DCIT, AAYAKAR BHAVAN CHURCHGATE, MUMBAI vs. IIFL FINANCE LTD, THANE, MUMBAI

relates to the arm’s length price under Chapter-X of the Act, the designated Income Tax Appellate Authority in the Mumbai region is Commissioner of Income Tax (Appeals)-55 – 58, Mumbai. The learned DR also placed reliance upon the Circular dated 06/10/2022 issued by the CBDT, clarifying that all the appeals under section 246A of the Act, pending or instituted on or after 25/09/2020, shall be completed under the Faceless Appeal Scheme, 2021, except, inter-alia, the 3. ITAs No.4159 & 4318/Mum/2024 (A.Ys. 2010-11 & 2012-13) appeals against assessments involving arm’s length price of international transaction under Chapter-X of the Act. Accordingly, the learned DR submitted that the learned CIT(A), NFAC, had no jurisdiction to pass the impugned orders in the present case, as the assessee’s appeals involved issues pertaining to transfer pricing adjustment.

5. On the contrary, the learned Authorised Representative (“learned AR”) submitted that even after the CBDT’s Circular dated 06/10/2022, the learned CIT(A), NFAC, issued three notices, which were duly responded to by the assessee. Objecting to the additional ground raised by the Revenue, the learned AR submitted that a jurisdictional issue cannot be raised by the Revenue to the prejudice of the assessee, and the Revenue has to follow the prescribed procedure. The learned AR further submitted that the Revenue has made a full recovery of tax due, along with interest, on the additions made vide assessment order, and there is no outstanding demand in respect of the years under consideration.

6. We have considered the submissions of both sides and perused the material available on record. In the present case, the assessee is engaged in the business of stockbroking and is a member of the National Stock Exchange of India Ltd and the Bombay Stock Exchange. The return filed by the assessee for the assessment years 2010-11 and 2012-13 was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. It is an undisputed fact that pursuant to the reference by the Assessing Officer (“AO”) under section 92CA(1) of the Act, the TPO proposed transfer pricing adjustments vide order passed under 4 ITAs No.4159 & 4318/Mum/2024 (A.Ys. 2010-11 & 2012-13) section 92CA(3) of the Act for both the assessment years. Accordingly, in conformity, the AO passed the assessment orders under section 143(3) of the Act, inter-alia, incorporating the transfer pricing adjustments proposed by the TPO. There is also no dispute amongst the parties that in its appeals before the learned CIT(A), the assessee raised grounds challenging the transfer pricing adjustments made by the AO/TPO. In the present case, it is pertinent to note that the appeals were instituted by the assessee before the learned CIT(A) on 10/04/2014 and 31/05/2016 for the assessment years 2010-11 and 2012-13, respectively. Thus, it is evident that both appeals were filed by the assessee before the learned CIT(A) prior to the introduction of the Faceless Appeal Scheme, 2020.

7. We find that in the exercise of the powers conferred under section 250(6B) of the Act, the CBDT introduced the Faceless Appeal Scheme, 2020, vide notification issued on 25/09/2020. The said scheme was later superseded by the Faceless Appeal Scheme, 2021, vide notification dated 28/12/2021. We find that vide Circular dated 06/10/2022, the CBDT clarified that all the appeals under section 246A and/or under section 248 of the Act, pending or instituted on or after 25/09/2020, shall be completed under the Faceless Appeal Scheme, 2021, except, inter-alia, the appeals against assessments and penalties involving arm’s length price of international transaction or specified domestic transactions under Chapter-X of the Act. We find that vide the notification dated 13/10/2022, the CBDT directed that the Commissioner of Income Tax (Appeals), Mumbai shall exercise powers and perform the functions in respect of the appeals arising under section 246A and section 248

5 ITAs No.4159 & 4318/Mum/2024 (A.Ys. 2010-11 & 2012-13) of the Act in all cases where the order has been passed by the TPO and one or more grounds of appeal relates to arm’s length price under Chapter-X of the Act. Therefore, from a careful perusal of the afore-noted Circular and notification issued by the CBDT, it is evident that even after implementation of the Faceless Appeal Scheme, 2021, the jurisdiction to decide the appeals in cases where order has been passed by the TPO and one or more grounds of appeal relates to transfer pricing adjustments under Chapter-X of the Act has not been transferred to the learned CIT(A), NFAC and the same remained with the learned CIT(A) as per the old regime.

with the leave of the Tribunal. Further, as noted above, the Hon’ble Supreme Court in NTPC vs. CIT (supra) also held that the legal issue, which can be decided on the basis of the material available on record, can be raised at any stage of the proceedings. Thus, we do not find any embargo in the Act or the Rules, which prohibits the Revenue, being an Appellant before us, to raise any jurisdictional issue. Further, it is pertinent to note that even though the 6. ITAs No.4159 & 4318/Mum/2024 (A.Ys. 2010-11 & 2012-13) learned CIT(A) functions under the administrative control of the CBDT, Department of Revenue, Ministry of Finance, its orders are appealable at the instance of both the assessee as well as the Revenue before the Tribunal under the Act. At this stage, it is further pertinent to note that the Revenue is not challenging the improper exercise of jurisdiction by the AO/TPO, and rather it is challenging the improper exercise of jurisdiction by the learned CIT(A), NFAC, in passing the impugned orders. Therefore, we are of the considered view that merely because the Revenue is in appeal before us, the same would not restrain it from challenging the improper exercise of jurisdiction by the learned CIT(A). Accordingly, we do not find any merits in the plea raised by the learned AR that the jurisdictional issue cannot be raised to the prejudice of the assessee in the present case. Further, even though the assessee has paid all the taxes and there is no outstanding demand in respect of the assessment years under consideration before us, the same would not absolve the learned CIT(A) from properly assuming jurisdiction while deciding the appeal filed by the assessee.

9. Therefore, in view of the facts and circumstances of the present case, since the appeals filed by the assessee before the learned CIT(A) are decided by the NFAC, which does not have the jurisdiction to decide the same, being the appeals, inter-alia, pertaining to transfer pricing adjustment, we are of the considered view that the learned CIT(A), NFAC, wrongly assumed the jurisdiction while passing the impugned orders in the present case. Accordingly, we restore the appeals by the assessee for the assessment years 2010-11 and 2012-13 to the file of the learned CIT(A), who has jurisdiction

7 ITAs No.4159 & 4318/Mum/2024 (A.Ys. 2010-11 & 2012-13) over the assessee to decide the appeal involving issues, inter-alia, pertaining to transfer pricing adjustment under Chapter-X of the Act as per CBDT’s Circular and notification, for de novo adjudication. As almost 15 years have elapsed since the assessment years under consideration, we deem it appropriate to direct the learned CIT(A) to decide the assessee’s appeals as expeditiously as possible on a priority basis. We order accordingly. With the above directions, the impugned order in both appeals is set aside, and the additional ground raised by the Revenue vide application dated 07/01/2025 for the assessment years 2010-11 and 2012-13 is allowed. In view of our aforesaid findings, the other grounds raised by the Revenue in its appeals are left open.