MAARI MULTI TRADING PRIVATE LIMITED, MUMBAI V. ITO 12(3)(3), MUMBAI

ITA 4296/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7901 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2014-2015
• Appeal Filed On: 25-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A MOHAN
• Assessee Lawyers: CHANDRESH T GANDHI
• Keywords: Transfer pricing; Opportunity of being heard; Period of limitation; Time period of passing order; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI VIKAS AWASTHY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4296/MUM/2018 ASSESSMENT YEAR: 2014 - 15 MAARI MULTI - TRADING PVT. LTD., 51, BAJAJ BHAVAN, NARIMAN POINT, MUMBAI - 400021. C/O : C.T. GA NDHI & CO. 403, MONTEROSSA, 90 FEET ROAD, ABOVE S.B.I., OFF . GANESH MANDIR, GHATKOPAR EAST, MUMBAI - 400075. VS. ITO - 12(3)(3), ROOM NO. 224/148, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020. PAN NO. AAHCM5894N APPELLANT RESPONDENT ASSESSEE BY : MR. CHANDRESH T. GANDHI, AR REVENUE BY : MR. A. MOHAN, CIT - DR DATE OF HEARING : 16/01/2020 DATE OF PRONOUNCEMENT : 22/01/2020 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2014 - 15. THE APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE INCOME TAX OFFICER - 12(3)(3), MUMBAI (IN SHORT AO) U/S 143(3) R.W.S. 144C( 3 ) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. THE AO AND THE DRP - 3 ('DRP') HAVE ERRED IN PASSING THE ORDERS IN THE MANNER PASSED BY THEM. MAARI MULTI - TRADING PVT. LTD ITA NO. 4296/MUM/2018 2 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DRP DIRECTION DI SMISSING THE OBJECTIONS WITHOUT CONDONING THE DELAY IS BAD IN LAW AND LIABLE TO BE QUASHED. 3. THE AO HAS ERRED IN PASSING THE FINAL ASSESSMENT ORDER IN ABSENCE OF DIRECTIONS FROM DRP. THE FINAL ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 1 44C (3) OF THE ACT IS BAD IN LAW AND LIABLE TO BE QUASHED. 4. GROUNDS RELATING TO TRANSFER PRICING ON MERITS: A . THE TRANSFER PRICING OFFICER HAS ERRED IN NOT PROVIDING AN OPPORTUNITY OF BEING HEARD WHILE CHANGING THE METHOD OF TRANSFER PRICING AND RE - COMPUTING THE INCOME OF THE ASSESSE E B . THE TRANSFER PRICING OFFICER HAS ERRED IN NOT ISSUING A SHOW CAUSE NOTICE BEFORE CHANGING THE METHOD OF TRANSFER PRICING AND RE - COMPUTING THE INCOME OF THE ASSESSEE. C . THE AO HAS ERRED IN NOT PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSE E BEFORE PASSING THE DRAFT ORDER U/S 143(3) R.W.S. 144C(1) OF THE ACT. D . THE TPO AND AO HAVE WITHOUT ANY BASIS, CHANGED THE METHOD OF TRANSFER PRICING AND ERRED IN SELECTION OF THE COMPARABLES, AS WELL. 5. ASSESSING OFFICER WAS INFORMED THAT WE HAVE FILED OBJECTION BEFORE DRP AND HE HAS TO WAIT FOR DRP'S DIRECTION BEFORE PASSING ORDER U/S. 143(3). 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 2014 - 15 ON 28.08.2015 DECLARING A LOSS OF RS. 4,28, 735/ - . AS RECORDED BY THE AO, DRAFT ORDER U/S 144C(1) DATED 29.12.2017 WAS SERVED ON THE ASSESSEE ON THE SAME DATE. IN RESPONSE TO IT, THE ASSESSEE VIDE LETTER DATED 27.01.2018 SUBMITTED BEFORE THE AO THAT THEY HAVE OBJECTIONS AGAINST THE SAID DRAFT ASSESS MENT ORDER. THE ASSESSEE FILED ITS OBJECTIONS BEFORE THE DISPUTE RESOLUTION PANEL (DRP), MUMBAI. FURTHER THE AO RECODED THAT SINCE THE DATE OF SERVICE OF DRAFT ASSESSMENT ORDER WAS 29.12.2017, THE LIMITATION PERIOD OF 30 DAYS FOR THE ASSESSEE EXPIRED ON MAARI MULTI - TRADING PVT. LTD ITA NO. 4296/MUM/2018 3 27 .01.2018. HOWEVER, THE ASSESSEE FILED ITS OBJECTIONS BEFORE THE DRP, MUMBAI ON 30.01.2018. SINCE THE ASSESSEE FAILED TO FURNISH ITS OBJECTIONS WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF THE DRAFT ORDER BEFORE THE DRP, THE AO COMPLETED THE ASSESSMENT U/S 14 4C(4) BY MAKING AN ADDITION ON ACCOUNT OF UPWARD ADJUSTMENT IN ARMS LENGTH PRICE OF RS. 4,29,08,348/ - . 4. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE TRANSFER PRICE OFFICER (TPO) DID NOT PROVIDE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE; THAT THE TPO DID NOT ISSUE SHOW CAUSE NOTICE BEFORE DECIDING TO CHANGE THE TRANSFER PRICE METHOD; THAT THE AO DID NOT PROVIDE OPPORTUNITY OF BEING HEARD BEFORE MAKING ADDITION AND PASS ED THE DRAFT ORDER; THAT THE AO ISSUED FINAL ORDER WITHOUT ISSUANCE OF DRP S DIRECTIONS DESPITE BEING INFORMED THAT OBJECTIONS HAVE BEEN FILED. ON THE OTHER HAND, THE LD. DEPARTMENT REPRESENTATIVE (DR) SUPPORTS THE ORDER PASSED BY THE AO 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD . AS MENTIONED EARLIER, THE DRP REJECTED THE APPLICATION FILED BY THE ASSESSEE ON THE GROUND THAT THE DATE OF SERVICE OF DRAFT ASSESSMENT ORDER WAS 29.12.2017, THE LIMITATION PERIOD OF 30 DAYS EXPIRED ON 27.01.2018, WHEREAS THE ASSESSEE FILED ITS OBJECTION BEFORE THE DRP ON 30.01.2018. FURTHER, IT IS FOUND THAT THE TPO HAS NOT ISSUED A SHOW CAUSE NOTICE BEFORE DECIDING TO CHANGE THE TRANSFER PRICING METHOD ADOPTED BY THE ASSESSEE. THAT REASONABLE OPPORTUNITY WAS NOT PROVIDED BY THE TPO, IS EVIDENT FROM THE ORDER U/S 92CA(3) DATED 31.10.2017. IN THE INSTANT CASE THE AO HAS MADE A REFERENCE TO THE TPO U/S 92CA(2) OF THE ACT. MAARI MULTI - TRADING PVT. LTD ITA NO. 4296/MUM/2018 4 IN SUCH A FACTUAL SCENARIO, WE DEEM IT FIT TO RESTORE THE MATTER TO THE FILE OF THE AO / TPO IN THE INTEREST OF JUSTICE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE AO/TPO AND RESTORE THE MATTER FOR FRESH ADJUDICATION. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22/01/2020. SD/ - SD/ - ( VIKAS AWASTHY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 22/01/2020 BISWAJIT , SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI