Time Barred Reference By AO To TPO By Giving Go Bye To Mandate Of Sec 92CA Is Clearly Erroneous: Mumbai ITAT Upholds Revision U/s 263
Pankaj Bajpai
15 March 2024 2:30 PM GMT
Finding that the AO had received the approval from the office of CIT well before the last date for passing of the TP order, but went in slumber and held on to himself the approval from CIT for more than six months, the Mumbai ITAT ruled that the reference made by Assessing Officer to the TPO was clearly time barred and invalid.The ITAT therefore upheld the CIT's invoking revisional...
Finding that the AO had received the approval from the office of CIT well before the last date for passing of the TP order, but went in slumber and held on to himself the approval from CIT for more than six months, the Mumbai ITAT ruled that the reference made by Assessing Officer to the TPO was clearly time barred and invalid.
The ITAT therefore upheld the CIT's invoking revisional jurisdiction u/s 263 in case of assessee for AY 2018-19.
The Bench comprising Vikas Awasthy (Judicial Member) and Ms. Padmavathy S. (Accountant Member) observed that “The Assessing Officer 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”. (Para 11)
The Bench noted that the assessee contended that CIT exercised revisionary power based on AO's failure to refer the case to TPO as mandated by CBDT Instruction No. 3/2016.
The Bench referred to the Assessee's argument that CIT's reasons for invoking Sec. 263 were contrary to the facts on record, and highlighted a timeline indicating that AO sought approval for TPO's reference on 20.09.2021 but TPO rejected the same citing expiry of the deadline.
The Bench noted that pursuant to this, AO proposed the initiation of 263 proceedings to CIT citing that time barring on ITBA portal was 30.09.2022 and claiming that the final assessment was prejudicial to Revenue's interest.
The Bench observed that “there is nothing wrong, if, the Assessing Officer initiates a proposal for invoking revisional jurisdiction u/s. 263 of the Act and thereafter, the CIT examine the record and after considering the same comes to the conclusion that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. The conditions of sub-section(1) to Section 263 of the Act are satisfied if the CIT independently examines the record, apply his mind dehors the fact that the proposal was made by the Assessing Officer”.
The Bench explained that the AO received CIT's approval within time, however, held it to himself and made the reference to TPO when the time period to pass the order by TPO had already elapsed.
Thus, the Bench opined that AO did not adhere to the mandatory provisions of Sec.92CA and CBDT Instruction, thus, order qualified as erroneous and prejudicial to Revenue's interest.
Limitation to complete assessment should be strictly determined as per the Act and not the portal dates and it is a settled legal position that Board Circulars, notifications and OMs are binding on AO, emphasized the Bench.
Consequently, the ITAT upheld the CIT's action of invoking revisional jurisdiction u/s. 263.
Counsel for Appellant/ Assessee: P.J. Pardiwala & Madhur Agrawal
Counsel for Respondent/ Revenue: Ajay Kumar Sharma
Case Title: JP Morgan Chase Bank N.A vs CIT
Case Number: ITA No 1235/MUM/2022
Click here to read/ download the Order
