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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: SHRI SANJAY GARG, HON’BLE & SHRI GIRISH AGRAWAL, HON’BLE
Per Sanjay Garg, Judicial Member :
The present appeals are directed at the instance of the assessee against the separate orders of the National Faceless Appeal Centre (hereinafter the “ld. CIT(A)”), even dt. 15/11/2022, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2004-05. 2. The sole issue raised in both the appeals is relating to the maintainability of the appeals before the ld. CIT(A) against the rectification orders passed by the Transfer Pricing Officer (in short “TPO”) u/s 154 r.w. sub-Section (5) to Section 92CA of the Act. The ld. CIT(A) vide impugned orders has dismissed the appeals of the assessee holding that as per the provisions of Section 246A of the Act, order u/s 92CA or its rectification order u/s 154 of the Act passed by the TPO is Assessment Year: 2004-05 M/s. Philips India Limited
not an appealable order before the Commissioner (Appeals) and he accordingly dismissed both the appeals being non-maintainable.
Being aggrieved by the said orders of the ld. CIT(A), the assessee has come before us by way of separate appeals.
ITA No. 33/Kol/2023 is pertaining to the order of the ld. Transfer Pricing Officer (ld. TPO) dated 21/06/2007, rejecting the application of the assessee u/s 154 r.w.s. 92CA(5) of the Act dated 08/01/2007 whereas ITA No. 32/Kol/2023 pertains to the suo moto rectification order passed by the ld. TPO u/s 154 of the Act r.w.s. 92CA(5) of the Act, dated 20/12/2007 enhancing the Transfer Pricing adjustments (TP adjustments) after giving opportunity of hearing to the assessee.
We have heard rival contention and gone through the record. This is an interesting issue which has come before us and after going through the relevant statutory provisions, we find that there are separate ramifications of the dismissal of an application moved by assessee before the TPO u/s 154 of the Act as compared to the suo moto invocation of the provisions of Section 154 by the TPO and thereby enhancing the transfer pricing adjustments and accordingly separate remedies are available in respect of an order passed u/s 154 r.w.s. 92CA(5) of the Act by the ld. TPO rejecting the application moved by the assessee as compared to an order passed u/s 154 r.w.s. 92CA(5) of the Act on the suo-moto exercise of the rectification powers by the ld. TPO u/s 154 of the Act .
At this stage, it will be relevant to reproduce sub-Section (5) & (6) of Section 92CA of the Act, which read as under:- Assessment Year: 2004-05 M/s. Philips India Limited
“Reference to Transfer Pricing Officer. 92CA. (1) Where any person, being the assessee, has entered into an international transaction or specified domestic transaction in any previous year, and the Assessing Officer considers it necessary or expedient so to do, he may, with the previous approval of the Principal Commissioner or Commissioner, refer the computation of the arm's length price in relation to the said international transaction or specified domestic transaction under section 92C to the Transfer Pricing Officer. ………………. (5) With a view to rectifying any mistake apparent from the record, the Transfer Pricing Officer may amend any order passed by him under sub- section (3), and the provisions of section 154 shall, so far as may be, apply accordingly. (6) Where any amendment is made by the Transfer Pricing Officer under sub- section (5), he shall send a copy of his order to the Assessing Officer who shall thereafter proceed to amend the order of assessment in conformity with such order of the Transfer Pricing Officer.”
A perusal of the sub-Section (5) of Section 92CA would reveal that a TPO may amend the order passed u/s 92CA(3) of the Act for the purpose of rectification of any mistake apparent from record in such order and the provisions of Section 154 will accordingly apply. Sub- Section (5), therefore, specifically provides that the provisions of Section 154 of the Act will be applicable for the purpose of amendment of TP adjustment order passed by the TPO. Sub-Section(6) provides that where such an amendment is made by the TPO under sub-Section (5), the necessary amendment will be carried out in the assessment order by the Assessing Officer which will be in conformity with such amendment brought by the TPO.
