ITO 14(1)(1), MUMBAI V. ADITYA BIRLA MINACS BPO P. LTD, MUMBAI

ITA 4697/MUM/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4724 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 18-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV; SUHAS KULKARNI D R S
• Assessee Lawyers: SHREEJA GANGWAL
• Keywords: Depreciation; Transfer pricing; Opportunity of being heard; Principle of natural justice; International transaction; Reason to believe; Reassessment proceedings
• Section: 143(3); 143(1); 201; 144C; 143(2); 147; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE S HRI G.S. PANNU ( VP ) AND SHRI RAM LAL NEGI (JM) ITA NO. 4697 /MUM/20 1 5 ASSESSMENT YEAR: 2008 - 09 THE ITO - 14 (1) (1) , ROOM NO. 431 , 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400020 VS. M/S ADITYA BIRLA MINACS BPO PRIVATE LIMITED (FORMERLY COMPASS BUSINESS PROCESS OUTSOURCING PVT. LTD.), GATE NO. - 4, GODREJ INDUSTRIES COMPLEX, VIKHROLI (E) , MUMBAI - 4000079 PAN: AAACC8690F (APPELLANT) (RESPONDENT) REVENUE BY : SHRI RAJESH KUMAR YADAV & SUHAS KULKARNI ( D R S ) ASSESSEE BY : SHRI YOGESH THAR & MS. SHREEJA GANGWAL (A R S ) DATE OF HEARING: 30/11 /201 8 DATE OF PRONOUNCEMENT: 22 / 02 /201 9 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST ORDER DATED 30/03/2015 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 55 , MUMBAI , FOR THE A S S ESSMENT YEAR 2008 - 09 , WHEREBY THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AG AINST ASSESSMENT ORDER PASSED U/S 143 (3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). 2. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING NIL INCOME. THE RETURN WAS PROCESSED U/S 143 (1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS 2 ITA NO. 4697/M UM/2015 ASSESSMENT YEAR: 2008 - 09 REOPENED U/S 147, THE REASON S RECORDED FOR REOPENING OF THE CASE READ AS UNDER: - RETURN IN THIS CASE WAS FILED ON 29.09.2008 DECLARING INCOME OF RS. NIL. ASSESSEE HAS FIL ED FORM NO. 3CEB ON 29.09.2008 AND ON THE BASIS OF WHICH THE CASE WAS REFERRED TO THE TPO FOR ARMS LENGTH PRICING VALUATION. IT IS NOTICED HOWEVER THAT THIS CASE IS NOT SELECTED FOR SCRUTINY. THE TPO HAS ESTIMATED THE TRANSFER PRICING ADJUSTMENT TO THE TU NE OF RS. 2,54,03,339/ - . THIS CONSTITUTES INFORMATION FOR THE PURPOSE OF SECTION 147 OF THE I . T . ACT. IN VIEW OF THE ABOVE INFORMATION, IT IS NOTICED THAT THE TRANSFER PRICING ADJUSTMENT IN THE RETURN OF INCOME OF THE ASSESSEE CONSTITUTES OMISSION OR FAILU RE ON THE PART OF THE ASSESSEE AND SAID TRANSACTION OF NOT AT ARMS LENGTH AS PER THE REPORT OF THE TPO. IN THE LIGHT OF THE ABOVE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX TO THE TUNE OF RS. 2,54,03,339/ - . 3. ACCORDINGLY, THE AO MADE ADDITION OF RS. 2,54,03,339/ - IN TERMS OF TPOS ORDER DATED 28.10.2011 PASSED U/S 92CA(3) OF THE ACT AND FURTHER MADE ADDITION OF RS. 21,150/ - TOWARDS INTEREST INCOME CLAIMED U/ S 10 OF THE ACT AND DETERMINED THE TOTAL INCOME AT RS. 2,54,24,489/ - UNDER THE NORMAL PROVISIONS OF THE ACT. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE FIRST APPELLATE AUTHORITY I.E. CIT (A) ON THE GROUND S THAT: I. REOPENING THE ASSESSMENT ORDER PASSED BY THE AO IS BAD IN LAW. II. ORDER PASSED BY THE AO IS ALSO BAD IN LAW . W ITHOUT PREJUDICE TO GROUND NO. 2 ABOVE , III. THE AO MADE REFERENCE TO THE T P O WITHOUT APPRECIATING THE FACT THAT NO NOTICE U/S 143 (2) WAS ISSUED . IV. ORDER PASSED BY THE AO IS BAD IN LAW AS THE ASSESSEE WAS NOT GIVEN OPPORTUNITY TO REPRESENT THE CAS E BEFORE THE DRP . V. THE ORDER IS PASSED IN VIOLATION OF PRINCIPLE S OF NATURAL JUSTICE . 3 ITA NO. 4697/M UM/2015 ASSESSMENT YEAR: 2008 - 09 VI . SINCE , THE AO HAS CONDUCTED FISHING ENQUIRY REOPENING OF THE CASE BAD IN LAW . VII. TRANSFER PRICING DISALLOWANCE IS NOT APPLICABLE TO UNDERTAKING ESTABLISHED IN F REE TRADE ZONE . VIII. THE TPO HAS FAILED TO CONSIDER DEPRECIATION WHILE CALCULATING OPERATING COST AND EMERGENCY I.E. RATIO OF OPERATING PROFITS, OPERATING COST. IX. TPO HAS ERRED IN NOT CONSIDERING THE ADJU STMENT FOR NEW SITE INCUBATION EXPENSE WHILE CALC ULATING THE OPERATING COST MARGINS I.E., RATIO OF OPERATING PROFIT TO OPERATING COST. X. TPO HAS ERRED IN NOT CONSIDERING THE EXPENSES INCURRED FOR STRATEGIC TEAM COST , WHILE CALCULATING THE OPERATING COST . XI. THE TPO HAS ERRED IN NOT CONSIDERING THE ADJ USTMENT WHICH WAS IN THE NATURE OR REIMBURSEMENT EXPENSES. WITHOUT PREJUDICE THE ASSESSEE FURTHER CHALLENGED THE ACTION OF THE TPO IN NOT ALLOWING BENEFIT OF VARIATION/REDUCTION OF 5% FROM THE ARITHMETIC MEAN WHILE DETERMINING THE ARMS LENGTH PRICE AS PROVIDED UNDER THE PROVISO TO SECTION 92C(2) OF THE ACT. 4. THE LD. CIT (A) AFTER HEARING THE ASSESSEE DECIDED GROUND NO. I TO IV IN FAVOUR OF THE ASSESSEE AND DID NOT ADJUDICATE THE REMAINING GROUNDS HOLDING THAT SINCE THE GROUND NO. 1 TO IV HAVE BEE N DECIDED IN FAVOUR OF THE ASSESSEE THE REMAINING GROUNDS HAVE BECOME OF ACADEMIC. 5. AGGRIEVED BY THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER BY RAISING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN QUASHING THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147 HOLDING THAT THE ORDER OF THE TPO ITSELF IS BAD IN LAW AND LACKS ITS JURIS DICTION WITHOUT APPRECIATING THE FACT THAT THE PROVISIONS OF SEC. 92CA HAS NOT BARRED THE AO TO REFER THE MATTER TO THE TPO EVEN THOUGH NO PROCEEDINGS ARE PENDING. 