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2022 (11) TMI 184 - ITAT BANGALORERevision u/s 263 by CIT - ALP of international transaction or specified domestic transaction listed in Form 3CEB / 3CD - HELD THAT:- The admitted fact is that one of the reasons for selection of the assessment for scrutiny is transfer pricing risk parameter. In the assessment completed u/s 143(3) of the I.T.Act, there is no discussion about the ALP of international transaction or specified domestic transaction listed in Form 3CEB / 3CD. In such a scenario, as per the Board Instruction No.3/2016 dated 10.03.2016, the case ought to have been mandatorily referred to the TPO by the AO after obtaining necessary approvals. The instruction further states that if the information on international transactions or specific domestic transactions has not been disclosed in the return or the audit report, and the AO comes to know about the same during the course of scrutiny proceedings which have otherwise been selected on non TP risk parameter, then also the A.O. has to mandatorily refer the transactions for examination by the TPO. As further stated in the said Board Instruction that the power to determine the ALP of the international transaction should not be carried out at all by the A.O. Therefore, inspite of the assessment being picked up for scrutiny on account of transfer pricing risk parameter, the A.O. having not referred the matter to the TPO to determine the ALP of the international transaction undertaken by the assessee with its AE, was in direct contravention / non adherence to the Board Instruction, cited supra. Clause (c) of Explanation 2 to section 263(1) states that the assessment order made not in accordance with any order, direction or instruction issued by the Board u/s 119 of the I.T.Act is erroneous order and prejudicial to the interest of the revenue. The Board Instruction No.3/2016 has been issued u/s 119 - Therefore, non-compliance of the above said Instruction by the A.O. will render the said assessment order as erroneous and prejudicial to the interest of the revenue. Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. [2011 (11) TMI 196 - DELHI HIGH COURT] had held that when Board Instruction No.3/2016 has been validly upheld, it is binding on the Assessing Officer and not taking recourse thereto would render the assessment order as erroneous and prejudicial to the interest of the revenue - we uphold the order of the PCIT passed u/s 263 as correct and in accordance with law. Appeal filed by the assessee is dismissed.
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