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2021 (7) TMI 1384 - HC - Income TaxValidity of reopening of assessment u/s 147 - as no assessment orders are passed under sub clause (4) to section 144C - Assessee case was referred to the TPO u/s 92CA and the TPO inturn, passed an order under section 92CA (3) - HELD THAT:- The order of the TPO is independent and unconnected with the powers conferred on the Assessing Officer under section 147 of the Act. Therefore, the report of the TPO cannot be conclusive for the purpose of its acceptance by the Assessing Officer, who is empowered to go into the contents of such report and make an assessment and if any materials are available, he is at liberty to invoke section 147 of the Act. Reference to the Transfer Pricing Officer more specifically sub-clause (4) reveals that on receipt of the order under sub-section (3), the Assessing Officer shall proceed to compute the total income of the assessee under sub-section (4) to section 92C so as to determined by the Transfer Pricing Officer. The above provision unambiguously clarifies that on receipt of the order passed by the TPO, the Assessing Officer shall proceed to compute the total income of the assessee and in confirmity with the Arm's length price. Therefore, the Assessing Officer is empowered to pass draft assessment order with reference to section 144C by taking into consideration the report of the TPO and the other aspects of the matter. In other words, the draft assessment order is not confined actually to the report of the TPO and therefore, there is a scope for reassessment. As far as determination of Arm's Length Price or consideration of other disallowance, etc. in the draft assessment order are to be considered at the time of adjudication of reopening proceedings and the assessee is at liberty to raise any further ground in respect of those aspects which all are relatable to the merits and with reference to the documents and evidences to be scrutinized. Mere consideration of Arm's Length Price and other disallowance in the draft assessment order would not preclude the Assessing Authority for reopening of assessment under section 147/148 of the Act as the spirit of the above provisions are providing wider scope to reopen the assessment and the only object is to ensure that the income chargeable to tax escaped assessment is brought within the tax net. Thus the object plays a pivotal role in the matter of reopening proceedings and the other procedures contemplated in Chapter XIV of the Act must be read cogently along with the purpose for which such procedures are contemplated and any interpretation overlapping the provisions would defeat the object and thus, this Court is of the opinion that the power of reopening under section 147 of the Act cannot be restricted, even in such circumstances, the TPO submitted a report and a draft assessment order is passed, with reference to certain materials available, and the AO has reason to believe that the income chargeable to tax escaped assessment, then he is well within his powers to invoke section 147/148 of the Act. Accordingly, the issues raised are answered in favour of the revenue.
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