At this stage, it will be appropriate to reproduce the relevant part of the provisions of Section 154 of the Act: Assessment Year: 2004-05 M/s. Philips India Limited
“ Rectification of mistake. 154. [(1) With a view to rectifying any mistake apparent from the record52 an income-tax authority referred to in section 116 may,— (a) amend any order52 passed by it under the provisions of this Act ; [(b) amend any intimation or deemed intimation under sub-section (1) of section 143;]] [(c) amend any intimation under sub-section (1) of section 200A;] [(d) amend any intimation under sub-section (1) of section 206CB.] [(1A) Where any matter57 has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided.] (2) Subject to the other provisions of this section, the authority concerned— (a) may make an amendment under sub-section (1) of its own motion, and (b) shall make such amendment for rectifying any such mistake which has been brought to its notice by the assessee 58[or by the deductor] 59[or by the collector], and where the authority concerned is 59a[the Joint Commissioner (Appeals) or] the 60[***] 61[Commissioner (Appeals)], by the 62[Assessing] Officer also. (3) An amendment, which has the effect of enhancing an assessment64 or reducing a refund or otherwise increasing the liability of the assessee 65[or the deductor] 66[or the collector], shall not be made under this section unless the authority concerned has given notice to the assessee 65[or the deductor] 66[or the collector] of its intention so to do and has allowed the assessee 65[or the deductor] 66[or the collector] a reasonable opportunity of being heard. (4) Where an amendment is made under this section, an order shall be passed in writing by the income-tax authority concerned. 67[(5) Where any such amendment has the effect of reducing the assessment or otherwise reducing the liability of the assessee or the deductor 68[or the collector], the Assessing Officer shall make any refund which may be due to such assessee or the deductor 68[or the collector].] (6) Where any such amendment has the effect of enhancing the assessment69 or reducing a refund 70[already made or otherwise increasing the liability of the assessee or the deductor 71[or the collector], the Assessing Officer shall serve on the assessee or the deductor 71[or the collector], as the case may be] a notice of demand in the prescribed form specifying the sum payable72, and Assessment Year: 2004-05 M/s. Philips India Limited
such notice of demand shall be deemed to be issued under section 156 and the provisions of this Act shall apply accordingly. (7) Save as otherwise provided in section 155 or sub-section (4) of section 18673 no amendment under this section shall be made after the expiry of four years 74[from the end of the financial year in which the order75 sought to be amended was passed.] 76[(8) Without prejudice to the provisions of sub-section (7), where an application for amendment under this section is made by the assessee 77[or by the deductor] 78[or by the collector] on or after the 1st day of June, 2001 to an income-tax authority referred to in sub-section (1), the authority shall pass an order, within a period of six months from the end of the month in which the application is received by it,— (a) making the amendment; or (b) refusing to allow the claim.]”
A perusal of sub-Section (1) to Section 154 of the Act would reveal that an Income-tax Authority as referred to in Section 116 may amend any order passed by it with a view to rectifying any mistake apparent on record in such order. By virtue of sub-Section (5) to Section 92CA, the aforesaid powers of rectification under Section 154 of the Act have also been extended to the TPO. It is pertinent to mention here that sub- Section (1) does not speak of any assessment order, rather it speaks of any order passed by the Income-tax Authority, wherein a mistake apparent on records has occurred. Sub-section (2) to Section 154 of the Act provides that such an amendment under sub-Section (1) may be carried out by such an Income-tax authority either on its own motion or when such mistake is brought to his notice either by the assessee and in case such order is passed by the Appellate Income-Tax Authority, then on the application of the Assessing Officer also.
At this stage, it will be relevant to reproduce here, the relevant part of Section 246A of the Act:- Assessment Year: 2004-05 M/s. Philips India Limited
“Appealable orders before Commissioner (Appeals). 246A. (1) Any assessee or any deductor or any collector aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals) against— …………………………. (c) an order made under section 154 or section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of the said sections except an order referred to in sub-section (12) of section 144BA;
A perusal of Clause (c) to Section 246A(1) would reveal that there are three types of orders passed u/s 154 of the Act which are appealable before the Appellate Income Tax Authorities. Firstly, an order passed u/s 154 of the Act having the effect of enhancing the assessment, secondly an order having the effect of reducing a refund and thirdly an order passed u/s 154 of the Act refusing to allow the claim made by the assessee u/s 154 of the Act, except an order referred under sub-Section (12) of Section 144BA of the Act. A careful reading of the above aforesaid clause (c) to Section 246A(1) would reveal that it is not that every order passed u/s 154 of the Act is appealable before the Commissioner (Appeals). There are only three types of order which are appealable before the Commissioner (Appeals) i.e., an order having the effect of enhancement of income, reducing the refund and an order refusing to allow the claim made by an assessee u/s 154 of the Act.
