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2021 (8) TMI 930 - HC - Income TaxDenial of principles of natural justice - Penalty u/s 271AA - opportunity of hearing not being given - Whether it was incumbent on the A.O. to have given the writ applicant an opportunity of being heard before making a reference to the T.P.O. under Section 92CA(1) - Whether the A.O. must provide an opportunity of being heard to the taxpayer before recording his satisfaction or otherwise ? - HELD THAT:- If the C.B.D.T. itself has accepted the dictum as laid by the Bombay High Court in Vodafone India Services (P) Ltd [2014 (10) TMI 278 - BOMBAY HIGH COURT] and in Indorama Synthetics [2016 (8) TMI 151 - DELHI HIGH COURT] then, we see no good reason to take the view that no opportunity of hearing is required to be given to the taxpayer by the A.O. before recording his satisfaction or otherwise. Undoubtedly, in the case on hand, a show cause notice was issued by the A.O. and reply was filed by the assessee i.e. the writ applicant and considering the reply, the A.O., thereafter, proceeded to pass the order of reference to the T.P.O. We are of the view that an opportunity of hearing should have been given by the A.O. before he proceeded to overrule all the objections and refer the matter to the T.P.O. No satisfaction being recorded in the order disposing of the objections - We find substance in the contention raised as A.O. could be said to have overlooked or rather ignored the jurisdictional requirement of a satisfaction in accordance with para 3.4 of the instruction No.3 of 2016 referred to above that there ought to be an income or potential of an income arising and/or being affected on determination of the A.L.P. of an international transaction or specified domestic transaction. In the absence of such satisfaction being recorded in the order disposing of the objections, the reference to the T.P.O. would also be without jurisdiction. We take notice of the fact that in the objections, a specific plea in this regard was taken, however, we do not find a word in this regard in the order disposing of the objections. On this issue, the only reply of the learned Senior Counsel appearing for the Revenue is that the same is self-serving and adherence the record. In other words, the only argument is that the Arm’s Length Price on the interest paid would have bearing on the income. We are not convinced with such stance of the Revenue. We allow the present writ application. The proceedings are remitted to the A.O. for fresh consideration of the matter and the issues as discussed in the present order. The A.O. shall give an opportunity of hearing to the assessee and thereafter, proceed to pass a reasoned order or a speaking order dealing with the objections in accordance with law.
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