NT Back Office Services Pvt. Ltd., New Delhi V. ACIT, Circle- 18(2), New Delhi

ITA 7016/DEL/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 2687 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 23-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY I BARA
• Assessee Lawyers: ROHAN KHARE S
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Bonafide belief; Period of limitation; Reasonable cause; Bad and doubtful debts; Assessment record; Prejudicial to interest; Condonation of delay
• Section: 143(3); 263; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: I - 1 , NEW DELHI BEFORE SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 3890 /DEL/201 7 AY: 20 10 - 11 M/S NT BACK OFFICE SERVICES PVT. LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA P VT. LTD.) 7/6, SARVAPRIYA VIHAR (LGF) NEW DELHI 110 016 PAN: AACCG2046N VS. PR. CIT - 06 ROOM NO. 418 C.R. BUILDING I.P.ESTATE NEW DELHI & ITA NO. 7016 /DEL/2017 AY: 20 10 - 11 M/S NT BACK OFFICE SERVICES PVT. LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT. LTD.) 7/6, SARVAPRIYA VIHAR (LGF) NEW DELHI 110 016 PAN: AACCG2046N VS. ACIT, CIRCLE 18(2) ROOM NO. 212 C.R. BUILDING NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEEPAK CHOPRA AND SHRI ROHAN KHARE, ADVOCATES DEPARTMENT BY : SH. SANJAY I BARA, CIT, DR DATE OF HEARING : 0 8/10/ 2018 DATE OF PRONOUNCEMENT : 11 /10/ 2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL S HA VE BEEN FILED BY ASSESSEE AGAINST ORDER S DATED 23.10.2015 PASSED BY LD. PRINCIPAL COMMISSIONER OF INCOME TAX VI (LD.PR. CIT ) , NEW DELHI , AND FINAL ASSESSMENT ORDER DATED 24.10.2017 PASSED U/S 143(3) R.W.S.144C(13) OF THE INCOME TAX ACT, 1961 (THE ACT) ON THE FOLLOWING GROUNDS OF APPEAL: ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 2 ITA NO.3890/DEL/17 A.Y. 2010 - 11 ( AGAINST ORDER PASSED U/S 263 OF THE ACT). 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY THE PR. COMMISSIONER OF INCOME TAX (APPEALS) ['PR. CIT'] IS BAD IN LAW VOID AB - INITIO AND IS LIABLE TO BE QUASHED. 2. THAT THE PR . CIT ERRED IN EXERCISING JURISDICTION U / S 263 OF THE ACT SINCE THE REQUISITE CONDITIONS OF AN ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WERE NOT SATISFIED. 3. THAT THE PR. CIT ERRED IN INITIATING PROCEEDINGS UNDER SECTION 263 OF THE INCOME - TAX ACT, 1961 ('ACT') ON THE BASIS OF AN ORDER WHICH WAS PASSED IN CONTRAVENTION OF THE MANDATE AS PER SECTION 144C OF THE ACT AND HENCE WAS VOID AB INITIO AND AS SUCH NO PROCEEDINGS COULD HAVE BEEN INITIATED ON THE BASIS OF AN INVALID/IL LEGAL ORDER. 4. THAT THE PR.CIT ALSO ERRED IN EXERCISING JURISDICTION U/S 263 WHICH POSTULATES THE EXISTENCE OF AN ORDER AND THE FINAL ASSESSMENT ORDER PASSED IN CONTRAVENTION OF S. 144C WAS NON - EST IN LAW AND AS SUCH DEPRIVED THE PR. CIT FROM EXERCISING JURISDICTION. 5. THAT THE PR. CIT FAILED TO TAKE COGNISANCE OF THE FACT THAT THE ASSESSING OFFICER IN THE ORIGINAL PROCEEDINGS HAD PASSED A FINAL ASSESSMENT ORDER AS OPPOSED TO A DRAFT ASSESSMENT ORDER AND THEREBY FAILURE TO ADHERE TO THE MANDATORY PROVIS IONS OF S.144C OF THE ACT RESULTED IN THE INVALIDATION OF THE FINAL ASSESSMENT ORDER. 