ITA Nos. 51 and 52/PNJ/2012, (Assessment Year: 2006-2007). Case: Gigabyte Technology (India) Pvt. Ltd. Vs Commissioner of Income Tax. ITAT (Income Tax Appellate Tribunal)
| Case Number | ITA Nos. 51 and 52/PNJ/2012, (Assessment Year: 2006-2007) |
| Counsel | For Appellant: Vishal Kalra, Adv. and For Respondents: Asha Desai, DR |
| Judges | P.K. Bansal, Member (A) and D.T. Garasia, Member (J) |
| Issue | Income Tax Act, 1961 - Sections 119, 120, 129, 143, 143(1)(a), 143(2), 143(3), 144A, 144B, 144B(2), 144B(4), 144C, 144C(2), 144C(iii), 147, 153, 153(1)(a)(iii), 254, 263, 263(1), 92C(3), 92CA |
| Judgement Date | October 31, 2014 |
| Court | ITAT (Income Tax Appellate Tribunal) |
Order:
P.K. Bansal, Member (A), (ITAT Panaji Bench)
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ITA NO. 51/PNJ/2012 has been filed against the order of CIT dt. 20.3.2012 passed u/s. 263 by taking the following effective grounds of appeal:
"Based on the facts and circumstances of the case, Gigabyte Technology (India) Private Limited; (hereinafter referred to as "the Appellant"), respectfully submits appeal on the following grounds, with respect to the order passed by the learned Commissioner of Income-Tax, Panaji-Goa ("CIT") under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the "Act"):
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That on the facts and circumstances of the case and in law the impugned order dated March 20, 2012 passed by the CIT under section 263 of the Act is beyond jurisdiction, bad in law and void ab initio.
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That the CIT erred on fact and in law in exercising revisionary powers under section 263 holding that the assessment order dated December 18, 2009, passed under section 143(3) of the Act was erroneous and prejudicial to the interests of the Revenue without assuming proper jurisdiction and without satisfying the prerequisite conditions of that section.
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That the CIT erred on facts and in law in not appreciating that the assessment order was passed after detailed examination/enquiries and proper application of mind by the assessing officer, thus the CIT exceeded his jurisdiction in revising the assessment order dated December 18, 2009.
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That the CIT erred on facts and in law and exceeded his jurisdiction in cancelling the entire assessment order and directing the assessing officer to make de-novo assessment.
The above grounds are independent and without prejudice to each other."
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ITA NO. 52/PNJ/2012 has been filed against the order of CIT(A) dt. 30.3.2012 by taking the following effective grounds of appeal:
"1. That the CIT(A) erred on facts and in law in dismissing the appeal filed by the appellant as infructuous, on the ground that the assessment under appeal has been set aside by the CIT under section 263 of the Income Tax Act, 1961 ("Act").
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That the CIT(A) erred on facts and in law in not adjudicating on merits the following issues raised in appeal:
a. The learned TPO erred by passing an order under section 92CA of the Act without providing an opportunity of being heard to the Appellant. This was especially in view of the fact that the TPO for the case i.e. Mr. Narendra Kumar had been transferred. The Appellant was not officially informed of such transfer of case to another TPO i.e. Mr. D. Prabhakar Reddy who was the Joint director of Income Tax (Transfer Pricing)-1, Bangalore. The said order was passed without affording any further opportunity of hearing to the Appellant by the new TPO.
b. The learned AO/TPO erred in rejecting two out of the three comparables selected by the Appellant on grounds of different financial year ending and functional incomparability.
c. The learned AO/TPO erred in including additional companies, which were functionally dissimilar to the activities undertaken by the Appellant.
d. The learned AO/TPO erred in computing incorrect margins of comparable companies.
e. The learned AO/TPO erred in rejecting usage of multiple year data by the Appellant and using only the current year (i.e. financial year 2005-06) data for computation of arm's length price.
f. The learned AO erred in not accepting the arm's length price determined by the Appellant, and in choosing to determine the arm's length price by making reference to the TPO even though none of the conditions laid down under section 92C(3) of the Act, were satisfied.
The above grounds are independent and without prejudice to each other."
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Since both the appeals relate to the same Assessee, for the sake of convenience both these appeals are decided by this common order.