4 ITA NO. 4697/M UM/2015 ASSESSMENT YEAR: 2008 - 09 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED I N QUASHING THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147 HOLDING THAT THE REOPENING ON THE BASIS OF ADJUSTMENT MADE BY THE TPO IS BAD IN LAW WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO OFFER THE ARMS LENGTH TRANSACTION CORRECTLY AND THERE I S ESCAPEMENT OF INCOME WITH REGARD TO ARMS LENGTH TRANSACTION OFFERED BY THE ASSESSEE. 6 . BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE ASSESSMENT ORDER PASSED BY THE AO SUBMITTED THAT SINCE THE ASSESSEE HAD ENTERED INTO THE INTER NATIONAL TRANSACTION S WITH ITS ASSOCIATE ENTERPRISES , T HE AO RIGHTLY REFERRED THE TRANSACTION S MENTIONED IN THE AUDIT REPORT IN FORM 3CEB , TO THE TRANSFER PRICING OFFICER (TPO) TO DETERMINE THE ARMS LENGTH PRICE . THE LD. DR FURTHER CONTENDED THAT AO HAS M ADE ADDITIO N THE BASIS OF UPWARD ADJUSTMENT MADE BY THE LD. TPO. 7 . ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RELYING ON THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED THAT THE LD. CIT (A) HAS RIGHTLY DECIDED THE GROUND NO. 1 TO 3 OF ITS APPEAL B Y FOLLOWING THE DECISION OF PUNE TRIBUNAL RENDERED IN THE CASE OF DY. COMMISSIONER OF INCOME TAX - CIRCLE - 6, PUNE VS. SAS RESEARCH AND DEVELOPMENT INDIA PVT. LTD. (2016) 75 TAXMANN.COM 81 (PUNE TRIBUNAL), THERE IS NO MERIT IN THE APPEAL OF THE REVENUE. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO EXAMINED THE MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON BY THE LD. CIT (A). THE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT (A) HAS ERRED IN QUASHING THE ASSESSMENT ORDER PASSED U/S 143 (3) READ WITH SE CTION 147 HOLDING THAT THE ORDER OF THE TPO ITSELF IS BAD IN LAW AND LACKS JURISDICTION AND FURTHER HOLDING THAT THE REOPENING ON THE BASIS OF ADJUSTMENT MADE BY THE TPO IS BAD IN LAW. IN THE PRESENT CASE, THE RETURN WAS FILED ON 29.09.2008 WHICH WAS PROCE SSED U/S 143 (1) OF THE ACT. NOTICE U/S 142 (1) ALONG WITH 143 (2) OF THE ACT WERE ISSUED ON 5 ITA NO. 4697/M UM/2015 ASSESSMENT YEAR: 2008 - 09 09.11.2010. THE ASSESSEE RAISED OBJECTION ON THE GROUND THAT THE STATUTORY NOTICES WERE ISSUED/RECEIVED BEYOND THE PRESCRIBED PERIOD UNDER THE ACT. HOWEVER, THE AO RE - OPENED THE CASE. THE ASSESSEE REQUESTED THE AO TO PROVIDE REASONS FOR RE - OPENING AND ALSO SUBMITTED THAT THE ORIGINAL RETURN FILED SHOULD BE TREATED AS THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THE ASSESSEE FURTHER CONTENDED THAT SINCE THE CASE WAS NOT SELECTED FOR SCRUTINY WITHIN THE STIPULATED TIME, THE REFERENCE MADE TO THE TPO ITSELF IS INVALID AND FURTHER RE - OPENING ON THE BASIS OF THE SAME IS VOID - AB - INITIO . HOWEVER, THE AO REJECTING THE CONTENTIONS OF THE ASSESSEE PASSED THE ASS ESSMENT ORDER U/S 143 (3) READ WITH SECTION 147 OF THE ACT. IN THE FIRST APPEAL , THE LD. CIT (A) HAS DECIDED GROUND NO. 1 TO 3 OF THE ASSESSEES APPEAL IN FAVOUR OF THE ASSESSEE HOLDING THE ASSESSMENT ORDER BAD IN LAW. THE FINDINGS OF THE LD. CIT (A) READ AS UNDER: - I FIND THAT THE MAIN CONTENTION OF THE APPELLANT IS THAT A REFERENCE TO THE TPO, IN ABSENCE OF ANY PROCEEDINGS PENDING BEFORE THE AO, IS UNSUSTAINABLE IN LAW AND ORDER PASSED BY TPO ON SUCH INCORRECT REFERENCE IS INVALID AND LACK OF JURISDICTI ON. FURTHERMORE, SUCH INVALID ORDER OF THE TPO CANNOT BE A REASON FOR RE - OPENING OF ASSESSMENT AND THE ENTIRE RE - ASSESSMENT PROCEEDING U/S 147 IS BAD IN AND NEEDS TO BE QUASHED. 4.1 FURTHER, I FIND THAT THE SIMILAR ISSUE LIKE BEAN CONSIDERED BY THE HON' BLE ITAT, PUNE IN THE CASE OF MAXIMIZE LEARNING' PRIVATE LIMITED VS. ASST COMMISSIONER OF INCOME - TAX (ITA NO. 2234/PN/2012 FOR AY' 2007 - 08 DATED 2ND FEBRUARY, 2015 WHEREIN THE FACTS WERE ARE AS FOLLOWS: THE APPELLANT FILED ITS RETURN OF INCOME ON 05.11.200 7 DECLARING TOTAL INCOME OF RS.2,15,31,701/ - . THE SAID RETURN OF INCOME WAS DULY PROCESSED U/S 143(1) OF THE ACT. THE SAID RETURN WAS NOT PICKED - UP FOR SCRUTINY ASSESSMENT BECAUSE NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER WITHIN T HE PERIOD PRESCRIBED IN CLAUSE (II) OF SUB - SECTION (2) OF SECTION 143 OF THE ACT, AS IT STOOD AT THE RELEVANT POINT OF TIME (I.E ON OR BEFORE 30TH SEPTEMBER, 2008). ON 14.09.2009, THE ASSESSING OFFICER MADE A 6 ITA NO. 4697/M UM/2015 ASSESSMENT YEAR: 2008 - 09 REFERENCE TO THE TPO FOR DETERMINATION OF ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS ENTERED BY THE ASSESSEE WITH ITS ASSOCIATED ENTERPRISES WHICH WAS CLEARLY BELATED INASMUCH AS, AT THAT P OINT OF TIME NO PROCEEDING FOR ASSESSMENT OF INCOME WAS PENDING BEFORE THE ASSESSING OFFICER. SUBSEQUENT, THE TPO PASSED ORDER U/S 92CA(3) OF THE ACT DATED 29.10.2010. BASED ON THIS TPO ORDER, ON 14.01.2011, THE ASSESSING OFFICER RECORDED REASONS IN TERMS OF SECTION 147 OF THE ACT AND FORMULATED A BELIEF THAT CERTAIN INCOME CHARGEABLE TO TAX HAD ESCAPED ASSES SMENT FOR THE YEAR UNDER, CONSIDERATION AND ACCORDINGLY HE ISSUED A NOTICE U/S 148 OF THE ACT OF EVEN DATE CALLING FOR A RETURN OF INCOME. - THE AQ COMPLETED THE ASSESSMENT U/SJ.43(3) R.W.S. 147 AND 144C(13) OF THE ACT DATED 28.09.2012, DETERMINING THE TOT AL INCOME AT RS.3,91,01,770/ - , WHICH INTER - ALIA, INCLUDED AN ADDITION OF RS.1,75,70,070/ - ON ACCOUNT OF ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION OF PROVISION OF IT ENABLED SERVICES TO ASSOCIATE ENTERPRISES ABROAD (AS PER TPO ORDER). IN NUTSHELL , THE ASSESSING OFFICER HAD FORMED A BELIEF ABOUT ESCAPEMENT OF INCOME BASED ON THE ORDER OF THE TPO U/S 92CA(3) COMPUTING ADJUSTMENT IN RELATION TO THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE WITH ITS ASSOCIATED ENTERPRISES. 