TMI Blog2023 (12) TMI 1262X X X X Extracts X X X X X X X X Extracts X X X X ..... g the matter to TPO and that makes the order erroneous and prejudicial to the interest of Revenue irrespective of the fact that the transaction may have resulted into no loss to Revenue for the reason that both the parties were paying tax at similar rate as that is not a justification in TP issue examination by TPO. For remaining grounds for finding the assessment order to be erroneous and prejudicial to the interest of Revenue, we find that assessee had made submissions to Ld. PCIT that the issue was examined by the Ld. AO by raising queries to which assessee had responded by letters dated 29.04.2016, 11.07.2016, 11.08.2016 and 17.08.2016. The order of Ld. PCIT makes it apparent that he has taken note of these submissions of the assessee as made before Ld. AO and as available on the assessment record, but found that enquiry was not detailed without indicating by his own efforts as to where Ld. AO failed to follow the mandate of the Act in accepting the pleas. No separate and reasoning of his own are stated to establish his findings that how the submissions were not otherwise sustainable under the law to hold that assessment order was erroneous and prejudicial to the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order observing that from the above reasons it can be seen that the case was selected on the basis of a TP Risk parameter. There was a mistake in noting the reason of selection on the system and, therefore, the case was not referred to TPO due to omission. This has resulted in the order passed therein which is erroneous and prejudicial to the interest of the Revenue. 4. Further on examining the records the Ld. PCIT concluded that the AO has passed the order without making enquiries or verification which he should have made while investigating the case and thus questioned the assessment order as erroneous due to the following reasons: (i) The AO as required by the Act/Circular did not send your case to the TPO, who has knowledge and ability to properly examine the specified domestic transaction which in your case appears to be in large amount. This was on the issues required to be examined extensively and it was one of the basis on which the case was selected for scrutiny. The AO, the record shows, has failed to apply his mind in making enquiries with regard to Specified Domestic Transactions. (ii) Besides this AO, has not properly examined the amount paid to related p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of Rs. 29,90,855/- but did not submit any bank account details or vouchers to justify the same. The assessee has only submitted unsigned copies of ledger account no Bill Vouchers or copy of bank account has been submitted by the assessee to justify the amount paid on account of commission. The AO had not referred the case to TPO even when the reason for selection was TP risk parameter. The AO had to mandatorily refer the case to TPO as scrutiny reasons had been revised as under: 1. Large specified domestic transaction(s) (Form 3 CEB). 2. Depreciation claimed at higher rates/higher additional depreciation claimed. 3. Mismatch in sales turnover reported in Audit Report and ITR. 4. Delayed payment of tax and return filed late. 5. Large other expenses claimed in the Profit Loss A/c. 6. Mismatch in amount paid to related persons u/s 40(A)(2)(b) reported in Audit Report and ITR. Hence, I am satisfied that this order is erroneous and prejudicial to the interest of Revenue. The order is set aside with directions to AO to refer it to TPO and examine all the other reasons as reflected in the system. The assessee must be given adequate opport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion the facts and circumstances of the case and the submissions, it comes up that as with regard to failure of the AO to send the case to the TPO. The assessee s claim was that there was Specified Domestic Transactions and the payments were made covered u/s 40(A)(2)(b) of the Act and for which both the parties are paying similar rate of taxation and no Revenue has been affected. The case of assessee is that this angle was examined by the AO while completing the assessment. It was also submitted before Ld. PCIT that for the AY 2015-16 on the same facts as this year no adverse view was found by TPO. 11. We are of the considered view that Instruction No.3/2016 dated 10.03.2016 of CBDT providing for guidelines/implementation of transfer pricing provisions in para 3.2 specifically provides that if a case is selected for scrutiny on the basis of transfer pricing risk parameters in respect of International Transactions or Specified Domestic Transactions or both the case has to be referred to TPO by the AO after obtaining the approval of the jurisdictional PCIT or CIT. The failure of Ld. AO to comply with these directions in relevant AY 2014-15 and following them in next AY 2015-16 make ..... X X X X Extracts X X X X X X X X Extracts X X X X
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