GLEN APPLLIANCES,FARIDABAD vs. ACIT CENTRAL CIRCLE 1 FARIDABAD, FARIDABAD

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I’, NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER And SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER

ITA No.6092/Del/2024 Assessment Year: 2017-18 Glen Appliances Private Vs ACIT, Central Circle-1, Limited, I-34, DLF Industrial New CGO Complex, Area, Phase-I, Amarnagar, Faridabad, Haryana-121001 S.O. Faridabad, Haryana-121003 (APPELLANT) (RESPONDENT) PAN No.AACCA4437G Assessee by Shri Gaurav Jain, Adv. Shri Tarun Chanana, Adv. Revenue by Shri Bhopal Singh, Sr. DR Date of Hearing 10.03.2026 Date of Pronouncement 03.06.2026

ORDER PER NAVEEN CHANDRA [A. M]: The above captioned appeal is preferred by the assessee against the order dated 18.11.2024, passed by ld. Comm. Of Income Tax (Appeals)-3, Gurgaon, (hereinafter referred to as ‘ld. CIT(A)), passed u/s 154 r.w.s. 250(6) of the Income Tax Act, 1961 (hereinafter ‘the Act’) pertaining to Assessment Year 2017-18.

ITA No.6092/Del/2025 Glen Appliances Private Limited “1. That the order passed by the Ld. Commissioner of Income Tax (Appeals)-3, Gurgaon (hereinafter referred to as "the CIT(A)") dated 30.10.2024 and later on passed under Section 154 rw.s. 250(6) of the Income Tax Act 1961, (hereinafter referred to as "the Act"), dated 18.11.2024, dismissing the appeal of the appellant company against the assessment order passed u/s 143(3) r.w.s. 144C of the Act dated 18.04.2021 and subsequently order u/s 1"54 r.w.s. 143(3) dated 25.04.2022, is erroneous, bad in law and on facts and against the principles of natural justice. 2. That the ld. CIT(A) erred in law and on facts in not quashing the impugned assessment order on the ground of being illegal, bad in law and beyond jurisdiction since the statutory notice u/s 143(3) of the Act was not issued by the ld. jurisdictional Assessing Officer ["ld. AO") i.e,, the DCIT, Central Circle-L, Faridabad, who had passed the impugned assessment order but by the Assessing Officers (DCIT, Circle 12(1), Delhi on 21.08.2018 and DCIT, Circle 10[1), Delhi on 27.09.2018), who had no jurisdiction over the case of the appellant and thereby rendering the assessment proceedings and the consequent order void ab initio. 2.1 That the Ld. CIT(A), while deciding the aforesaid legal and jurisdictional issue, failed to consider that the order passed by the PCIT (Central), Gurugram under Section 127(2) of the Act dated 17.05.2017, transferring of jurisdiction from the DCIT Central Circle- 1, Faridabad to the ACIT Circle 1,2(1), Delhi, followed by the corrigendum dated 22.06.2018 transferring them further to the DCIT Circle 10(1), Delhi, was illegal and contrary to the provisions of Sections 124 and 127 of the Act, which is evident from the subsequent order passed by the PCIT (Central), Gurgaon u/s 127(2) dated 14.03.2019. which cancelled the corrigendum dated 22.06.2018. 2.2 That the ld. CIT(A) grossly erred in treating the notices u/s L43(Z) issued by non-jurisdictional AOs as valid, solely based on the findings in the remand report without applying his independent mind or addressing the legal objections raised by the appellant before the AO as well as the ld. CIT(A) during the course of appellant proceedings Without prejudice to the above: 3. That the Ld. CITIA) erred in law and on facts in not quashing the order passed by the ld. TPO u/s 92CA(3) of the Act, dated 31.01.2023 later rectified order u/s 154/92C(3) on 18.03.2021, on account of being illegal, bad in law and without jurisdiction, since the ld. TPO determined the ALP for "other transactions" amounting to Rs.115.05 crores (as reported at Sr. Nos. 23(A) of the Form 3CEB), for which no prior approval was obtained from the Competent authority, i.e., the PCIT/CIT, and no valid reference was made by the A0 under Section 92CA 1) of the Act read with the CBDT Instruction No. 3/2016 dated10.03.2016. 3.1 That the ld. CIT(A) grossly erred in holding that the AO did not deviate from the procedure for prior approval and reference to the TPO, as outlined in the CBDT Instruction dated 10.03.2016, solely based on the findings in the remand report, while overlooking the Page 2 of 9

