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2021 (9) TMI 1436 - AT - Income TaxRevision u/s 263 - as per CIT assessment is erroneous as reference to TPO was not made - HELD THAT:- The assessee has furnished all information as asked for by AO during the course of assessment proceedings and which have been duly considered by him as evident from the assessment order - AO had issued detailed questionnaire raising various issues which were also replied by the assessee from time to time. The assessee had also appeared personally and filed the detailed replies to all the queries raised and books of accounts were also produced. CIT has failed to specify as to how and on what ground the assessment order is erroneous and/ or which part of the CBDT instructions were not adhered to by the AO. Merely not recording the satisfaction AO on the records does not make the assessment order erroneous and prejudicial to the interest of revenue, as is decided in the various judicial pronouncement by various courts. We have also perused Instruction no 3/2016 and are of the opinion that it was not mandatory for the AO to make a reference to the TPO. Even as per the order and the show cause notice u/s 263 which has been issued it is evident that the selection of the case was for complete scrutiny and the issues was not on transfer pricing parameters risk factors.The Instruction No. 3 of 2016 in para 3.3 states that where cases are selected for scrutiny on non transfer pricing risk parameters but also having international transactions or specified domestic transactions, shall be referred to TPO in specified circumstances. The clause (a) states where there are international transactions or specified transactions or both and the taxpayer has not filed any report required to be submitted under section 92E. This is not a situation in the case of the assessee and report was submitted and also during the assessment the same was submitted. The second situation where in previous assessments if any addition on account of transfer pricing adjustment of more than ten crores and addition being upheld in appellate proceedings is also not applicable in the case of the assessee, and this is not a case where search or seizure or survey operations had been carried out. In such a situation it cannot be said that the assessment is erroneous as reference to TPO was not made. As in relation to the query letter issued by the AO reply was duly submitted to the AO on various issues which were raised and the assesseehad also appeared personally and filed the detailed replies to all the queries raised and books of accounts were also produced. The PCIT has failed to specify as to how and on what ground the assessment order is erroneous and/ or which part of the query was not properly examined. As regards claim of bad debts and foreign exchange fluctuation the issue was duly examined by AO and we find nothing has been pointed out with regard to the allowability of the same or as to how the decision of the AO was erroneous or prejudicial to the interest of revenue. We hold that the order u/s 263 cannot be sustained as we find that the assessment order passed by the AO cannot be said to be erroneous orprejudicial to the interest of revenue, and accordingly the order made u/s 263 is quashed. - Decided in favour of assessee.
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