Lack of enquiry in a particular manner or as per procedures prescribed vitiates the assessment only when relevant provisions are applicable.
ABCAUS Case Law Citation:
ABCAUS 3325 (2020) (07) ITAT
In the instant case, the appeal of the assessee was directed against the action of the Pr. CIT assuming jurisdiction u/s 263 of the Income Tax Act, 1961 (the Act) whereby assessment order passed by the Assessing Officer (AO) u/s 143(3) of the Act was sought to be set aside.
According to PrCIT, despite the domestic transactions undertaken by the assessee covered within the ambit of Section 92BA of the Act for which prescribed form 3CEB was issued by the Chartered Accountant was filed by the Assessee, the AO failed to refer the matter to the Transfer Pricing Officer (TPO) and in carrying out the necessary consequential inquiries.
Before the Tribunal, the assessee submitted that the form 3CEB was filed only as a matter of abundant caution and was actually not required to be filed in law due to the fact that “Specified Domestic Transaction” (SDT)represented sales made to the sister concern and sales do not fall within the sweep of meaning of ‘SDT’ defined u/s 92BA(i) of the Act which is narrower in its scope and applies to expenditure in respect of which payments has been made etc. by the assessee to certain categories of persons referred to in Section 40A(2)(b) of the Act.
It was thus contended that a sale transaction is out of the ambit of erstwhile clause (i) of Section 92BA of the Act.
It was further pointed out that the assessee had not entered into any SDT as spell out under clause (ii) to (vi) of Section 92BA of the Act either, as can be easily seen from the return of income filed. The assessee had not entered into any transaction susceptible to Section 80IA of the Act.
It was further submitted that the transactions reported in Form 3CEB are not to be regarded as SDT in Law at the first place, there was no warrant for the AO to refer the matter to the TPO merely on account of wrongly filed Form 3CEB in contradiction to statutory provisions of section 92BA of the Act.
Lack of enquiry vitiates assessment only when relevant provisions are applicable
The Tribunal observed that the consequential proceedings u/s 92BA for referring to TPO and other enquiries contemplated in respect of SDT would trigger only when a stipulated transaction falls within the meaning of definition of SDT as provided under s. 92BA of the Act.
The Tribunal stated that a sale made by the assessee outrightly excluded from the ambit of clause (i) of Section 92BA of the Act which is meant to deal with expenditure incurred by the assessee to the benefit of sister concern/AE.
The Tribunal stated that merely because a prescribed Form No. 3CEB was filed in accordance with Rule 10E r.w.s. 92BA of the Act would not make an assessee susceptible to onerous investigation proceedings on such transactions where the assessee prima facie demonstrates that Section 92BA of the Act is wholly inapplicable in any manner at the first instance.
The Tribunal pointed out that a lack of enquiry in a particular manner or as per certain procedures prescribed would possibly vitiate the assessment order only when it is found that the relevant provisions were applicable to the assessee and not otherwise.
Accordingly, the Tribunal quashed the revisional order passed u/s 263 of the Act.
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