6. THAT THE APPELLANT SEEKS LIBERTY TO ADD, ALTER, AMEND, FOREGO OR OTHERWISE MODIFY THE GROUNDS AT THE TIME OF HEARING. ITA NO. 7016 /DEL/17 A.Y. 2010 - 11 (AGAINST FINAL ASSESSMENT ORDER ) 1. JURISDICTIONAL GROUND 1.1 . THAT THE ASSESSMENT ORDER OF THE ASSESSING OFFICER ('AO') IS WITHOUT JURISDICTION, VOID - AB - INITIO AND IS LIABLE TO BE QUASHED. 1.2 . THAT THE PR. COMMISSIONER OUGHT TO HAVE CONSIDERED THAT THE POWER U/S 263 OF THE ACT CAN ONLY BE EXERCISED AGAINST A 'VALID ORDER' WHICH THE FINAL ORDER DATED 30.03.2014 WAS NOT AND THE SAME WAS NON - EST IN LAW BEING PASSED AGAINST THE MANDATE OF S. 144C O F THE INCOME TAX ACT, 1961 ('ACT'). 1.3 . THAT THE PR. COMMISSIONER GROSSLY ERRED IN EXERCISING JURISDICTION U/S 263 OF THE ACT WHICH GAVE RISE TO THE CURRENT PROCEEDINGS WITHOUT APPRECIATING THAT TO EXERCISE SUCH JURISDICTION THERE MUST EXIST A VALID OR DER ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 3 AND THE PROVISIONS OF S. 263 CAN NOT BE RESORTED TO WHERE THERE WAS NO ORDER IN THE EYES OF LAW. 1.4. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS THE AO OUGHT TO HAVE CONSIDERED THAT ONCE A REFERENCE U/S 92CA(1) OF THE ACT WAS MADE IN THE ORIGINAL PRO CEEDINGS TO THE TRANSFER PRICING OFFICER, IT WAS INCUMBENT UPON HIM TO FORWARD A DRAFT ASSESSMENT ORDER INSTEAD OF PASSING A FINAL ASSESSMENT ORDER DATED 30.03.2014 FAILING WHICH THE ENTIRE ASSESSMENT PROCEEDINGS AND ALL CONSEQUENTIAL PROCEEDINGS ARE INVAL ID, NON - EST AND VOID AB INITIO. 1.5 . THAT WITHOUT PREJUDICE, POS T THE 263 REMAND WHERE THE PR. CIT HAD DIRECTED THE ASSESSMENT TO BE MADE DE - NOVO IT WAS INCUMBENT ON THE AO TO MAKE A FRESH REFERENCE U/S 92CA(1) FAILING WHICH HE COULD NOT HAVE PASSED A DRAFT ORDER U/S 144C. 1.6 THAT WITHOUT PREJUDICE THERE BEING NO REFERENCE IN THE REMAND PROCEEDINGS AND THERE BEING NO CONSEQUENTIAL ORDER U/S 92CA(3) OF THE ACT THE APPELLANT WAS NOT AN ELIGIBLE ASSESSEE AS ENVISAGED U/S 144C(15)(B) OF THE ACT TO ENABL E TO AO TO PASS A DRAFT ASSESSMENT ORDER. 1.7 THAT WITHOUT PREJUDICE, THE AO OUGHT TO HAVE CONSIDERED THAT THE ORDER DATED 30.03.2014 PASSED U/S 143(3) OF THE ACT BEING PASSED AGAINST THE MANDATE OF S. 144C OF THE ACT WAS NON - EST AND VOID - AB - INITIO AND THUS, ALL CONSEQUENTIAL PROCEEDINGS AND ORDERS DATED 23.10.2015 PASSED BY THE PR. COMMISSIONER OF INCOME TAX AND THE DRAFT ORDER DATED 30.12.2016 PASSED BY THE AO WERE ALSO INVALID, VOID - AB - INITO AND NON - EST . 2. TRANSFER PRICING ADDITION - INR 14,27,57,112 / - 2.1 THAT THE AO GROSSLY ERRED IN REJECTING THE TRANSFER PRICING ANALYSIS CONDUCTED BY THE APPELLANT. 2.2 THAT THE AO GROSSLY ERRED I N NOT APPRECIATING THAT MISCELLANEOUS EXPENSES TO THE TUNE OF INR 10,57,50,999 BEING NON - OPERATING IN NATURE OUGHT T O HAVE BEEN EXCLUDED/REDUCED FROM THE TOTAL OPERATING EXPENSES OF INR 29,82,81,217 WHILST CALCULATING THE OPERATING MARGIN (OP/OC) OF THE TESTED PARTY. 2.3 THAT THE AO GROSSLY ERRED IN NOT APPRECIATING THAT THE MISCELLANEOUS EXPENSES COMPRISED OF MAT CRE DIT AND BAD DEBTS WRITTEN OFF WHICH BY NO STRETCH OF IMAGINATION COULD BE TAKEN AS OPERATING COST WHILST CALCULATING THE OP/OC . 2.4 THAT THE AO GROSSLY ERRED IN NOT ACCEPTING THE COMPARABLE COMPANIES PROPOSED BY THE APPELLANT AS THE SAID COMPANIES MET TH E FAR TEST AS ENVISAGED UNDER RULE 10B(2) OF THE INCOME TAX RULES, 1962. ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 4 2.5 THAT THE AO ERRED IN VIOLATING THE PROVISIONS OF RULE 10 B (2) OF THE RULES BY INTRODUCING NEW COMPARABLES WITHOUT CONSIDERING THE DIFFERENCES IN THE FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISKS ASSUMED BY SUCH COMPANIES VIS - A - VIS THE APPELLANT, THEREBY RESORTING TO CHERRY PICKING OF COMPARABLES. 2.6 THAT THE AO GROSSLY ERRED IN ADJUSTING THE APPELLANT'S COST BASE AS AGAINST THE PROVISIONS OF RULE 10 B(1)(E) OF THE RULES WHICH MANDATES ADJUSTMENT ONLY ON COMPARABLES. CORPORATE TAX ADDITIONS . JURISDICTIONAL GROUND : - 3 THAT THE CORPORATE TAX ADDITIONS MADE BY THE A O ARE COMPLETELY INVALID SINCE THERE IS NO DISCUSSION I N THE IMPUGNED ORDER REGARDING MAKING SUCH ADDITIONS/DISALLOWANCES. 4. DISALLOWANCE OF BAD DEBTS - INR 9,40,37,338/ - 4.1 THAT THE A O ERRED IN CONFIRMING THE ADDITION OF ACCOUNT OF BAD DEBTS WIT HOUT APPRECIATING THAT THE SAID DEBTS WERE WRITTEN OFF OWING TO THE BUSINESS OF THE APPELLANT SHUTTING DOWN DURING THE IMPUGNED YEAR. 4.2 THAT THE A.O. GROSSLY ERRED IN NOT APPRECIATING THAT IT IS A WELL SETTLED PRINCIPLE OF LAW THAT IT IS NOT NECES SARY FOR THE APPELLANT TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE AND HAT IT IS ENOUGH IF THE BAD DEBT HAS BEEN WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS OF THE APPELLANT. 4.3 THAT THE A O GROSSLY ERRED IN NOT APPRECIATING THE DETAILE D EVIDENCES FILED BY THE APPELLANT TO SUBSTANTIATE T HE CLAIM AND DISALLOWED THE SAME WITHOUT ANY JUSTIFICATION. 5. ADDITION ON ACCOUNT OF CESSATION OF LIABILITY U/S 41 - I NR 84,00,000 / - 5.1 THAT THE AO GROSSLY ERRED IN MAKING THE SAID ADDITION EVEN THOUGH THE APPELLANT HAD DISCHARGED ITS ONUS BY PROVIDING DETAILED CONFIRMATIONS/SUBMISSIONS FOR THE SAME. 5.2 THAT THE AO FURTHER ERRED IN NOT APPRECIATING THAT THE SAID AMOUNT WAS DULY REFLECTE D IN THE BOOKS OF ACCOUNTS OF THE APPELLANT AS WELL AS THE RECIPIENT AND MADE THE SAID ADDITION WITHOUT ANY REASONING. 6. ADDITION ON ACCOUNT OF CESSATION OF LIABILITY U/S 41 - INR 1,34,34,472 / - 6.1 THAT THE AO GROSSLY ERRED IN MAKING THE SAID ADDITION U/S 41 OF THE ACT ON AN AD - HOC BASIS WITHOUT APPRECIATING THAT THE SAID AMOUNT REPRESENTED PROVISIONS CREATED FOR STATUTORY AND OTHER LIABILITIES AND WERE NEVER CLAIMED AS AN EXPENDITURE IN THE PRECEDIN G YEARS. ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 5 6.2 THAT THE AO GROSSLY ERRED IN NOT APPRECIATING THE MANDATE OF S. 41 OF ACT AND IGNORING THE FACT THAT THE SAID PROVISIONS WERE NEVER CLAIMED AS EXPENSES IN THE PRECEDING YEARS. 7. DISALLOWANCE OF GENERAL/MISCELLANEOUS EXPENSES - INR 1,45,3 6,670 7.1 THAT THE AO GROSSLY ERRED IN WRONGLY TERMING THAT SAID EXPENSES AS GENERAL/MISCELLANEOUS WHEN THE SAID EXPENSES WERE ON ACCOUNT OF FOREIGN EXCHANGE LOSS INCURRED BY THE APPELLANT DURING THE IMPUGNED YEAR AS EVIDENT FROM THE BALANCE SHEET OF THE APPELLANT. 7.2 THAT THE AO COMPLETELY ERRED IN NOT APPRECIATING THAT THE SAID EXPENSES WERE OPERATING IN NATURE AND AROSE ON ACCOUNT OF REVENUE TRANSACTIONS FROM OPERATIONS AND HENCE THE SAME WAS AN ALLOWABLE EXPENDITURE. 8. DISALLOWANCE U / S 40(A)(IA) - INR 5,58,86,447 7.1 THE AO GROSSLY ERRED IN MAKING THE DISALLOWANCE ON AN AD - HOC BASIS WITHOUT APPRECIATING THE TDS DEDUCTED WAS DULY REFLECTED IN THE OLTAS. 