ITA NO. 51/PNJ/2012:
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There is delay of 8 days in filing this appeal. The Assessee has filed application for condonation of delay relying on the decision of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji, 167 ITR 471 (SC). After hearing the rival submissions, we are of the view that the Assessee has been prevented by sufficient cause to file the appeal within the stipulated time. There is delay of only 7 days. We, therefore, condone the same.
4.1. This appeal has been filed by the Assessee against the order of CIT passed u/s. 263. The Assessee has challenged the order on legality. The brief facts relating to this case are that the CIT noted after calling for the records that the AO made addition towards TPO adjustment u/s. 92CA amounting to Rs. 7,30,40,428/- pursuant to the order passed u/s. 92CA dt. 29.10.2009 which was received by him on 30.11.2009. The AO after receipt of TPOs order has given opportunity to the Assessee vide letter dt. 10.12.2009 and after hearing and considering the submissions of the Assessee dt. 17.12.2009, the AO passed order u/s. 143(3) on 18.12.2009. The CIT noted that the AO before passing the order u/s. 143(3) has not sent any draft assessment order to the Assessee as is required u/s. 144C of the Income Tax Act inserted by the Finance Act, 2009 w.e.f. 1.4.2009 so that the Assessee could have raised its objections before the Dispute Resolution Panel. The CIT was of the opinion that the order u/s. 143(3) has not been passed in accordance with the provisions of Sec. 144C and accordingly invoked jurisdiction u/s. 263 as he was of the opinion that the order was erroneous and prejudicial to the interest of the revenue. Accordingly, notice u/s. 263(1) dt. 23.2.2012 has been issued to the Assessee stating therein that since the AO has failed to provide the draft assessment order before passing order u/s. 143(3) of the Income Tax Act, the AO has violated the principles of natural justice and, therefore, the order passed is erroneous and therefore he proposed to pass appropriate order u/s. 263 of the Income Tax Act for setting aside the assessment. Opportunity was given to the Assessee in this regard vide notice dt. 23.2.2012. Before CIT the Assessee submitted written submissions vide letter dt. 19.3.2012 stating therein that the order passed by the AO cannot be termed as erroneous or prejudicial requiring revisionary jurisdiction u/s. 263. The AO has completed the assessment after protracted hearing calling for information from the Assessee, considering the explanation filed by the Assessee and after due application of mind. The Assessee also filed details in relation to international transactions with its associated enterprises. Reliance was placed in this regard on the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 as well as that of Hon'ble Punjab & Haryana High Court in the case of Hari Iron Trading Co. vs. CIT, 263 ITR 437 (P & H). It was also contended that the jurisdiction u/s. 263 is not to set aside unfavourable order. It was also contended that the provisions of Sec. 144C are similar to the provisions of erstwhile provisions of Sec. 144B. Courts in the context of Sec. 144B of the Act have held that merely because the procedure laid down in Sec. 144B of the Act has not been followed, the same would not suffice to exercise revisionary powers available to the CIT u/s. 263 of the Act. Reliance was placed on the following decisions:
i) Krishnamurthy (V.G.) vs. CIT, 152 ITR 683 (Kar)
ii) Maharaja Raja Pawer Dewas (H.H.) vs. CIT, 138 ITR 518 (MP)
iii) Nandlal Bhandari and Sons vs. CIT, 147 ITR 710 (MP)
CIT after considering the submission of the Assessee noted that records showed that the AO has not provided draft assessment order to the Assessee before passing order u/s. 143(3). As per provisions of Sec. 144C of the Income Tax Act as enacted and inserted by the Finance Act, 2009 w.e.f. 1.4.2009 the draft assessment order has to be mandatorily provided to the Assessee before passing order u/s. 143(3) of the Income Tax Act for raising its objections before the Dispute Resolution Panel and therefore he was of the opinion that the order passed u/s. 143(3) is not in accordance with the provisions of Sec. 144C and the AO violated the principles of natural justice which may affect the legality of the order. Since the AO has not given the draft assessment order to the Assessee, the Assessee has lost the opportunity to raise its objections against the draft assessment order before the Dispute Resolution Panel and therefore the assessment...
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