Now, as per sub-Section (5) to Section 92CA of the Act, the provisions of Section 154 of the Act have been made applicable to the order of the TPO proposing TP adjustments. As per sub-Section (6) to Section 92CA, the Assessing Officer in that event, is supposed to carry out such amendments as brought by the TPO in the order passed by Assessment Year: 2004-05 M/s. Philips India Limited
him u/s 92CA(3) of the Act. If the TPO on its own motion, of course after giving due opportunity to the assessee, bring certain amendments in the order passed u/s 92CA(3) of the Act, proposing for enhancement of Transfer Pricing adjustment in his earlier order passed, in that event as per the provisions of Section 92CA(6) of the Act, the Assessing Officer is bound to bring corresponding amendment in the assessment order by invoking the provisions of Section 154 of the Act and further if such an amendment has the effect of enhancement of assessment, assessee will have the right to appeal against the said rectification order passed u/s 154 of the Act by the Assessing Officer. However, if an application for rectification has been moved by the assessee to the TPO for amendment of his order passed u/s 92CA(3) of the Act and the TPO rejects the claim of the assessee and no amendment is carried out in the Transfer pricing order passed u/s 92CA(3) of the Act, then, there will be no occasion to pass any amendment order by the ld. Assessing Officer under sub-Section (6) to Section 92CA of the Act. In such circumstances, neither there will be any occasion to the assessee to move any application before the Assessing Officer for amendment of assessment order nor any such application would have adjudicated, or to say, has been declined by the Assessing Officer, hence, there will be no cause of action available to the assessee to file any appeal u/s 154 r.w.s. 246A of the Act against the assessment order of the Assessing Officer on account of rejection of application of the assessee u/s 154 of the Act. Be that as it may, the assessee has not been left remediless in this scenario rather, the third part of the provision of Clause(c) to Assessment Year: 2004-05 M/s. Philips India Limited
Section 246A(1) will come into play as per which any order passed by any income tax authority u/s 154 of the Act refusing to allow the claim made by the assessee will be appealable before the Commissioner (Appeals).
In view of the above discussion, since in ITA No. 33/Kol/2023, the assessee is aggrieved by the action of the ld. TPO/ACIT(TP-2) in rejecting the application moved by the assessee for amendment of the TP order passed u/s. 92CA(3) of the Act for the purpose of rectification of a mistake apparent on record, as discussed above, in view of the later part of the provision of Clause (c) to sub-Section (1) of Section 246A of the Act, the assessee has a right to appeal against the said rejection order before the Commissioner (Appeals), however, in respect of the suo-moto amendment brought by the ld. TPO in the Transfer Pricing order and as per provisions of sub-Section (6) to Section 92CA of the Act, the ld. Assessing Officer is supposed to carrying such amendments in the assessment order passed u/s 143(3) of the Act and since such amended assessment order passed u/s 154 of the Act has the effect of enhancement of assessment, the appeal to the Commissioner (Appeals) will lie against such rectification order passed u/s 154 of the Act by the Assessing Officer u/s 143(3) of the Act, and not against the order passed by the TPO u/s 154 r.w.s. 92CA(5) of the Act.
In view of the above discussion, ITA No. 33/Kol/2023 is allowed and impugned order of the ld. CIT(A) is set aside with a direction to decide the appeal of the assessee on merits, whereas, ITA No. 32/Kol/2023 is dismissed with the observation that the assessee will be Assessment Year: 2004-05 M/s. Philips India Limited
at liberty to file appeal against the order passed by the Assessing Officer u/s 154 r.w.s. 92CA(6) r.w.s. 143(3) of the Act.
In the result, appeal of the assessee in ITA No. 33/Kol/2023 is treated as allowed for statistical purposes and appeal bearing ITA No. 32/Kol/2023 is, hereby, dismissed. Order pronounced on 11th day of June, 2024 under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963 (Girish Agrawal) Judicial Member Kolkata, Dated 11/06/2024 *SC SrPs
आदेश क" "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Assessee
""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील ( ) / The CIT(A)- 5. िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाड" फाई/ Guard file.
आदेशानुसार/ BY ORDER,