7.2 THE AO FURTHER ERRED IN MAKING THE DISALLOWANCE WITHOUT APPRECIATING THE DET AILED SUBMISSIONS/EVIDENCES SUBMITTED BY THE APPELLANT TO CORROBORATE ITS CLAIM. 7.3 THE AO ALSO ERRED IN NOT APPRECIATING THAT THE APPELLANT HAD DULY DEDUCTED TAX ON EXPENSES ON WHICH TDS WAS MANDATED AND FURTHER ERRED IN NOT APPRECIATING THAT TDS LIABI LITY DOES NOT ARISE ON GENERAL AND ADMINISTRATIVE EXPENSES. THE ABOVE GROUNDS OF APPEAL ARE MUTUALLY EXCLUSIVE AND WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. THE APPELLANT PRAYS FOR APPROPRIATE RELIEF BASED ON THE SAID GROUNDS OF APPEAL AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. BRIEF FACTS OF THE CASE ARE AS UNDER. RE TURN OF INCOME WAS FILED BY ASSESSEE ON 22.01.2011 DECLARING LOSS OF RS.12,25,17,735/ - . NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 30.08.2011 . DURING ASSESSMENT PROCEEDINGS LD.AO OBSERVED THAT ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTION WITH ITS ASSOCIATED ENTERPRISE (A.E. ) AND ACCORDINGLY R EFERENCE WAS MADE TO LD. TRANSFER PRICING OFFICER (LD.TPO). ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 6 LD.TPO PASSED ORDER U/S 92CA(3) OF THE ACT ON 20.01.2014 PROPOSING AN ADJUSTMENT OF RS.14,27,57,112/ - . HOWEVER, WHILE PASSING ASSESSMENT ORDER DATED 30.03.2014 U/S 143(3) O F THE ACT LD.AO DID NOT INCORPORATE ADJUSTMENT PROPOSED BY LD.TPO . LD.PR.CIT THEREFORE INITIATED PROCEEDINGS U/S 263 OF THE ACT AND ISSUED SHOW CAUSE NOTICE O N 29.09.2015 AS FOLLOWS: THE INCOME TAX ASSESSMENT RECORDS OF THE ASSESSEE COMPANY FOR THE A.Y. 2010 - 11 HAVE BEEN CALLED FOR AND EXAMINED. I HAVE NOTICED THAT IN THIS CASE THE A.O. ERSTWHILE CIRCLE 13(1), NEW DELHI NOW CIRCLE 18(1), NEW DELHI HAD PASSED AN ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 30.03.2014 WITHOUT INCORPORATING ORDER OF THE TPO - I(2), NEW DELHI U/S 92CA(3) OF THE ACT ON 20.01.2014 IN VIOLATION TO PROVISIONS OF SUB SECTION (4) OF SECTION 93CA OF THE ACT. IN VIEW OF THIS, THE ORDER PASSED BY A.O. U/S 143(3) OF THE ACT IS NOT ONLY PREJUDICIAL TO THE INTEREST OF REVENUE BUT ALSO ERRONEOUS IN LAW. I, THEREFORE, INTEND TO EXERCISE THE POWERS VESTED WITH ME U/S 263 OF THE ACT TO PASS AN APPROPRIATE ORDER. 2. 1 . A SSESSEE WAS REQUIRED TO SHOW CAUSE ON 07.10.2015 AS TO WHY AN ORDER U/S 263 OF THE ACT SHOULD NOT BE PASSED TO REVISE ASSESSMENT MADE U/S 143(3) OF THE ACT ON 30.03.2014 . THE CASE WAS DISCUSSED WITH DIRECTOR AND REPRESENTATIVE OF ASSESSEE AND DRAFT ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT DATED 30.03.2014 WAS HELD TO BE ERRONEOUS IN LAW IN SO FAR AS PREJUDICIAL TO INTEREST OF REVENUE. LD.PR.CIT ACCORDINGLY DIRECTED LD.AO AS UNDER. 6. IN VIEW OF THE FOREGOING DISCUSSION AND IN EXERCISE OF POWERS VESTED WITH PR.CIT - 06, NEW DELHI BY VIRTUE OF SECTION 263 OF THE ACT , IT IS HELD THAT THE ASSESSMENT ORDER PASSED BY THE DY.CIT, ERSTWHILE CIRCLE - 13(1), NEW DELHI, NOW CIRCLE - 18(1), NEW DELHI, U/S 143(3) OF THE ACT ON 30.3.2014 FOR THE A.Y. 2010 - 11 IS ERRONEOUS IN LAW SO FAR AS IT IS PREJUDICIAL TO INTEREST OF REVENUE OWIN G TO THE FAILURE ON THE PART OF THE A.O. TO FRAME THE ASSESSMENT U/S 14393) OF THE ACT IN CONFORMITY WITH THE ORDER OF THE TPO - I(2), NEW DELHI PASSED U/S 92CA(3) OF THE ACT ON 20.01.2014. 