4.2 THE CONTENTIONS O F THE ASSESSEE WERE MAINLY ON: 1. CHALLENGING THE VALIDITY OF THE PROCEEDINGS INITIATED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT 2. THE BASIS OF REOPENING IS FLAWED INASMUCH AS IT IS BASED ON AN INCORRECT REFERENCE MADE TO THE TPO U/S 92CA OF THE ACT A ND THEREFORE ANY FURTHER PROCEEDINGS RESULTING THEREFROM DESERVE TO BE TREATED AS ILLEGAL. 3. 'REASON TO BELIEVE' THAT CERTAIN INCOME HAD ESCAPED ASSESSMENT AS REQUIRED BY SECTION 147 OF THE ACT HAS TO BE THAT OF THE ASSESSING OFFICE ALONE AND NOT THAT OF ANY OTHER AUTHORITY. THE HO N'BLE APPELLANT TRIBUNAL UPHELD THE CONTENTION OF THE APPELLANT THAT THE ASSESSING OFFICER IS PRECLUDED FROM MAKING A REFERENCE TO THE TPO U/S 92CA(1) OF THE ACT FOR THE PURPOSES OF 7 ITA NO. 4697/M UM/2015 ASSESSMENT YEAR: 2008 - 09 COMPUTING ARM'S LENGTH PRICE IN RELATION TO TH E INTERNATIONAL TRANSACTION WHEN NO ASSESSMENT PROCEEDINGS IRE PENDING IN RELATION TO THE RELEVANT ASSESSMENT YEAR. THE RE4EVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: '24 NOW, WE MAY COME BACK TO THE FACTS OF THE PRESENT CAST IN THIS CASE, RETURN OF I NCOME WAS FILED ON 05.11.2007, WHICH WAS PROCESSED U/S 14'3111 OF THE ACT. ON 14.09.2009, THE .4SS6THING OFFICER MADE A REFERENCE TO THE TPO FOR COMPUTATION OF ARM'S LENGTH PRICE IN RELATION TO AN INTERNATIONAL TRANSACTION ENTERED BY ASSESSEE WITH ITS ASS OCIATED ENTERPRISE. THE TPO, AFTER ALLOWING THE ASSESSEE OPPORTUNITY OF BEING HEARD AND AFTER TAKING INTO ACCOUNT THE MATERIAL AVAILABLE WITH HIM, PASSED AN ORDER DATED 29.10.2010 DETERMINING THE ARM'S LENGTH PRICE IN ACCORDANCE WITH SUB - SECTION (3) OF SE CTION 92CA OF THE ACT. . 25. FIT BACKGROUND OF THE ABOVE FACTS, IT NEEDS TO BE ESTABLISHED AS TO WHETHER ON 14.09.2009 WHEN THE ASSESSING OFFICER MADE A REFERENCE TO THE TPO U/S 92CA(1) OF THE ACT, WAS' THERE AN ASSESSMENT PROCEEDINGS' U/S 143 OF THE ACT PENDING FOR THE YEAR UNDER CONSIDERATION. IN THE PRESENT CASE, WE ARE DEALING WITH ASSESSMENT YEAR 2007 - 08 AND ASSESSEE FILED ITS RETURN OF INCOME ON 05.11.2007. IN TERMS OF CLAUSE (II) TO SUB - SECTION (2) OF SECTION 143 OF THE ACT, AS IT STOOD AT THE RELEV ANT POINT OF TIME, NOTICE U/S 143(2) OF THE ACT IN ORDER TO SUBJECT THE RETURN OF INCOME TO SCRUTINY ASSESSMENT, SHOULD HAVE BEEN ISSUED WITHIN THIS SIX MONTHS FROM THE END OF THE RELEVANT ASSESSMENT YEAR I.E. UPTO 30.09.2008. THERE IS NO DISPUTE THAT NO S UCH NOTICE HAS BEEN ISSUED WITHIN THE ABOVE STIPULATED PERIOD. A CONSEQUENCE OF THE AFORESAID SITUATION IS THAT THE RETURN OF INCOME FILED BY THE ASSESSEE ON 05.11.2007 BECAME FINAL AS NO SCRUTINY PROCEEDINGS WERE STARTED WITHIN THE PERIOD STIPULATED IN LA W. THE