ITA No.6092/Del/2025 Glen Appliances Private Limited approval obtained on 04.11.2019 and other internal communications between the PCIT, Gurgaon, the TP0, and the AO, which showed that the prior approval was obtained only for the Specified Domestic Transactions ["SDT") of Rs. 11,08,09,663/-, as reported at Sr. No. 22 of Form 3CEB, covered under clause (i) of Section 92BA of the Act, which was omitted by the Finance Act, 2017, w.e.f. 01.04.2017, and therefore not applicable for the impugned assessment year. 3.2 That the ld. CIT(A) also failed to appreciate that the ld. TPO was not empowered to determine ALP in respect of any other SDT transactions, which came to his notice subsequently as the said power is available only in respect of International Transactions in view of Sub-section (2A) of Section 92CA of the Act. 4. That the Ld. CITIA) erred on the facts and in law in confirming the action of the ld. AO/TPO in reducing the eligible profits by Rs.11,45,12,135/- after computing ALP of such eligible profits, of manufacturing unit at Baddi claiming deduction u/s 80-IC of the Act, which resulted in reduction of the claim of deduction by Rs.3,43,53,640/- being 30% of the TP adjustment made of Rs.11,45,12,135/- 4.1. That the ld. CIT(A) failed to consider that, before determining the ALP of the eligible profits earned from the transfer of goods amounting to Rs.115.05 crores from the eligible unit to non-eligible units, i.e., Associated Enterprises ["AEs"), the ld. AO was required to establish that the impugned transactions failed to meet the test of ALP as per Sections 80- IA(8) or 80-IA(10) read with Section 92BA(v) of the Act. 4.2 The ld. CIT(A) erred in rejecting the appellant's contention that the AO without fulfilling the conditions under section 92C(3) of the Act referred the matter to the TPO and further TPO erred in not providing proper opportunity to the appellant by not confronting/ clarifying the finally selection of 6 companies, which were already rejected by the appellant. 4.3 That the ld. CIT(A) also grossly erred in rejecting the contention of the appellant that the impugned transactions with the AEs were at the Arm's length Price as the same were recorded at sale prices ordinarily fetched in open market under uncontrolled conditions and therefore no adjustment was required to such prices and eligible profits earned thereon in terms of Section 92BA (v) read with Section 80-IC(7) r.w.s. Sections 80-IA (8)/ 80-IA(10) of the Act. 4.4 The ld. CIT(A) rejected the aforesaid contention solely based on the TPO's findings without any material evidence that the eligible unit disclosed higher profits compared to other companies with lower margins, without independently addressing the various contentions raised by the appellant in this regard. 5. That the ld. CITIAJ erred in Iaw and on facts in confirming the action of the ld. AO/TPO in rejecting the "Other Method" prescribed by the CBDT and Rule 10AB, which was adopted by the appellant and instead adopting the TNM Method as the Most Appropriate Method (MAM) for the purpose of undertaking the benchmarking analysis of the impugned SDT transactions carried out with the AEs.

Page 3 of 9

ITA No.6092/Del/2025 Glen Appliances Private Limited 5.1 The ld. CITIAJ erroneously stated that the appellant had adopted TNMM as the MAM, which was accepted by the TPO, solely based on the findings in the TP order, while overlooking the Form 3CEB and reply filed to TPO, which demonstrated that the appellant had adopted the "Other Method" as per Rule L0AB for benchmarking the impugned transactions. 6. That the ld. CIT(A) erred in law and on facts, without analysing the terms of Rule 10B(2)b and confirming the action of the ld. AO/TPO in selecting the six comparables companies by applying inappropriate filters such as. a. Including functionally dissimilar companies; b. Failing to apply the turnover filter with an upper limit of Rs. 200 crores and a lower limit of 10%o of the turnover of the appellant company; c. Including comparable companies facing exceptional circumstances such as demerger, amalgamation, significant fall in turnover, and continuous losses; d. Including comparable companies showing low profit margins due to interest or other expenses" 7. That the ld. CIT(A) erred in law and on facts in accepting the ld. TPO's actions:- (i) Using three-year data instead of current-year data, there by violating Rule 10B(4) of the Income Tax Rules; (ii) Calculating incorrect average of the three-year OP/OR and determining the percentile and median of the two at 7.18%. 8. That the ld. CIT(A) also failed to accept the appellant's submission that in cases where comparable data of other companies for earlier years is unavailable then the appellant's own data for those years should be considered. 9. That the order passed by the Ld. CIT(A) is a non-speaking order, which was passed without properly considering the facts of the case, the submissions made, the legal precedents relied upon by the appellant for each issue, and without applying an independent application of mind. 10. That on the facts and circumstances of the case and in law the ld. AO erred in initiating penalty proceedings under Section 270A of the Ac! ignoring the provisions of Section 270A(6) of the Income Tax Act, hence, the penalty proceedings be quashed.