7. ACCORDINGLY, THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) ON 30.03.2014 IS SET ASIDE WITH THE DIRECTION TO FRAME THE ASSESSMENT DE NOVO AFTER CONSIDERING THE ORDER OF THE TPO - I(2), NEW DELHI PASSED U/S 92CA(3) OF THE ACT ON 20.01.2014, AS PER PROVISIONS OF SEC.92CA(4) OF THE ACT AND ALSO AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 7 2. 2 . LD.A.O. ON RECEIPT OF ORDER U/S 263 OF THE ACT DATED 30.12.2016 , PASSED D RAFT A SSESSMENT ORDER BY CONSIDERING ADDITIONS MADE BY LD.AO U/S 143(3) VIDE ORDER DATED 30.03.2014 AND T RANSFER P RICING ADJUSTMENT PROPOS ED BY LD.TPO VIDE ORDER DATED 20.01.2014. THE TAXABLE INCOME WAS THUS COMPUTED BY LD.AO AT RS.20,65,34,305/ - . 2. 3 . BEFORE SEC.263 PROCEEDINGS STARTED, ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A) AGAINST ORDER PASSED BY LD.A.O. DATED 30.03.2014 U/S 143(3) CHALLENGING ADDITIONS MADE THEREIN. SINCE, BY THEN, LD.PR.CIT ISSUED SHOW - CAUSE NOTICE TO A SSESSEE U/S 263 OF THE ACT , AND SUBSEQUENTLY PASSED ORDER DATED 23.10.2015 , ASSESSEE WITHDREW APPEAL FILED BEFORE LD.CIT(A) , WHICH WAS RECORDED V IDE ORDER DATED 16.02.2016. IMMEDIATELY AFTER WITHDRAWAL OF APPEAL FILED BEFORE LD.CIT(A), LD. A.O. INITIATED PENALTY PROCEEDINGS ON ADDITIONS MADE BY LD.AO ON CORPORATE TAX ADDITIONS MADE IN ASSESSMENT ORDER DATED 30.03.2014 PASSED U/S 143(3) OF THE ACT . LD. A.O. ISSUED SHOW - CAUSE NOTICE U/S 274 R.W.S. 271 OF THE ACT FOR IMPOSING PENALTY U/S 271(1)(C ) ON 14.03.2017. 2. 4 . ASSESSEE AFTER CONSULTING WITH LD.COUNSEL APPEARING BEFORE US, PREFERRED APPEAL BEFORE THIS TRIBUNAL AGAINST ORDER PASSED BY PR.C IT DATED 23.10.2015. THE APPEAL SO FILED BEFORE THIS TRIBUNAL WAS WITH DELAY OF 536 DAYS. ITA NO.3890/DEL/2017 3 . IN APPLICATION FOR CONDONATION OF DELAY FILED BY ASSESSEE, AFORESTATED FACTS HAVE BEEN ENUNCIATED. LD.COUNSEL SUBMITTED T HAT ASSESSEE WAS UNDER BONAFIDE BELIEF , AND THEREFORE NO APPEAL WAS PREFERRED AGAINST ORDER OF PR.CIT DATED 23.10.2015. HE SUBMITTED THAT GRAVE INJUSTICE WOULD BE CAUSED TO ASSESSEE IF ORDER DATED 23.10.2015 PASSED BY LD.PR.CIT IS NOT QUASHED/SET ASIDE. IN THE APPL ICATION FOR CONDONATION OF DELAY FILED BEFORE US DATED 15 TH SEPTEMBER, 2017 ASSESSEE SUBMITTED THAT , ON ACCOUNT OF MIS - INTERPRETATION OF ORDER DATED 16.02.2016 PASSED BY LD.CIT(A) IN APPEAL FILED BY ASSESSEE AGAINST ASSESSMENT ORDER DATED 30.03.2014 , LD.A.O. IMPOSED PENALTY ON AN ASSUMPTION THAT CORPORATE TAX ADDITION HAS ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 8 ATTAINED FINALITY AND THAT THE STATUTORY RIGHT VESTED WITH ASSESSEE TO GET THE APPEAL ADJUDICATED ON MERITS HAS BEEN INFRINGED. HE THUS PRAYED FOR DELAY BEING CONDONED IN FILING APPEAL BY ASSESSEE AGAINST ORDER DATED 23.10.2015 PASSED BY LD.PR.CIT U/S 263 OF THE ACT. 4 . LD.CIT, D.R. SUBMITTED THAT ASSESSEE ADMITTED TO THE ORDER DATED 23.10.2015 PASSED BY LD.PR.CIT U/S 263 OF THE ACT FOR REVISING A ASSESSMENT ORDER DATED 30.03.2014 PASSED BY LD.A.O. U/S 143(3) OF THE ACT. HE RELIED ON PARA 4 OF ORDER PASSED BY LD. PR.CIT WHICH IS REPRODUCED HEREUNDER. 