M/S.acme Commodities Pvt.ltd v. Deputy Commissioner Of Income Tax, Transfer Pricing Officer-1(1) Room

CORAM M/s.Acme Commodities Pvt.Ltd.,No.10, Plot No.17, Perumal Nagar,1[st] Street, Nanganallur, Chennai 600 061Rep.by its Director, K.R.Sangeetha .. Petitioner vs. 1. Deputy Commissioner of Income Tax, Transfer Pricing Officer-1(1) Room No.504, BSNL Building Tower 1, No.16, Greams road, Chennai. 2. The Deputy Commissioner of Income Tax, Corporate Circle 1 (1), 121, Mahatma Gandhi Salai, Nungambakkam, Chennai 600 034. .. Respondents Prayer : Writ petition is filed under Article 227 of theConstitution of India, praying for a writ of certiorarifiedMandamus calling for the records of the first respondent andquash the impugned order bearing File No.A-108/TPO-1(1)/A.Y.2014-15 dated 31.10.2017 of the Income Tax Act, 1961 for theAssessment Year 2014-15 on the file of the first respondent anddirecting the respondent to pass the order after giving thepetitioenr adequate opportunity. Petitioner an income tax assessee is an importer of rawcashew nut in shells. The petitioner claims to be selling themas such and after further processing in the domestic market.The 1[st] respondent Deputy Commissioner of Income Tax, Transfer https://hcservices.ecourts.gov.in/hcservices/ Pricing Officer issued a Show Cause Notice dated 29.9.2017 tothe petitioner for the Assessment Year 2014-15 and called uponthe petitioner to show cause as to why Arms-Length Price (ALP)adopted by the petitioner in its international transactionshould not be determined at Rs.147,47,64,740/- and why anadjustment of Rs. 5,39,22,216/- should not be made. 2. The petitioner had adopted Comparable Uncontrolled Price(CUP) as the Most Appropriate Method. The 1[st] respondent howeverfelt that the raw cashew nut sold by the petitioner with that ofthe average annual rate of third-party was not reasonable andtherefore the aforesaid method adopted by the petitioner wasliable to be rejected. 3. The 1[st] respondent further felt that the petitioner hadnot submitted any supporting proof at which the AssociatedEnterprises adopted the price in its transaction with the 3[rd]parties. It was further stated that the petitioner had notsubstantiated the Comparable Uncontrolled Price (CUP) properlywith reference to the contractual terms, economic circumstancesand the business strategies etc. 4. Under the circumstances, the 1[st] respondent adoptedtransactional Net Margin Method (TNMM) in the said show causenotice dated 29.09.2017. 5. The petitioner replied to the above Show Cause Noticevide reply dated 19.10.2017 and 24.10.2017. Meanwhile, the 1[st]respondent vide email dated 27.10.2017 furnished documents. Thepetitioner also filed its further reply dated 30.10.2017 andanother reply of the same date. On the following day, theimpugned order has been passed by the 1[st] respondent. 6. It is the contention of the petitioner that the impugnedorder has been passed without the following principal ofnatural justice and new materials were relied while passing theimpugned order. 7. Respondent in their counter have justified the impugnedorder and that on receipt of the reference under Section 92 CAof Income Tax Act, 1961 from the 2[nd] respondent, notice wasissued by the 1[st] respondent on 07.11.2016 and the petitioner washeard on various dates on 09.02.2017, 20.02.2017, 01.03.2017,22.03.2017, 17.07.2017, 07.08.2017, 25.09.2017, and 28.09.2017respectively. 8. According to the respondents, the petitioner has notsubstantiated the Arm’s-Length Price (Arm) through theComparable Uncontrolled Price (CUP) as the Most AppropriateMethod and that after issue of the Show-Cause Notice, thepetitioner was heard through their newly appointed authorised representatives who appeared on 25.10.2017 and presented anadditional reply. 7. Respondent in their counter have justified the impugnedorder and that on receipt of the reference under Section 92 CAof Income Tax Act, 1961 from the 2[nd] respondent, notice wasissued by the 1[st] respondent on 07.11.2016 and the petitioner washeard on various dates on 09.02.2017, 20.02.2017, 01.03.2017,22.03.2017, 17.07.2017, 07.08.2017, 25.09.2017, and 28.09.2017respectively. 8. According to the respondents, the petitioner has notsubstantiated the Arm’s-Length Price (Arm) through theComparable Uncontrolled Price (CUP) as the Most AppropriateMethod and that after issue of the Show-Cause Notice, thepetitioner was heard through their newly appointed authorised representatives who appeared on 25.10.2017 and presented anadditional reply. 9. Though the 1[st] respondent has justified the impugnedorder on merits, from a reading of the impugned order, it isevident that the 1[st] respondent has relied upon the additionalmaterial which is in the form of a screenshot. The petitionerwas not put to notice of the same before the impugned order cameto be passed. Therefore, on this limited ground alone theimpugned order is quashed and the case is remitted back to the1[st] respondent to pass a speaking order. The content of theimpugned order shall be treated as corrigendum to the noticedated 29.9.2017 issued by the 1[st] respondent. 10. Petitioner may therefore file their writtenrepresentation if any, within a period of 30 days from the dateof receipt of this order. The 1[st] respondent shall pass aspeaking order within a period of 3 months thereafter, afterhearing the petitioner in person or through its authorisedrepresentative. 11. In case, the petitioner fails to co-operate with the 1[st]respondent in the remand proceeding, the 1[st] respondent shallpass a fresh order based on available records within theaforesaid period. 12. The present writ petition stands disposed with the aboveobservation. No cost. Consequently, connected miscellaneouspetition is closed. Sd/- Assistant Registrar(CS VI) //True Copy// kkd Sub Assistant Registrar To 1. The Deputy Commissioner of Income Tax, Transfer Pricing Officer-1(1) Room No.504, BSNL Building Tower 1, Room No.504, BSNL Building Tower 1, No.16, Greams road, Chennai. 2. The Deputy Commissioner of Income Tax, Corporate Circle 1 (1), 121, Mahatma Gandhi Salai, Nungambakkam, Chennai 600 034. Corporate Circle 1 (1), 121, Mahatma Gandhi Salai, Nungambakkam, Chennai 600 034. +1cc to Mr.Wv.Balaji, Advocate, S.R.No.103261+1cc to M/s.Hema Murali Krishnan, Advocate, S.R.No.102701 W.P.No.29223 of 2017 and W.M.P.No.31475 of 2017 MP(CO)CS/11/02/2020