AFORESAID POSITION IS ALSO REINFORCED BY THE CBDT CIRCULAR NO.549 DATED 31.10.1989. AS PER THE CBDT, IF AFTER FURNISHING RETURN OF INCOME) AN ASSESSEE DOES NOT RECEIVE A NOTICE U/S 143(2) OF THE ACT FROM THE DEPARTMENT WITHIN PERIOD STIPULATED III T HE: PROVISO TO SECTION 143(2) OF THE ACT, IT FOLLOWS THAT THE RETURN FILED BY THE ASSESSEE HAS BECOME FINAL AND NO SCRUTINY PROCEEDINGS SHOULD BE STARTED IN RESPECT OF THAT RETURN, IN OTHER WORDS, IN THE PRESENT 8 ITA NO. 4697/M UM/2015 ASSESSMENT YEAR: 2008 - 09 CASE, ASSESSMENT PROCEEDINGS U/S 143 OF THE ACT COME TO END AND THE MATTER BECAME FINAL ON 30.09,2008 I.E. THE DATE WITHIN WHICH A NOTICE U/S 432 OF THE ACT, WAS 'REQUIRED TO BE ISSUED, WHICH WAS NOT DONE. THE JUDGEMENT OF THE HON 'BBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF VIPAN KHANNA VS. CIT AND OTHERS, 255 ITR 220 (P&H) IS ALSO TO THE SAME EFFECT. IN - FACT, AS PER THE HON'BLE PUNJAB & HARYANA HIGH COURT, IN CASE WHERE A RETURN IS FILED AND IS PROCESSED AND NO NOTICE UNDER SUB - SECTION (2) OF SECTION 143 THEREAFTER IS SERVED ON THE ASSESSEE WI THIN THE STIPULATED PERIOD, THE ASSESSMENT PROCEEDINGS U/S 143 COME TO AN END AND MATTER BECOMES FINAL. AS PER THE HONBLE HIGH COURT, ALTHOUGH TECHNICALLY NO ASSESSMENT IS FRAMED IN SUCH A CASE, YET THE PROCEEDINGS FOR ASSESSMENT STAND TERMINATED. TO THE SIMILAR EFFECT IS THE RATIO OF THE JUDGEMENTS OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF (I) CIT VS. M. CHELLAPPAN AND ANOTHER, 281 ITR 444 (MADRAS); AND, 1'II) CIT VS. DEEP BARUAH, 329 ITR 362 (MADRAS). 26. IN THIS BACKGROUND, IF ON THE DATE OF MAKIN G OF REFERENCE TO THE TPO, THE ASSESSMENT PROCEEDINGS U/S 243 OF THE ACT HAD COME TO AN END AND THE PROCEEDINGS FOR ASSESSMENT STOOD TERMINATED, THERE WAS NO OCCASION FOR THE ASSESSING OFFICER TO HAVE MADE A REFERENCE TO THE TPO FOR DETERMINATION OF ARMS L ENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS IN TERMS OF SECTION 92C4 OF THE ACT. WE HAVE ALREADY INFERRED IN THE EARLIER PARAS THAT UNDER THE PROVISIONS OF SECTION 92CA OF THE ACT, A REFERENCE TO THE TPO FOR COMPUTATION OF ARMS LENGTH PRICE IN RELATION TO INTERNATIONAL TRANSACTIONS IS PERMISSIBLE ONLY IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. 27. IN VIEW OF THE AFORESAID DISCUSSION, IT HAS TO BE INFERRED THAT WHEN THE ASSESSING OFFICER MADE REFERENCE TO THE TPO ON 14.09.2009 FOR DETERMINATION OF ARMS LENGTH PRICE IN RELATION TO AN INTERNATIONAL TRANSACTION, THERE WAS NO ASSESSMENT PROCEEDINGS PENDING, AND THEREFORE IT WAS AN INVALID REFERENCE. CONSEQUENTLY, THE SUBSEQUENT ORDER PASSED BY THE TPO ON 29.10.2010 (SUPRA) DETERMINING THE ADJUSTMENT OF RS. 2,49,48,811/ - TO THE INTERNATIONAL TRANSACTION IS A NULLITY IN LAW AND VOID AB INITIO. 