4. IN RESPONSE, SHRI RAHUL KHARE, DIRECTOR AND ADVOCATE OF THE ASSESSEE COMPANY ATTENDED AND VIDE NOTE SHEET ENTRY DATED 07.10.2015 SUBMITTED HIS NO OBJECTION TO THE ACTION PROPOSED U/S 263 OF THE ACT. HE THUS SUBMITTED THAT ASSESSEE ANYWAY CANNOT PREFER APPEAL BEFORE THIS TRIBUNAL AGAINST ORDER DATED 23.10.2015, PASSED BY LD.PR.CIT U/S 263 OF THE ACT. LD.CIT , DR SUBM ITTED THAT PRESENT APPEAL FILED AGAINST IMPUGNED ORDER PASSED BY PR.CIT U/S 263 IS AN AFTER THOUGHT , DUE TO PENALTY PROCEEDINGS INITIATED BY LD.AO. REFERRING TO SUBMISSIONS MADE BY ASSESSEE IN APPLICATION FOR CONDONATION OF DELAY, LD.CIT, DR SUBM I TTED THAT THERE IS NO BONAFIDE REASON FOR DELAY CAUSED IN FILING PRESENT APPEAL. 5 . WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF MATERIAL PLACED ON RECORD. 5 .1. ADMITTEDLY THERE IS A DELAY OF 563 DAYS IN FILING PRESENT APPE AL BEFORE THIS TRIBUNAL AGAINST IMPUGNED ORDER DATED 23.10.2015 PASSED BY LD.PR.CIT U/S 263 OF THE ACT . THE REASON FOR SUCH HUGE DELAY CITED BY ASSESSEE CANNOT BE ACCEPTED. AS RIGHTLY PUT BY LD.CIT, D.R. ASSESSEE HAS PREFERRED THIS APPEAL ONLY BECAUSE OF PENALTY PROCEEDINGS INITIATED BY LD.AO ON CORPORATE TAX ADDITIONS. THE ASSESSEE HAS NOT MADE OUT REASONABLE CAUSE THAT COULD JUSTIFY THE BONAFIDES IN FILING APPEAL BELATEDLY. EVEN OTHERWISE, HAD ASSESSEE TO PREFER APPEAL WITHIN PERIOD OF LIMITATION, IT COULD NOT HAVE STOOD THE TEST OF LAW , AS NO GRIEVANCE/HARDSHIP IS CAUSED TO ASSESSEE WITH THE LIMITED DIRECTIONS OF LD.PR.CIT, WHICH WAS TO OVERCOME THE ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 9 LAPSE OCCURRED IN ORDER DATED 30.03.2014. AND ASSESSEE THROUGH ITS REPRESENTATIVE ADMITTED TO D ECISION OF LD.PR.CIT, WITHOUT ANY OBJECTION, HAVING REGARDS TO PROVISION OF LAW APPLICABLE. 5 .2. WE ARE, THEREFORE, NOT INCLINED TO CONDONE THE DELAY OF 563 DAYS IN PREFERRING THE PRESENT APPEAL BEFORE THIS TRIBUNAL AGAINST ORDER DATED 23.10.2015 PASSED B Y LD.PR.CIT. SINCE WE ARE NOT CONDONING THE DELAY, WE DO NOT FIND IT NECESSARY TO ADJUDICATE UPON GROUNDS RAISED BY ASSESSEE IN PRESENT APPEAL. IN THE RESULT, WE DISMISS APPEAL IN ITA 3890/DEL/2017 IN LIMINE . 6. ITA NO.7016/DEL/2017 PR ESENT APPEA L FILED BY ASSESSEE AGAINST FINAL ASSESSMENT ORDER DATED 24.10.2017 PASSED BY LD.ACIT, CIRCLE 18(2), NEW DELHI. IT HAS BEEN SUBMITTED THAT LD.PR.CIT SET ASIDE ORDER PASSED BY LD.AO U/S 143(3) DATED 30.03.2014 , WITH DIRECTION TO FRAME ASSESSMENT DE - NOVO , A FTER CONSIDERING ORDER OF LD.TPO PASSED U/S 92CA(3) OF THE ACT ON 20.02.104 AS PER PROVISIONS OF S.92CA(4) OF THE ACT. IT IS SUBMITTED THAT LD.PR.CIT DIRECTED LD.AO TO GIVE PROPER OPPORTUNITY OF BEING HEARD TO ASSESSEE. 6.1. LD.COUNSEL SUBMITTED THAT PR.CIT VIDE ORDER DATED 23.10.2015 SET ASIDE ORIGINAL ASSESSMENT ORDER DATED 30.03.2014, BUT, WHILE PASSING D RAFT A SSESSMENT ORDER U/S 263 R.W.S. 143(3)/144C(1) OF THE ACT DATED 24.10.2017, HE COMPUTED ASSESSED INCOME BY CONSIDERING PROPOSED ADJUSTMENT OF RS.14,27,112/ - BY LD.TPO AND ADDITION IN RESPECT OF CORPORATE TAX OF RS.18.62 CRORES BY LD.AO ORIGINALLY WITHOUT FOLLOWING THE PROCEDURE LAID DOWN U/S 92CA OF THE ACT . HE SUBMITTED THAT LD.AO DID NOT FOLLOW DIRECTIONS ISSUED BY LD.PR.CIT FOR CONDUCTING ASSESSMENT DE - NOVO . HE SUBMITTED THAT LD.AO SHOULD HAVE AGAIN REFERRED TO TRANSFER PRICING OFFICER. I T WAS SUBMITTED THAT , ASSESSEE FILED OBJECTIONS BEFORE DRP , AND DRP VIDE ORDER DATED 07.09.2017 HELD A S UNDER. 