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Income Tax Appellate Tribunal, MUMBAI BENCH “J” MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2014-15. The appeal is directed against the order passed by the Income Tax Officer-12(3)(3), Mumbai (in short ‘AO’) u/s 143(3) r.w.s. 144C(3) of the Income Tax Act 1961, (the ‘Act’).
2. The grounds of appeal filed by the assessee read as under:
1. The AO and the DRP-3 ('DRP') have erred in passing the orders in the manner passed by them.
Maari Multi-trading Pvt. Ltd
On facts and circumstances of the case and in law, the DRP’ direction dismissing the objections without condoning the delay is bad in law and liable to be quashed.
3. The AO has erred in passing the final assessment order in absence of directions from DRP. The final assessment order passed u/s 143(3) r.w.s. 144C (3) of the Act is bad in law and liable to be quashed.
4. Grounds relating to Transfer Pricing on merits: a. The Transfer Pricing Officer has erred in not providing an opportunity of being heard while changing the method of transfer pricing and re- computing the income of the assessee b. The Transfer Pricing Officer has erred in not issuing a show cause notice before changing the method of transfer pricing and re - computing the income of the assessee. c. The AO has erred in not providing an opportunity of being heard to the assessee before passing the draft order u/s 143(3) r.w.s. 144C(1) of the Act. d. The TPO and AO have without any basis, changed the method of transfer pricing and erred in selection of the comparables, as well.
5. Assessing officer was informed that we have filed objection before DRP and he has to wait for DRP's direction before passing order u/s. 143(3).
Briefly stated the facts of the case are that the assessee filed its return of income for the AY 2014-15 on 28.08.2015 declaring a loss of Rs. 4,28,735/-. As recorded by the AO, draft order u/s 144C(1) dated 29.12.2017 was served on the assessee on the same date. In response to it, the assessee vide letter dated 27.01.2018 submitted before the AO that they have objections against the said draft assessment order. The assessee filed its objections before the Dispute Resolution Panel (DRP), Mumbai. Further the AO recoded that since the date of service of draft assessment order was 29.12.2017, the limitation period of 30 days for the assessee expired on Maari Multi-trading Pvt. Ltd 27.01.2018. However, the assessee filed its objections before the DRP, Mumbai on 30.01.2018. Since the assessee failed to furnish its objections within 30 days from the date of receipt of the draft order before the DRP, the AO completed the assessment u/s 144C(4) by making an addition on account of upward adjustment in arm’s length price of Rs. 4,29,08,348/-.
Before us the ld. counsel for the assessee submits that the Transfer Price Officer (TPO) did not provide opportunity of being heard to the assessee; that the TPO did not issue show cause notice before deciding to change the transfer price method; that the AO did not provide opportunity of being heard before making addition and passed the draft order; that the AO issued final order without issuance of DRP’s directions despite being informed that objections have been filed.
On the other hand, the ld. department representative (DR) supports the order passed by the AO
We have heard the rival submissions and perused the relevant materials on record. As mentioned earlier, the DRP rejected the application filed by the assessee on the ground that the date of service of draft assessment order was 29.12.2017, the limitation period of 30 days expired on 27.01.2018, whereas the assessee filed its objection before the DRP on 30.01.2018.
Further, it is found that the TPO has not issued a show cause notice before deciding to change the transfer pricing method adopted by the assessee. That reasonable opportunity was not provided by the TPO, is evident from the order u/s 92CA(3) dated 31.10.2017. In the instant case the AO has made a reference to the TPO u/s 92CA(2) of the Act.
Maari Multi-trading Pvt. Ltd In such a factual scenario, we deem it fit to restore the matter to the file of the AO / TPO in the interest of justice. Accordingly, we set aside the order of the AO/TPO and restore the matter for fresh adjudication.
In the result, the appeal filed by the assessee is allowed for statistical purposes.