9 ITA NO. 4697/M UM/2015 ASSESSMENT YEAR: 2008 - 09 THE HONBLE APPELLANT TRIBUNAL ALSO UPHELD THE CONTENTION OF THE APPELLANT THAT FORMATION OF A BELIEF ABOUT ESCAPEMENT OF INCOME AS REQUIRED U/S 147 OF THE ACT MERELY ON THE BASIS OF NON - JURISDICTION ORDER OF THE TPO IS BAD IN LAW. IN SUCH SITUATION, PROCEEDING U/S 147 NEED TO BE QUASHED. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED BELOW: 28. THE NEXT ASPECT IS AS TO WHETHER, IN THE ABOVE CIRCUMSTANCES, THE ORDER OF THE TPO DATED 29.10.2010 (SUPRA) CAN BE VALID MATERIAL FOR THE ASSESSING OFFICER TO ENTERTAIN A BELIEF THAT CERTAIN INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. 29. 35. AS A CONSE QUENCE, WE CONCLUDE BY HOLD ING THAT THE REASONS RECORDED BY THE ASSESSING OFFICER IN THE PRESENT CASE DO NOT MEET WITH THE REQUIREMENTS OF SECTION 147 OF THE ACT AND THEREFORE THE ASSESSING OFFICER HAD NO JURISDICTION TO ISSUE NOTICE U/S 148 OF THE ACT DATED 14.01.2011. AS A CONSEQU ENCE, THE SUBSEQUENT ASSESSMENT ORDER PASSED U/S 143 (3) R.W.S 147 AND 144C (13) OF THE ACT IS LIABLE TO BE QUASHED. WE HOLD SO. RECENTLY, SIMILAR ISSUE HAS BEEN CONSIDERED BY THE HONBLE ITAT, DELHI IN THE CASE OF XL INDIA BUSINESS SERVICES (P) LTD. VS. ASST. COMMISSIONER OF INCOME TAX (2015) 113 DTR (DEL) (TRIB) 6] 4.4 THE FACTS OF THE APPELLANT CASE IS - SIMILAR TO THE CASE OF MAXIM IZE L EARNING PRIVATE LIMITED (SUPRA) & XL INDIA BUSINESS SERVICES (P) LTD. (SUPRA) INASMUCH AS THE NO SCRUTINY ASSESSMENT W AS UNDERTAKEN IN THE APPELLANT'S CASE AS NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER WITHIN THE PERIOD PRESCRIBED IN CLAUSE (II) OF SUB - SECTION (2) OF SECTION 143 OF THE AC T, AS IT STOOD AT THE RELEVANT POINT OF TIME (I.E ON OR BEFO RE 30TH SEPTEMBER, 2009). ON 21ST APRIL, 20 10, THE ASSESSING OFFICER MADE A REFERENCE TO THE TPO FOR DETER MINATION OF ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS ENTERED BY THE ASSESSEE WITH ITS ASSOCIATED ENTERPRISES WHICH WAS CLEARLY BELATED INAS MUCH AS, AT THAT POINT OF TIME N O PROCEEDING FOR ASSESSMENT OF INCOME WAS PENDING BEFORE THE ASSESSING OFFICER. SUBSEQ UENT, THE TPO PASSED ORDER U/ S 92CA(3) OF THE ACT DATED 28TH OCTOBER, 2011. BASED ON THIS TPO ORDER, ON 9TH DECEMBER, 2011, 10 ITA NO. 4697/M UM/2015 ASSESSMENT YEAR: 2008 - 09 THE ASSESSING OFFICER RECORDED REASONS IN TERMS OF SECTION 1 47 OF THE ACT AND FORMULATED A BELIEF THAT CERT AIN INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR THE YEAR UNDER CONSIDERATION AND ACCORDINGLY HE ISSUED A NOTICE U/S 148 OF THE ACT. THE AO COMPLETED THE A SSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT DATED 11TH MARCH, 2013 MAKING SAME ADDITION AS MADE BY TPO. 4.5. THE ONLY REASON FO R RE - OPENING OF ASSESSMENT