Rectification order by DRP based on Rectification application by TPO is Not maintainable

Shapoorji Pallonji Bumi Armada Pvt Ltd Vs ACIT (ITAT Mumbai)

We have noted that the Dispute Resolution Panel, having rejected the rectification application filed by the Transfer Pricing Officer and having held that there is no mistake apparent in the direction dated 3^rd November 2020, have proceeded to rectify these DRP directions nevertheless. Undoubtedly, if the DRP was of the opinion that there are mistakes apparent in the directions issued by the DRP, they could have taken a suo motu cognizance of the same and initiated the proceedings by the issuance of show-cause notice, setting out clearly the reasons as to why such proceedings not be initiated, but that exercise has not been carried out. Whatever rectification has been carried out is on the basis of an application made by the Transfer Pricing Officer- an application which was not maintainable at all, and even after holding that there was no apparent mistake in the DRP directions, whereas a finding of the mistake being a mistake apparent in the DRP directions was a sine qua non for invoking the jurisdiction under rule 13.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

1. By way of this appeal, the assessee appellant has challenged the correctness of the order dated 2^nd June 2021 passed by the learned Assistant Commissioner of Income Tax, under section 154 read with sections 143(3) and 144C(13) of the Income Tax Act, 1961, for the assessment year 2016-17. As this order is passed pursuant to, and to give effect to, the directions dated 22^nd April 2021 of the Dispute Resolution Panel, this appeal is directly filed before us.

2. The core issues requiring our adjudication in this case, as learned representatives agree, are (i) whether the Dispute Resolution Panel was justified in passing the impugned order dated 22^nd April 2021, (ii) whether the Transfer Pricing Officer was justified in given effect, vide his order dated 31^st May 2021, to the directions contained in the said order, and, (iii) whether, based on this rectification order passed by the Dispute Resolution Panel and based on the TPO‟s resultant order giving effect thereto, and, whether the Assessing Officer was justified in, based on these order, passing the impugned order dated 2^nd June 2021 making an addition of Rs 6,68,10,000 as an arm’s length price adjustment.

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