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2020 (3) TMI 1420 - ITAT KOLKATAReopening of assessment u/s 147 - adjustment to ALP - AO could not have made any transfer pricing adjustments in the absence of a reference u/s 92CA after assumption of jurisdiction u/s 147 - AO had information, in the form of a report by the TPO, determining that the Arm’s Length Price of the international transactions, of the assessee had with its associate enterprise calls for adjustment - HELD THAT:- TPO order is non-est in law. DRP also held that after re-opening the assessment u/s 147 a fresh reference has not been made to the TPO. Hence the adjustment made without a valid reference to the TPO for determination of ALP of the international transaction cannot be sustained. We agree with these findings. TPO has acted without jurisdiction as there was no valid and continuing reference. The reference made on 08.09.2015 gets terminated or infructuous after passing of the final assessment order u/s 143(3) of the Act on 31.08.2016. A T.P. report is not a material found as in the case of Pooran Mal Etc [1973 (12) TMI 2 - SUPREME COURT]. It is a report which has no legal validity. An adjustment made based on this report is also bad in law. Directions of the DRP are binding of the AO u/s 144(13) - final assessment order dated 16.05.2019 should have incorporated the finding of the DRP as directed in the order of the DRP. When the DRP has held that the re-opening of the assessment is bad in law, the AO, in our view, has no other alternative but to drop the assessment proceedings on the ground that re-opening of assessment has been held as bad in law. As the AO has not followed the binding directions of the DRP, we have to quash the final assessment order dated as bad in law. We uphold the view of the DRP that the re-opening of assessment based on a TPO report which is a nullity is bad in law. Hence, we quash the final assessment order passed by the AO u/s 143(3) r.w.s. 144C as bad in law. - Appeal of assessee allowed.
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