U/S 147 WAS THE TPO ORDER WHICH ITSELF IS ILLEGAL & INVALID AS ITS LA CK JURISDICTION. IN OTHER WORDS, INITIATION OF NEW PROCEEDINGS ON THE BASIS OF A EARLIER INVALID PROCEEDING, WILL; ITSELF MAKE THE NEW PROCEEDING VOID - AB - IN I TIO. 4.6. FOR THE REASONS SET OUT ABOVE AND RESPECTFULLY FOLLOWING THE DECISIONS OF HON'BLE ITAT, P UNE AND DELHI (SUPRA) THE VERY IN ITIATION OF REASSESSMENT PROCEEDINGS U/S 147 IS NOT SU STAINABLE IN LAW. ACCORDINGLY, I CONSIDER IT PROPER AND APPROPRIATE TO HOLD THAT THE REASSESSMENT PROCEEDING SO INITIATED BY THE AO LACKS THE JURISDICTION UNDER THE PROVISIONS OF THE LAW. ACCOR D INGLY , T HE REASSESSMENT ORDER PASSED BY, THE AO IS ANNULLED. 9. WE NOTICE THAT THE LD. CIT (A) HAS HELD THE PROCEEDINGS U/S 147 OF THE ACT BAD IN LAW BY FOLLOWING THE VARIOUS DECISIONS OF THE TRIBUNAL INCLUDING THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MAXIMI ZE LEARNING PVT. LTD. VS. ACIT (SUPRA), WHEREIN THE TRIBUNAL UPHELD THE CONTENTION OF THE APPELLANT THAT THE ASSESSING OFFICER IS PRECLUDED FROM MAKING A REFERENCE TO TPO U/S 92CA (1) OF THE ACT FOR THE PURPOSE OF COMPUTING ARMS LENGTH PRICE IN RELATION T O THE INTERNATIONAL TRANSACTION WHEN NO ASSESSMENT PROCEEDINGS ARE PENDING IN RELATION TO THE RELEVANT ASSESSMENT YEAR. THE TRIBUNAL FURTHER UPHELD THE CONTENTION OF THE APPELLANT THAT FORMATION OF A BELIEF ABOUT ESCAPEMENT OF INCOME AS REQUIRED U/S 147 O F THE ACT, MERELY ON THE BASIS OF ORDER WITHOUT JURISDICTION OF THE TPO IS BAD IN LAW AND THE SAME NEEDS TO BE QUASHED. IN OUR CONSIDERED VIEW THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS OF THE AFORESAID CASES. SINCE, THE LD. CIT (A) HAS PASSED THE ORDER IN QUESTION BY FOLLOWING THE DECISIONS OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MAXIMIZE LEARNING PVT. LTD. VS. ACIT (SUPRA) AND THE DECISION OF THE DELHI 11 ITA NO. 4697/M UM/2015 ASSESSMENT YEAR: 2008 - 09 BENCH OF THE TRIBUNAL IN THE CASE OF XL INDIA BUSINESS SERVICES PVT. LTD. VS. ACIT (SUPRA), WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A) TO INTERFERE WITH. MOREOVER, THE LD. DR DID NOT BRING TO OUR NOTICE ANY DECISION CONTRARY TO THE FINDINGS OF THE LD. CIT (A) IN THE PRESENT CASE . HENCE, WE DO NOT FIND ANY MERIT I N THE APPEAL OF THE REVENUE . A CCORDINGLY, WE UPHOLD THE ORDER DATED 30.03.2015 PASSED BY THE LD. CIT (A) AND DISMISS BOTH THE GROUNDS OF THE APPEAL OF THE REVENUE. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR A SSESSMENT YEAR 2008 - 2009 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY , 2019 . SD/ - SD/ - ( G.S. PANNU ) ( RAM LAL NEGI ) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; DATED: 22 / 02 / 201 9 ALINDRA, PS / 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