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2014 (2) TMI 673 - AT - Income TaxPower of the TPO to determine ALP u/s 92C of the Act – Held that:- The TPO is empowered only to determine the ALP as per the provisions u/s. 92C by applying any one of the methods stipulated in sub section (1) of Sec.92C and by applying the most appropriate method - The decision in LG Polymers India (P.) Ltd. Versus Additional Commissioner of Income-tax, Range-3 [2011 (9) TMI 259 - ITAT VISAKHAPATNAM] followed - TPO is not empowered to hold the transaction as sham transaction - He has jurisdiction to decide a method and arrive at the ALP and nothing more – thus, the order of the TPO is quashed – Decided in favour of Assessee. Validity of reopening of assessment u/s 147 of the Act – Held that:- The reopening was beyond 4 years from the end of the assessment year in appeal and the assessment under sec. 143(3) has been made, the Assessing Officer while recording the reasons for reopening should indicate what the assessee has omitted to furnish at the time of original proceedings which resulted in escapement of income - The TPO has passed an order on 23.10.2009 for the assessment year 2004-2005 and applied the same criteria for the purpose of determining the arms length price - the Assessing Officer should have given further opportunity to the assessee to provide necessary clarifications and replies so that the assessment can be completed under section 143(3) read with section 147 and not section 144 of the Act. Relying upon CIT v. Kelvinator India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] – re-assessment beyond four years is a condition precedent i.e., failure to disclose material facts necessary for assessment by the assessee - When the assessee made full disclosure and the A.O. examined the issue by raising queries, the assessment cannot be reopened - the information that payment was made to a non-resident partner was available before the Assessing Officer and at the time of completion of regular assessment, a reference was not made to the TPO and consequently, the said amount was disallowed by applying the provisions of section 40(a)(i) of the I.T. Act – thus, there is no escapement of income or non-furnishing of any particulars by the assessee – thus, the AO is not justified in initiating the proceedings under section 147 of the I.T. Act – Decided in favour of Assessee.
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