TMI Blog2021 (11) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... o TPO in specified circumstances The said clause 3.3 of the Instruction specifies three situations and we find that none of the situation is applicable in the case of the assessee. 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. See M/S AMIRA PURE FOODS PVT. LTD. VERSUS THE PR. C.I.T, CENTRAL GURGAON [ 2017 (12) TMI 189 - ITAT DELHI] - Decided in favour of assessee. - ITA No. 01/JODH/2021 - - - Dated:- 8-9-2021 - Shri Sandeep Gosain, Judicial Member And Shri Vikram Singh Yadav, Accounta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order dated 14.12.2018 to be erroneous and prejudicial to revenue on the following effective ground that there were large outward remittance to a non resident not being a company or to a foreign company for which form 15CA was issued and that the query raised by AO in its letter dated 10.9.2018 for which reply was submitted was not properly examined. The PCIT in its order observed that while the assessee have replied to all the points, the AO had failed to verify and the submission of the assessee have merely been accepted and he did not apply his mind nor did he conducted an enquiry while accepting the case of the assessee and accordingly he directed the AO to verify the replies of the assessee with the books of accounts and documentary evidence and accordingly passed an order u/s 263 of the IT act holding that the assessment order is erroneous and prejudicial to revenue. Against the order dated 23.2.2021, u/s 263 of the IT act 1961, the assessee is in appeal. 3. The contention of the assessee is that the impugned order u/s 263 is not maintainable since the mandatory statutory requirement provided in the Act for a valid assumption of jurisdiction u/s 263 remains unfulfilled a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der is erroneous. Even if it is inferred that non-consideration of the issues pointed out by the CIT would amount to an erroneous order, it is not stated as to how this order is prejudicial to the interest of the revenue. 6. The assessee further pleaded that the facts of the said judgment of the Hon ble High Court are identical to facts and circumstances of the present case in as much as in the said case also the provisions of section 263 of the Act were invoked on the ground that the AO had not raised queries in relation to certain issues which is precisely the case in hand wherein it has been proposed to invoke the provisions of section 263 on the solitary ground that the AO has not raised any queries regarding the issues stated in the impugned notice. Thus, the said judgment pronounced by the Hon ble Delhi High Court is squarely applicable to the facts and circumstances of the present case thereby rendering the impugned show cause notice as unwarranted and without jurisdiction and the same is accordingly prayed to be revoked and nullified at this stage itself in the interest of substantial justice. 7. The assessee further stated that even as the assessment order, notices i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 ITR 282 (SC) c. CIT v. Rajiv Arora (DBITA 283/2010 dated 28.08.2017 (Rajasthan) d. CIT v. Deepak Real Estate Developers (India) Pvt. Ltd. (DBITA 581/2011 dated 03.03.2014 Rajasthan High Court) e. CIT v. Reliance Communication Ltd. (2016) 76 Taxmann.com 226 (SC), f. CIT vs. Mahavir Spinning Mills Ltd. (2008) 303 ITR 353 g. CIT vs. PANKAJ DHIRAJLAL DHRUVE (2008) 305 ITR 332 h. CIT vs. Nahar Exports Ltd. (2008) 173 TAXMAN 3 i. Virendra Kumar Jhamb vs. CIT (2009) 222 CTR (Bom) 88 j. CIT V/s. GirdhariLal (2002) 258 ITR 331 (Raj) (DB) k. CIT V/s. ArvindJewllers (2002) 259 ITR 502 l. CIT V/s. Shiv HariMadhu Sudan (1998) 233 ITR 649 (Raj) m. CIT V/s. Mehsana District Co-operative Milk Producers Union Ltd. (2003) 263 ITR 645 (Guj) 11. In regard to the reference to the TPO is concerned, the assessee referred to para 3 of the CBDT Instruction No. 3/2016, F. No. 500/9/2015-APA-II Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, Foreign Tax and Tax Research Division-I, APA-II Section, New Delhi, dated 10th March, 2016, which read as 3. Reference to Transfer Pricing Officer (TPO) . 3.1 The power to determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or specified domestic transactions, shall be referred to TPOs only in the following circumstances: (a)where the AO comes to know that the taxpayer has entered into international transactions or specified domestic transactions or both but the taxpayer has either not filed the Accountant s report under Section 92E at all or has not disclosed the said transactions in the Accountant s report filed; (b)where there has been a transfer pricing adjustment of ₹10 Crore or more in an earlier assessment year and such adjustment has been upheld by the judicial authorities or is pending in appeal; and (c)where search and seizure or survey operations have been carried out under the provisions of the Income-tax Act and findings regarding transfer pricing issues in respect of international transactions or specified domestic transactions or both have been recorded by the Investigation Wing or the AO. 14. The assessee mentioned that the assessee case does not attract any of the condition stipulated above and therefore, no reference was required to be made to the TPO. The assessee also mentioned that each of the query of the AO was replied, the fact which is not denied by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference was not made to the TPO, the PCIT was well within his jurisdiction to say that the order was erroneous and prejudicial to the interest of revenue. 19. We have considered the rival contentions of both the parties, carefully perused the material placed on record and also considered the order passed u/s 263 and his observation therein and assessee reply to the PCIT and the original assessment order and are of the view 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. The 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. The PCIT 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 Ld AO on the records does not make the assessment order erroneous and prejudicial to the interest of reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusion that the order of the AO is erroneous and prejudicial to the interests of the Revenue has to be preceded by some minimal inquiry. In fact, if the Principal CIT is of the view that the AO did not undertake any inquiry, it becomes incumbent on the Principal CIT to conduct such inquiry. All that Principal CIT has done in the impugned order is to refer to the Circular of the CBDT and conclude that in the case of the assessee-company, the AO was duty bound to calculate and allow depreciation on the BOT in conformity of the CBDT Circular No. 9 of 2014 but the AO failed to do so. Therefore, the order of the AO is erroneous insofar as prejudicial to the interest of revenue. This can hardly constitute the reasons required to be given by the Principal CIT to justify the exercise of jurisdiction under s. 263. In the context of the present case if, as urged by the Revenue, the assessee has wrongly claimed depreciation on assets like land and building, it was incumbent upon the Principal CIT to undertake an inquiry as regards which of the assets were purchased and installed by the assessee out of its own funds during the assessment year in question and, which were those assets t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment. The learned Principal CIT has ignored the replies of the assessee. He merely states that the reply has been filed by the assessee but he nowhere discusses the contentions raised by the assessee and why he does not agree with the contentions of the assessee. The learned Principal CIT has merely remitted the matter back to the AO without making any enquiry himself. The learned Principal CIT has mentioned that the fresh loans have not been examined by the AO. The learned Principal CIT has not considered the contentions of the assessee that there is no fresh loan. Similarly, the other replies of the assessee filed during the course of assessment and in response to notice under s. 263 of the Act have been totally ignored. No enquiry has been made by the learned Principal CIT. It was incumbent for the learned Principal CIT to make some minimum independent enquiry to reach to the conclusion that the order of the AO is erroneous and prejudicial to the interest of revenue. The reliance is rightly placed on the decisions of Delhi High Court in learned Principal CIT vs. Delhi Airport Metro Express (P) Ltd. (supra) and ITO vs. DG Housing Projects Ltd. (supra). The Hon ble Delhi High ..... X X X X Extracts X X X X X X X X Extracts X X X X
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