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2014 (12) TMI 2 - AT - Income TaxValidity of reopening of assessment - Non issuance of notice u/s 143(2) - Whether report of DVO constitute fresh information for reopening of the case - Reference made to the DVO found as illegal - Held that:- The assessee filed the return of income of 29th October 2007, and that the time limit for issuance of notice, u/s 143(2), selecting the case for scrutiny assessment expired on 30th September 2008 - it was only on 24th December 2009 that the AO made a reference, u/s 92CA(3), to the Transfer Pricing Officer for determination of arm’s length price of the international transactions entered into by the assessee with its associated enterprises - as there were no proceedings pending before the AO, nor was, for that purpose, the case of the assessee was even picked up for scrutiny assessment u/s 143(3), the AO proceeded to reopen the assessment, which had by then achieved finality, by reopening the assessment - the reference to TPO was invalid but it does invalidate the findings of the TPO which are based on the facts of the case - The assessee itself appeared before the TPO from time to time and did not contest or, the notice issued by the TPO to compute the arm's length price - Thus the directions of the TPO even on an irregular reference, form a valid ground to reopen the proceedings for reassessment - the notice u/s. 148 was not sent to substitute notice u/s. 143(2) - notice u/s. 143(2) was never issued, therefore, it is wrong to presume that reassessment proceedings u/s. 148 were to substitute the proceedings as stated by the assessee. Reassessment to be based on fresh material/information – Held that:- As decided in Commissioner of Income Tax, Delhi Versus M/s. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - as to what is the relevance of an order passed by the Transfer Pricing Officer’s order, in a situation in which the reference itself is unsustainable in law - such a reference could not have been made under the scheme of the Act because the assessment proceedings had come to an end before the point of time when such a reference was made, and as such the reference itself was legally invalid - The stand of the revenue was that even if reference to the DVO is to be held to be invalid, the DVO’s report constituted information and as such it could be a good basis for coming to the conclusion that wealth has escaped assessment - when reference itself is invalid, the report received as a result of the reference cannot constitute material for forming the belief that an income or wealth tax escaped assessment - the initiation of reassessment proceedings are not sustainable in law – the reassessment order is set aside – Decided in favour of assessee.
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