ITA No.6092/Del/2025 Glen Appliances Private Limited 127(2) of the Act. It is contended that the PCIT Gurgaon, passed the order u/s 127(2) without providing any opportunity of hearing to the assessee as mandated under section 127(2). The assessee raised an objection before the PCIT, Gurgaon, contending that jurisdiction lies with Faridabad as its registered office is located there. It is stated that the PCIT, Gurgaon issued a corrigendum to the order dated 17.05.2017, stating that the correct AO is DCIT, Circle 10(1), Delhi (earlier wrongly mentioned as Circle 12(1), Delhi). The corrigendum was also issued without providing an opportunity of hearing.

Page 5 of 9

ITA No.6092/Del/2025 Glen Appliances Private Limited DCIT, Circle 12(1), Delhi) and the corrigendum dated 22.06.2018 (transferring from DCIT, Circle 12(1), Delhi to ACIT, Circle 10(1), Delhi). The assessee informed the ACIT, Circle 10(1), Delhi, of the same. Thereafter, the DCIT, CC-1, Faridabad passed the Assessment Order u/s 143(3) of the Act without assuming jurisdiction by issuing a notice under Section 143(2) of the Act. The short issue, the ld. AR stated that the initial order under section 127(2) of the Act by the PCIT, Gurgaon, dated 17.05.2017 is illegal as the same was passed without providing any opportunity of hearing. The ld. counsel strongly relied on the jurisdictional High Court on the decision of Melco India Pvt. Ltd. (2003) 260 ITR 450, wherein it was held that the order under section 127(2) of the Act will be rendered invalid if opportunity of hearing is not afforded to the assessee. The ld. Counsel for the assessee has relied upon the decision of the Hon’ble Supreme Court in the case of Ajanta Industries vs CBDT 102 ITR 281.

Page 6 of 9

ITA No.6092/Del/2025 Glen Appliances Private Limited under section 127(2) of the Act dated 17.05.2017. Provisions under section 127(2) mandates that when the PCIT is to pass an order for transferring of jurisdiction of a case from one territory to another, then he may, after giving the assessee a reasonable opportunity of being heard, wherever it is possible to do so and after recording his reasons for doing so, pass the order. We find that in the instant case, the ld. PCIT, Gurgaon, has not given any opportunity of being heard to the assessee before transferring the case from Faridabad to Delhi. In such factual matrix of the case, the decision of the Hon’ble jurisdictional High Court in Melco India Pvt. Ltd (supra) squarely applies. We therefore hold that the order u/s 127(2) for transferring the case from Faridabad to Delhi as invalid on account of ld. PCIT’s failure to afford any opportunity to the assessee before transferring the case before passing an order under section 127(2) of the Act. The consequence of the invalid transfer u/s 127(2) of the Act, is that the AO, DCIT Circle 12(1), Delhi and ACIT Circle 10(1), Delhi, who had issued notice/s 143(2) of the Act, were not vested with valid jurisdiction to issue notice u/s 143(2) of the Act and therefore the said notices will be treated as if no notice u/s 143(2) was issued for the impugned assessment year. 8. Further we find that once the PCIT Gurgaon, on 14.03.2019, cancelled the transfer order u/s 127(2) dated 17.05.2017, and the

Page 7 of 9

ITA No.6092/Del/2025 Glen Appliances Private Limited jurisdiction over the case was restored to the original AO, DCIT CC-1, Faridabad. We however, find that the DCIT CC-1, Faridabad, passed the assessment order dated 18.04.2021 without assuming valid jurisdiction by the issuance of notice u/s 143(2) of the Act. Consequently, the assessment order is also rendered invalid as it suffers jurisdictional defect and accordingly quashed. The ground no.2 of the appeal is allowed. 9. As the case has been adjudicated on legal grounds, no adjudication is made on the merits of the case.

Order was pronounced in the open court on 3rd June, 2026.

Sd/- Sd/- (ANUBHAV SHARMA) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 03.06.2026 Shekhar Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi

Page 8 of 9