2.2.5.1. IN VIEW OF THE ABOVE PROVISIONS IT IS CLEAR THAT THE PANEL HAS NO JURISDICTION OVER CASES WHERE THE TPO, AND THE TRANSFER PRICING ISSUE, IS NOT ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 10 INVOLVED, AS IS APPARENT FROM THE FACTS OF THE CASE MENTIONED EARLIER HEREIN ABOVE. THEREFORE, IT IS EVIDENT THAT THE CASE OF THE ASSESSEE IS NOT COVERED UNDER THE PROVISIONS OF SEC.144C(15) OF THE ACT AS THERE WAS NOT ANY ISSUE PERTAINING TO CROSS - BORDER TRANSACTIONS OR BUSINESS CONNECTION COUPLED WITH THE EXISTENCE OF A PERMANENT ESTAB LISHMENT, AND THEREFORE THE DRP IS OF THE VIEW THAT THE ASSESSEE S CASE IS BEYOND THE JURISDICTION OF THE DRP. 6.2. LD.COUNSEL SUBMITTED THAT LD. A.O. WHILE PASSING FINAL ASSESSMENT ORDER DATED 24.10.2017 CONFIRMED ADDITIONS MADE BY LD.AO IN DRAFT ASSE SSMENT ORDER. HE SUBMITTED THAT ENTIRE SEQUENCE OF ORDERS PASSED BY LD.AO IN THE FORM OF D RAFT A SSESSMENT O RDER, THEN DIRECTIONS ISSUED BY DRP AND FINAL ASSESSMENT ORDER (THE IMPUGNED ORDER ) IS NOT IN CONFORMITY WITH EACH OTHER. LD.COUNSEL SUBMITTED TH AT ONCE LD. PR.CIT SET ASIDE ORIGINAL ASSESSMENT ORDER DATED 30.03.2014 WITH A DIRECTION TO CONDUCT THE ASSESSMENT DE - NOVO , LD.AO IN COMPLETE VIOLATION OF PROVISIONS OF SEC.92CA . HE SUBMITTED THAT LD.AO MADE ADDITION WITHOUT GIVING PROPER OPPORTUNITY TO ASSESSEE. HE THUS SUBMITTED THAT FINAL ASSESSMENT ORDER DATED 24.10.2017 IS INVALID, NON - EST AND VOID - AB - INITIO. 6.3 . LD.CIT, D.R. SUBMITTED THAT M ERELY BECAUSE R EFERENCE HAS NOT BEEN MADE TO LD.TPO, THE DRAFT ASSESSMENT ORDER DATED 30.12.2016 DOES NOT BECOME INVALID/NON - EST. LD.CIT, DR SUBMITTED THAT THERE WAS NO NEED FOR LD.AO TO AGAIN REFER TO TRANSFER PRICING OFFICER, AS PROCEDURE LAID DOWN U/S 92CA OF THE ACT HAS BEEN FOLLOWED. LD.CIT,DR SUBMITTED THAT ONLY ERROR WAS THAT, LD.AO WHILE PASSING ORDER DATED 30.03.2014 FAILED TO INCORPORATE THE ADJUSTMENT WHICH WAS PROPOSED BY LD.TPO VIDE ORDER DATED 23.10.2015. HE SUBMITTED THAT LD.PR.CIT HELD ORIGINAL ASSESSMENT ORDER DATED 30.03.2014 TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE , ONLY FOR REASON THAT TRANSFER PRICING ADJUSTMENT PROPOSED BY LD.TPO VIDE ORDER DATED 20.01.2014 HAD NOT BEEN INCORPORATED THEREIN. LD.CIT,DR SUBMITTED THAT S OLELY FOR THIS REASON AND FOR LIMITED PURPOSE, ORIGINAL ORDER DATED 30.03.2014 WAS SET ASIDE. HE SUPPORTED FINAL ASSESSMENT ORDER PASSED BY LD.ACIT DATED 24.10.2017. 7. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 11 8 . DURING RELEVANT ASSESSMEN T YEAR, ASSESSEE ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES, PURSUANT TO WHICH REFERENCE WAS MADE BY LD.AO TO LD.TPO AS PER SEC.92CA OF THE ACT. LD.TPO, PASSED ORDER DATED 20/01/14 U/S 92CA(3) OF THE ACT , PROPOSING ADJUST MENT OF RS.14,27,57,112/ - . HOWEVER, LD.AO WHILE PASSING D RAFT A SSESSMENT ORDER DATED 30/03/14, FAILED TO INCORPORATE ADJUSTMENT PROPOSED BY LD.TPO, VIDE ORDER DATED 20/01/2014. LD.PR.CIT THUS ISSUED SHOW CAUSE NOTICE UNDER SECTION 263 ON THE GROUND THAT A S SESSING O FFICER FAILED TO CONSIDER ORDER PASSED BY LD.TPO DATED 20/01/14, WHICH WAS BINDING ON HIM AND THUS, TO THAT EXTENT, ASSESSMENT ORDER DATED 30/03/14 WAS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. LD.PR.CIT