DCIT CIRCLE-1, NASHIK vs. JYOTI PAPER UDYOG LIMITED, NASHIK

ITA 552/PUN/2025Status: DisposedITAT Pune30 October 2025AY 2013-1417 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal. On the primary issue concerning the applicability of Section 92BA(1) for AY 2013-14, the Tribunal followed the consistent view of various High Courts and Tribunals, including the Karnataka High Court in PCIT v. Texport Overseas Pvt. Ltd. and the jurisdictional ITAT, Pune in Uttam Energy Ltd. v. ACIT. These decisions held that the omission of Section 92BA(1) by the Finance Act, 2017, without a saving clause, meant that the said clause was to be considered as if it never existed on the statute, even for periods prior to its omission. Consequently, any action initiated under the omitted provision, such as the AO's reference to the TPO, was considered invalid and bad in law. The Tribunal found no infirmity in the CIT(A)'s order holding that the transactions were not covered under Section 92BA(i). Therefore, grounds 1 to 4 raised by the Revenue were dismissed. Regarding grounds 5, 6, and 7, the Revenue's Departmental Representative did not argue them, leading the Tribunal to dismiss these grounds as academic and unadjudicated. The operative direction was to dismiss the Revenue's appeal.

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for Assessment Year 2013-14. The dispute concerns the applicability of Section 92BA(i) of the Income Tax Act, 1961, to specified domestic transactions (SDTs) involving payments to related parties under Section 40A(2). The assessee, Jyoti Paper Udyog Limited, had transactions exceeding the threshold of Rs. 5 crore with four related parties. The Assessing Officer (AO) referred the matter to the Transfer Pricing Officer (TPO) under Section 92CA(1). The CIT(A) held that the omission of Section 92BA(i) by the Finance Act, 2017, without a saving clause, meant it never existed on the statute, rendering the AO's actions invalid. The Revenue's appeal challenges this finding, arguing the omission should apply prospectively and that a saving clause in Section 40(2)(a) preserves the applicability of Section 92B(1). The assessee did not appear for the hearing.

What were the issues?

1. Whether, on the facts and circumstances, the CIT(A) was justified in holding that the omission of Section 92BA(1) is applicable retrospectively from its inception, despite the Finance Act, 2017, providing for prospective application from AY 2017-18 onwards, thereby turning on Section 92BA(1) and the Finance Act, 2017. 2. Whether, on the facts and circumstances, the CIT(A) was justified in overlooking the saving clause in Section 40(2)(a), which preserves the applicability of Section 92B(1) for specified domestic transactions up to AY 2016-17, thereby turning on Section 40(2)(a) and Section 92B(1). 3. Whether, on the facts and circumstances, the CIT(A) was correct in relying on judicial precedents that did not consider the saving clause or legislative intent, leading to the conclusion that Section 92BA(1) is inapplicable for AY 2013-14, thereby turning on Section 92BA(1). 4. Whether, on the facts and circumstances, the CIT(A) erred in concluding that Section 92BA(1) was not applicable for AY 2013-14, without appreciating that the provision was valid and enforceable during that assessment year, thereby turning on Section 92BA(1). 5. Whether, on the facts and circumstances, the CIT(A) erred in holding that the transactions of purchases and sales between the appellant and its related parties were mere paper transactions. 6. Whether, on the facts and circumstances, the CIT(A) erred in concluding that the transactions were undertaken solely to inflate turnover for bank finance, without supporting evidence, and in disregarding the commercial rationale and business necessity. 7. Whether, on the facts and circumstances, the CIT(A) erred in rejecting the TPO's findings that the transactions were duly recorded, reported, and subject to statutory compliance, proving their authenticity. Revenue's Contentions: The Revenue argued that the omission of Section 92BA(1) by the Finance Act, 2017, was intended to apply prospectively from AY 2017-18. They contended that judicial decisions relied upon by the CIT(A) did not consider the legislative intent behind the omission and its effective date. The Revenue also highlighted the saving clause in Section 40(2)(a) preserving the applicability of Section 92B(1) up to AY 2016-17. They relied on decisions like M/s Texport Overseas Pvt Ltd and its affirmation by the Karnataka High Court, but argued that these did not consider the legislative intent or effective dates. Assessee's Contentions: No contentions were recorded for the assessee as they did not appear for the hearing.

Which sections of the Income-tax Act were involved?

Section 92BA,Section 40A(2),Section 92B,Section 143(3),Section 144C,Section 250,Section 92CA

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Income Tax Appellate Tribunal, PUNE BENCHES “C” :: PUNE

Before: MS.ASTHA CHANDRA & DR.DIPAK P. RIPOTE

For Respondent: Shri Gaurav Kr. Singh
Hearing: 07/10/2025Pronounced: 30/10/2025

PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by Revenue against the order of ld.Commissioner of Income Tax(Appeal) [NFAC] passed under section 250 of the Income Tax Act, 1961 dated 03.01.2025 emanating from the Assessment Order under section 143(3) r.w.s.144C of the Act, 1961, dated 14.12.2016 for the A.Y.2013-14.The Revenue has raised the following grounds of appeal :

“1. Whether on the facts and circumstances of the case, the Ld. CIT(A) is justified in holding that the omission of Section 92BA(1) is applicable retrospectively from its inception, without considering that the finance Act, 2017 specifically provides for the omission to apply prospe

The order continues below.

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