amendment for omission has a provision therein that pending proceedings shall continue then such a proceeding will continue. However, in absence of any such provision in the statute or in the rule, the pending proceeding will laps....
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....or action taken under that clause would not survive at all and any reference made to TPO under section 92CA in respect of transactions referred to in clause (i) of Section 92BA of the Act shall be invalid and bad in law. (iv) In the case of M/s AIC Iron Industries Pvt Ltd vs Pr. CIT, Kolkata in ITA No.1332/kol/2019 dated 31-12-2019, the principle laid down in the case of DVC Emta Coal Mines Ltd is followed. The decisive para is reproduced below: "31. Applying the ratio laid down in the foregoing decision to the facts of the present case, we note that when the impugned order was passed by the Ld. Pr. CIT, clause (i) of section 92BA of the Act had already been omitted by the Finance Act, 2017 and in that view of the matter the Ld. Pr. CIT could not set aside the order for alleged non-compliance with provision of law which no longer existed in the statute as on the date of order. The Ld. Pr. CIT's direction requiring the AO to consider making a reference to the TPO in the set aside proceedings is also contrary to the view expressed in the foregoing decision of the coordinate bench(supra). For all the foregoing reasons therefore, we hold that the AO's order di....
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....er dated 16/07/2021 wherein the Coordinate Bench has held as under: "7. We have duly considered rival submissions and gone through the record carefully. Section 263 of the Income Tax Act has direct bearing on the controversy, therefore, it is pertinent to take note of this section. It reads as under: "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation .- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner o....
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....re would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various j....
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....the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 9. In the light of the above, let us examine the facts of the present case. A perusal of the transactions entered with the related parties whose value at the most could be determined at arm's length, are the transactions with related parties. We have noticed the break-up of such transactions (supra) and at the cost of repetition, we take this transaction again below: Sr. No. Date Particulars Amount Remarks 1 AY 2014-15 Transactions entered with related parties is as under: Transaction with related parties are duly disclosed in Form 3CEB Particulars Nature 1. Global Enterprise (Prop. Ashish S Shah HUF) Purchase 19,36,86,462/- 2. Amiben P Shah Interest 2,063/- 3. Diptiben D Shah Interest 3,095/- 4.SwatibenSShah Interest 3,095/- 5. Neenben KShah Interest 3,095/- 6. Subhodchandra K Shah Interest 4,03,135/- 7. Subhochandra K Shah HUF Interest 3,6....
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....low: 1. Point no.1 of notice It seems that scrutiny is attracted due to following 3 broad points on which you sought to file a. Large commission expense and low net profit Kindly note that assessee deals in knitted fabrics and much of the sales is done through commission agents and brokers and hence, commission expenses is found to be high. For the sake of comfort, we attempt to give comparative list of past 2 years also which will clarify that during the year under assessment, commission as % of sales has reduced but sales is much dependent upon commission agents. Financial Year Commission Expenses (Amount Rs.) Sales as per Audit Report (Amount Rs.) Net Profit as per Audit Report (Amount Rs.) Commission as a % of sales 2013-14 23,46,917/- 22,34,96,914/- 32,43,340/- 1.05% 2012-13 26,21,040/- 16,64,70,249/- 26,24,854/- 1.57% 2011-12 18,35,747/- 11,70,91,114/- 22,15,512/- 1.57% b. Justification of large specified domestic transaction (form 3CEB) In this connection, we would like to brief you about background of business which is relevant to explain this point. ....
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....urchase from related party viz. Global Enterprise, you have asked to justify purchase prices with those of other unrelated suppliers. In this regard, please find herewith enclosed detailed working of purchase price comparison in respect of material purchased from Global Enterprise with other unrelated party either on same day or nearby date along with few sample purchase bills of Global enterprise i.e. related party as well as of other unrelated parties. List of unrelated suppliers of which copies of bill are produced: a) Dewan Knitwear b) Sweety fabrics Pvt. Ltd c) Amit enterprise Kindly note that there is difference in prices on account of different material also." 12. On the basis of the explanation given by the assessee during the course of scrutiny assessment, the ld.AO did not refer this transaction to the TPO for determination of ALP. Now reverting back to section 92BA, it reveals that transaction mentioned at Sr.No.2 to 6 are not attracted in the case of the assessee; because he has not undertaken any of the transaction mentioned in serial nos.2 to 6. Only transaction, which could be fallen in the definition of specified....
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....ex Court has examined the effect of repeal of a statute vis- avis deletion/addition of a provision in an enactment and its effect thereof. The import of section 6 of General Clauses Act has also been examined and it came to be held: "37. The position is well known that at common law, the normal effect of repealing a statute or deleting a provision is to obliterate it from the statute- book as completely as if it had never been passed, and the statute must be considered as a law that never existed. To this rule, an exception is engrafted by the provisions of section 6(1). If a provision of a statute is unconditionally omitted without a saving clause in favour of pending proceedings, all actions must stop where the omission finds them, and if final relief has not been granted before the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in section 6 or in special Acts may modify the position. Thus the operation of repeal or deletion as to the future and the past largely depends on the savings applicable. In a case where a particular provision in a statute is omitted and in its place another provision dealing with the same contingency ....
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....merits with regard to question No. 2 formulated by the revenue in the respective appeals, we proceed to pass the following ... " 13. The above discussion is clearly applicable on the facts of the present case, when the ld. Commissioner issued a show cause notice under section 263 and ultimately passed impugned order; by that time the alleged domestic transaction of purchase from related party was not required to be considered as a specified domestic transaction under section 92BA of the Act. It has been omitted, and therefore, no proceedings under section 263 should have been undertaken by the ld. Commissioner. 14. In view of the above discussion, we allow this appeal, and quash the impugned order." 7. We also observed that the AO after due verification of all the details and documents submitted during assessment proceedings which includes details relating to Specified Domestic Transactions, has passed order u/s 143(3) dated 29-6-2017 in which returned loss is accepted and the ld. Pr. CIT has held that the assessment order is erroneous and prejudicial to the interest of revenue for the reason that the case was selected for scrutiny assessment and one of the rea....