WHILE SETTING ASIDE ASSESSMENT ORDER DATED 30/03/14 DIRECTED LD. AO AS UNDER: 7. ACCORDINGLY, THE ASSESSMENT ORDER PASSED BY THE AO UNDER SECTION 143 (3) ON 30/03/14 IS SET ASIDE WITH THE DIRECTION TO FRAME THE ASSESSMENT DE NOVO , AFTER CONSIDERING THE ORDER OF THE T RANSFER P RICING O FFICER - I (2), NEW DELHI PASSED UNDER SECTION 92CA (3) OF THE I NCOME T AX A CT, 1961 ON 20/01/14 AS PER THE PROVISIONS OF SECTION 92 CA (4) OF THE I .T ACT AND ALSO AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 8. 1 . LD. COUNSEL WH ILE ADVANCING HIS ARGUMENTS BEFORE US SUBMITTED THAT, POST SEC. 263 ORDER PASSED BY LD.PR.CIT, LD. AO BEFORE PASSING DRAFT ASSESSMENT ORDER DATED 30/12/16, SHOULD HAVE ONCE AGAIN MADE REFERENCE UNDER SECTION 92CA OF THE ACT TO TRANSFER PRICING OFFICER. 8.2 . ON PERUSAL OF DRAFT ASSESSMENT ORDER DATED 30/12/16 PASSED BY LD. AO POST ORDER PASSED UNDER SECTION 263, IT IS OBSERVED THAT A SSESSING O FFICER ISSUED NOTICE TO ASSESSEE WITHOUT REFERRING TO LD.TPO. 8. 3 . AS WE HAVE ALREADY DISMISSED APPEAL FILED BY ASSESSEE AGAINST ORDER U/S 263, THE DIRECTIONS THEREIN HAS ATTAINED FINALITY. WITH SPECIFIC DIRECTION IN O RDER PASSED BY LD.PR . CIT TO FRAME THE ASSESSMENT DE NOVO , WE ARE OF CONSIDERED OPINION THAT ASSESSING OFFICER SHOULD AGAIN REFER ASSESSEE S C ASE TO TRANSFER PRICING O FFICER FOR PURPOSES OF COMPUTING ALP OF INTERNATIONAL ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 12 TRANSACTIONS. THE SPECIFIC DIRECTION ISSUED BY LD.PR . CIT SHOULD BE FOLLOWED BY LD.A.O. BY FOLLOWING PROCEDURE LAID DOWN U/S 92CA. 8.4. WE THUS DIRECT LD.A.O. TO PASS DRAFT ASSESSMENT ORDER AFTER REFERRING THE ISSUE ONCE AGAIN TO LD.TPO. THE DRAFT ASSESSMENT ORDER SO PASSED SHALL BE THEN SUBJECT TO CHALLENGE BEFORE LD.DRP/CIT(A) BY ASSESSEE AS THE CASE MAY. THE DRP/CIT(A) UPON SUCH OBJECTIONS BEING RAISED BY ASSESSEE, SHALL PASS A REASONED ORDER ON MERITS. 8. 5 . ACCORDINGLY WE SET ASIDE THE ISSUE TO LD.A.O. TO PASS A FRESH DRAFT ASSESSMENT ORDER BY FOLLOWING DUE PROCESS OF LAW AS PER SEC.92CA OF THE ACT. NEEDLESS TO SAY THAT ASSESSEE SHALL BE ISSUED NOTICE AND PROPER OPPORT UNITY SHALL BE GIVEN. 9 . ACCORDINGLY GROUNDS NO. 2 - 8 ON MERITS RAISED BY ASSESSEE ARE SET - ASIDE TO LD.A.O. FOR PROPER ADJUDICATION AS PER LAW. OTHER JURISDICTIONAL GROUNDS NOS. 1.1 TO 1.7 RAISED BY ASSESSEE STANDS DISMISSED AS DISCUSSED ABOVE. 1 0 . IN THE RESULT , ITA NO. 3890/D EL/20 17 STANDS DISMISSED AND ITA NO. 7016/ D EL/2017 STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE O PEN C OURT ON 1 1 / 1 0 / 2 0 1 8 . S D / - S D / - (N.K.BILLAIYA) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 1 1 T H OCTOBER, 2018 *GMV ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 13 COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA NO. 3890/DEL/17 & ITA 7016/DEL/17, A.Y. 2010 - 11 M/S NT BACK OFFICE SERVICES P LTD. (FORMERLY KNOWN AS GLOBERIAN INDIA PVT.LTD.) 14 DRAFT DICTATED ON 08.10.18 DRAFT PLACED BEFORE AUTHOR DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER APPROVED DRAFT COMES TO THE SR. PS/PS KEPT FOR PRONOUNCEMENT ORDER UPLOADED ON FILE SENT TO BENCH CLERK DATE ON WHICH THE FILE GOES TO HEAD CLERK DATE ON WHICH FILE GOES TO A.R. DATE OF DISPATCH OF ORDER