TMI Blog2020 (2) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 19-2-2020 - Shri S.S.Godara, Judicial Member And Dr. A.L. Saini, Accountant Member For the Appellant : Shri Dilip S. Damle, FCA For the Respondent : Shri Ram Bilash Mena, CIT-DR ORDER PER S.S.GODARA, JUDICIAL MEMBER:- This assessee s appeal for assessment year 2014-15, arises against the Principal Commissioner of Income Tax-2, Kolkata s order dated 26.02.2019 passed in case M.No. Pr.CIT-3/Hqrs.-3/Kol/u/s.263/Kritika Wires./2018-19/11146-49, involving proceedings u/s 263 of the Income Tax Act, 1961; in short the Act . Heard Shri Damle; learned authorized representative and Sri Meena, learned CIT-DR appearing at the Revenue s behest. Case file perused. 2. We advert to the basic relevant facts. This assessee is a company manufacturing and trading in wire rods. It filed its return on 23.09.2014 stating nil income. The Assessing Officer framed his regular assessment on 23.11.2016 making various disallowance(s) / addition(s). He further observed in assessment order that as per the CBDT s instruction No.3/2016, the transfer price issue had not been examined at all. 3. We proceed further to notice that the PCIT sought to assume his sec. 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In this case, the assessment order was passed without considering the corroborative material, available at the disposal of the AO and accordingly, the AO failed to carry out necessary inquiry. 6.2 In this connection it is pertinent to note that the failure on the part of the Assessing Officer to make an enquiry on a relevant issue/point would render the assessment erroneous and prejudicial to the interest of the revenue as decided in the following cases by various courts: (1968) 67 ITR 84 (SC) Ram Pyari Devi Saraogi (1973) 88 ITR 323 (SC) Tara Devi Aggarwal (1975) 99 ITR 375 (Del) Gee Vee Enterprises (1966) 220 ITR 657 (Mad) K.A. Ramaswami Cheettiar Another (1966) 220 ITR 456 (Del) Duggal and Co. (1966) 220 ITR 167 (MP) Mahavar Traders (1995) 213 ITR 843 (Raj) Emery Stone Mfg. Co. (1992) 198 ITR 611 (Ker) Malabar Industrial Co. - Malabar Industrial Co. Ltd. vs. CIT 243 ITR 83 (SC) - CIT vs.Max India Ltd. 268 ITR 128 (P H) [affirmed in 295 ITR 282 (SC)] - CIT vs. Kwalaity Steel Suppliers Complex 395 ITR - CIT vs. Amitabh Bachchan 384 ITR 200 (SC) - CIT vs. Hindustan Lever Ltd. 343 ITR 161 (Bom) - CIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for the relevant AY 2014-15 on the issues as discussed supra. This leaves the assessee aggrieved. 5. We have given our thoughtful consideration to rival contentions against and in support of the PCIT s revision directions under challenge that the Assessing Officer ought to have made mandatory reference to the TPO for determining arm s length price of the large specified domestic transactions(s) recorded in Form 3CEB. We find that that this tribunal s co-ordinate bench s decision in ITA No.1332/Kol/2019 AIC Iron Industries Pvt. Ltd., Principal Commissioner of Income Tax-1, Kolkata decided on 31.12.2019 for very assessment year 2014-15 has held that such an in a claim at the Assessing Officer does not render the corresponding regular assessment to be erroneous causing prejudice to the interest of the Revenue as per statutory amendment in the Act as follows:- 4. We have given our thoughtful consideration to rival contentions reiterating both the parties' respective stands against and in support of the impugned revision jurisdiction. We find that Id. PCIT has exercised his section 263 revision jurisdiction only on account of the Assessing Officer's alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount which was disallowable in terms of Section 40A (2) (b) of the Act. On the other hand, in Clause 23 of the TAR read with Annexure - IX thereto, the auditor had reported the payments actually made by the assessee to the persons specified in Section 40A(2)(b) of the Act. It was explained that the tax auditor, while giving his report in conformity with the form prescribed by the Board u/s 44AB of the Act, was required to report only the amounts paid to persons specified in S 40A(2) during the relevant reporting period and he was not required to express his opinion as to whether the payments to the specified persons were excessive and for that reason any part thereof was disallowable u/s 40A(2) of the Act. The Id. AR therefore submitted that the intent and purport of information disclosed in clause 9A of Part A- 01of the Income-tax Return in ITR-6 and Clause 23 of the TAR being materially different, and the figures reported in ITR and in Clause 23 of TAR did not match. 24 . The Id. AR submitted that the CASS parameter referred only to mismatch of the figures reported in tax audit report in relation to payments made to persons referred 40A(2)(b) with the figures mentioned in in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order, justifying his interference that for not making reference to the TPO, order of assessment was erroneous in terms of Section 263 of the Act. In the first instance, we note that the Ld. Pr. CIT himself gave up the reason set out in SCN viz., that one of the CASS reason for selection of scrutiny assessment was a transfer pricing risk parameter. Once it is established that the transfer pricing risk parameter was not the ground for selection of scrutiny assessment u/s 143(3) of the Act, then we have to agree with the Id. AR's submission that Para 3.2 of the CBDT Instruction No. 3 of 2016 was not applicable in the given facts of the present case and therefore the AO's order could not have been held to be erroneous by the CIT for not making reference to the TPO in terms of the said CBDT Instruction 3 of 2016. 27 . So far as the Ld. Pr.CIT's finding justifying his case that the AO's order became erroneous and prejudicial to the interests of the Revenue for not referring the assessee's case to the TPO u/s 92CA of the Act on the ground that the assessee's case came with the category of ' complete scrutiny ', we note that this contention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation Wing or the AO. 28 . From perusal of the above, it is noted that none of the conditions prescribed in these Paras necessitating mandatory reference to TPO were satisfied in the instant case. In fact, we find that in the impugned order, Ld. Pr. CIT himself did not to make out a case that the assessee's case Jell under any of the situations prescribed in Paras 3.2 3.3 requiring mandatory reference u/s 92CA(2) of the Act. The only ground on which the Ld. Pr. CIT ultimately justified his order requiring AO to make reference U/S 92CA mandatorily was that the assessee's case was selected under complete scrutiny criteria and therefore all possible enquiries should have been made by the AO inter alia including making reference to the TPO. We find that although in support of such conclusion the Ld. Pr. CIT has placed reliance on the CBDT Instruction No. 3 of 2016, the said Instruction nowhere even suggests let alone provides that every case of an assessee selected on non-transfer pricing risk parameter but involving ' complete scrutiny ', the reference must be made to the TPO if such an assessee had entered into international transactions or specified dome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.04.2017 whereby clause (i) of sec. 92BA relating to any expenditure in respect of which payment have been made or is to be made to a person referred to clause (b) of sub- section (2) of section 40A of the Act was omitted. Now the question arises whether after the omission of clause (i) from the statute, the CIT can justifiably set aside the order of assessment for not making a reference to TPO for examining transactions coming within the ambit of Section 92BAm of the Act. In this regard. our attention was invited to the decision of the coordinate bench of this Tribunal in the case of DVC Emta Coal Mines Ltd Ors Vs ACIT in ITA Nos. 2430-2432/Kol/2017 dated 01.05.2019 wherein it was held that the legal effect of clause (i) of Section 92BA being omitted by subsequent amendment, would mean that clause (i) never existed in the statute and consequently no adverse inference with reference to omitted provision can be drawn against an assessee. While omitting the clause (i) of section 92BA of the Act. nothing was specified whether the proceeding initiated or action taken on this count can continue. Therefore, this Tribunal held that any proceeding initiated or action taken under that ..... 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