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Income Tax Appellate Tribunal, DELHI BENCH ‘H’ : NEW DELHI
PER SHAMIM YAHYA, ACCOUNTANT MEMBER :
This appeal by the assessee is directed against the order of the ld. Pr.CIT, Gurgaon passed under section 263 of the Income-tax Act, 1961 (for short ‘the Act’) pertaining to assessment year 2014-15.
2. The ground of appeal taken by the assessee reads as under :- “That on the facts and in the circumstances of the case and in law the Ld. Pr. Commissioner of Income Tax, Gurgaon has erred in passing an order u/s 263 of the Income Tax Act setting aside the assessment framed by the assessing officer for the A.Y. 2014-15 without affording any opportunity to the appellant of being heard as mandated under section 263(1) of the Income Tax Act.”
Officer u/s 143(3) of the Act, vide order dated 30.03.2019 ld. Pr.CIT has invoked his power u/s 263 of the Act. The initial circumstances for invocation of jurisdiction u/s 263 and the response of the assessee are contained hereunder:-
Pages 1 to 3 cit “2. The relevant assessment records for the A.Y. 2014-15 were examined. On perusal of the record, it is noticed that the assessee company had furnished a report in Form 3CEB with DCIT, Circle- 2(1), Gurgaon. It is further noticed that the case was selected under scrutiny through CASS with one of the reasons "Lame Specified Domestic Transactions (Form 3CEB)". On the basis of this reason, the case has to be referred to the TPO. New Delhi to determine Arms Length Price after getting necessary approval from the Pr. Commissioner of Income Tax, Gurugram as per the Instruction no. 3 of 2016 issued by the CBDT before the passing the assessment order u/s 143(3) of the Income Tax Act. But, the assessing officer has completed the assessment without referring the matter to the TPO regarding determination of Arms Length Price (ALP) in respect of specified domestic Transactions. Thus the assessment order u/s 143(3) has not been made in accordance with instructions issued by the Board u/s 119 of the LT. Act. Hence, the assessment order U/S 143(3) dated 20.03.2017 for the A.Y.2014-15 passed by the AO is prima-facie erroneous and prejudicial to the interest of revenue and liable to be revised u/s 263 of the IT Act 1961.
Therefore notices u/s 263 of the Act have been issued on 01.03.2019 to the assessee providing opportunity to show cause as to why the assessment order passed by the Dy. Commissioner of income- tax, Circle-2(1), Gurugram u/s 143(3) dated 20.03.2017 for A.Y. 2014- 15 in assessee's case should not be revised u/s 263 of the Act, fixing the date of hearing on 12.03.2019. The assessee failed to avail the opportunity of being heard to this show cause notice accordingly, keeping in view the law of justice, another opportunity of being heard was given.
4. In response to the notice dated 01.03.2019, Sh. Aarav Sharma, Accountant of company attended the hearing after giving opportunity of being heard on 19.03.2019 and submitted its reply. The details of the submissions are as under: It is respectfully submitted that.-
Jain Cord industries Pvt. Ltd. Did enter info Specified Domestic Transaction during [he FY 2014-15.
Mandatory audit report u/s 92E of the Act was obtained and duly filed. 3. Reasons for selection of the case for scrutiny did not carry a TP risk parameter and they same was neither conveyed to us even after written requests.
CBDT Instruction No.3 of 2016 is being quoted to state that an error has been committed by the then assessing officer which is prejudicial to the interest of revenue. In the present case:- A. Section 92CA provides that where the Assessing Officer considers it necessary or expedient so to do, he may refer the computation of ALP. The word used here is may & amp; not shall.
B. Instruction no. 3 of 2016 instructs reference to TPO only in certain circumstances in our case. Neither was the TP risk one of the parameters to select the case for scrutiny nor was there any default in filing of the Audit Report or any TP adjustment exceeding Rs.10 Cr in an earlier year or Search or Survey operation in that year. In view of the above facts where there was no error committed by the assessing officer let alone it being prejudicial to the interest of revenue this proposal action under section 263 is not called for.”
4. Thereafter, after examination of the analysis, ld. Pr.CIT invoked his power u/s 263 of the Act and concluded as under :-
“9. In view of the above mentioned fact and the legal position on the issue. I am of the considered opinion that the aforesaid assessment order made by the AO is erroneous and prejudicial to the interests of the revenue. Therefore, the assessment order u/s 143(3) dated 25.11.2016 for A.Y. 2014-15 passed by the Assessing Officer in the case of assessee company is set-aside on this particular issue only. The Assessing Officer is directed to make an assessment order afresh after referring the matter regarding determination of ALP in respect of international transaction entered by the assessee with its associate concerns to TPO, after following the procedure laid down under the Act. The AO should also provide opportunity to the assessee before completing the assessment afresh.”
./2019 5. Against the above order, assessee has filed appeal before the ITAT.
We have heard the ld. DR of the Revenue. None appeared on behalf of the assessee. Notice of hearing has also returned unserved. Hence, we proceed to adjudicate the issue.
As is clear from the order of ld. Pr.CIT referred herein above that pursuant to the ld. Pr.CIT query, there has been due response from Shri Aarav Sharma, Accountant of the company and who was given opportunity of being heard on 19.03.2019 by ld. Pr.CIT and whose submissions have also been incorporated in the order of ld. Pr.CIT herein above. In this view of the matter, the ground of appeal
raised by the assessee that ld. Pr.CIT passed order without affording any opportunity to the assessee is totally misplaced and in clear contradiction of the facts as incorporated in the order of ld. Pr.CIT herein above. Hence, on finding that there is no substance in the submission that ld. Pr.CIT passed the order without granting any opportunity to the assessee, we uphold the order of ld. Pr.CIT and dismiss the ground raised by the assessee.
8. In the result, the appeal of the assessee stands dismissed. Order pronounced in the open court on this 7th day of June, 2022.