Revisional jurisdiction u/s 263 rightly invoked as order passed without satisfying mandatory provisions of section 92CA: ITAT Mumbai

JP Morgan Chase Bank N.A J.P Morgan Tower Vs CIT (ITAT Mumbai)

ITAT Mumbai held that assessment order passed without satisfying mandatory provisions of section 92CA and CBDT instruction no. 3 of 2016 is order falling within the meaning of erroneous and prejudicial to the interest of revenue. Hence, revisional jurisdiction u/s. 263 of the Income Tax Act rightly invoked.

Facts- The present appeal is preferred by the assessee contesting invocation of revisional jurisdiction. It is alleged that the CIT has invoked revisional jurisdiction primarily on the ground that AO was mandatorily required to make reference to the Transfer Pricing Officer (TPO), but AO in violation of CBDT Instructions 3/2016 dated 10/03/2016 has failed to make reference to the TPO. Assessee mainly points out that the reasons given by CIT for invoking jurisdiction u/s. 263 of the Act are contrary to the facts on record.

Conclusion- The CBDT Instruction No.3 of 2016 sets out guidelines for implementation of the TP provisions , hence, a reference has to be made by the Assessing Officer to the TPO in accordance with provisions of section 92CA read with CBDT Instruction No.3/2016. The provisions of Section 92CA(3A) specifies the time line for passing of the order by TPO u/s. 92CA(3) of the Act. The TPO has to pass the order u/s. 92CA(3) at any time before 60 days prior to the date of expiry of limitation for completion of the assessment. Any reference made by the Assessing Officer to TPO in deviation in terms of approvals, time line, etc. that has the effect of jeopardizing the assessment would make the reference invalid. Such invalid reference is in fact no reference.

Held that AO completed the assessment giving a go bye to the mandatory provisions of section 92CA and CBDT Instruction No.3 of 2016. Such an assessment order definitely falls within the meaning of erroneous and prejudicial to the interest of Revenue as envisaged u/s. 263 of the Act.

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