Wp/11618/2016 Of Devas Multimedia Private Limited v. The Principal Commissioner Of Income-Tax

IN THE HIGH COURT OF KARNATAKA AT BBNGALURU| DATED THIS THE 27[‘T]DAY OF SEPTEMBER, 2019 BEFORE| THE HON’BLE MR.JUSTICE P.B. BAJANTHRI WRIT PETITION NO.11618 OF 2016 (TIT) BETWEEN: DEBVAS MULTIMEDIA PRIVATE LIMITEDUNIT 502, PRESTIGE MERIDIAN-1NO.209, M.G.ROAD,BANGALORE -560 OO]REPRESENTED BY ITSCOMPANY SKHCRETARYMR.VINOD SUNDER K._.. PHTITIONE (BY SRI.UDAYA HOLLA, SR. COUNSEL,FOR SRIL.NANDISHA PATEL, ADV.) AND: THER PRINCIPAL COMMISSIONER OF [INCOME-TABANGALORE-560 OO25 FLOOR, BMTC BUILDING80 FEET ROAD, 6 BLOCK|.KORAMANGALA|BANGALORE-560 095.... RESPONDENT| (BY SRI.K.V.ARAVIND AND SRI.DILIP M. ADVOCATES) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND2D", OF CONSTITUTION OF INDIA PRAYING TO DECLARE THATTHE.IMPUGNEDPROCEEDINGSINITIATEDBYTHE.RESPONDENT UNDER SECTION 263 OF THE ACT ARE OPPOSEDTO THERE SAID PROVISIONS AND THEREFORE WITHOUJURISDICTION AND BIC. THIS WRIT PRTITION HAVING BREN HRARD AND!RESHRVEBEON04.09.2019.ANT)COMINGONFORPRONOUNCEMENT OF ORDER THIS DAY, THE COURT MADE|THR FOLLOWING: | ORDER In the instant petition, petitioner has sought for the|following reliefs: (t) declaring that the impugned proceedingsinitiated by the Respondent under Section|263 of the Act are opposed to the saidprovisionsandthereforewithoutjurisdiction. (it)QuashingtheimpugnedNoticeNo.AACCD2059H/ PCIT-2/ 2015-1dated08.02.2016 (Annexure — A) issued by the|respondent. (ut) Pass such other orfurther order as this|Hon’ble Court may deem fit in the facts andcircumstances of the case, in the interestsofjustice and equity. 2. Petitioner is stated to have engaged in the businessof providing internet based multimedia and interactive dataservices to hand-held mobile terminals through a portfolio ofservices including streaming of video, audio and data as wellas web access, infotainment and social applications. It isstated that it was a unique project which is multifariousrequiring high skilled manpower with superior R & D eftortswere put in, large infrastructure, high vendor development efforts and funding. It was stated that there was noenterprise in India which could provide for such services aswere required by the petitioner. In this backdrop, petitioneriS an income tax assessee who had filed returns of income on23.09.2009 for the assessment year 2OO9-10 declaring loss|of Rs.21,72,93,/09/-. Petitioner’s return was selected for|the purpose of scrutiny and consequently, notice was issuedunder Section 143(2) of the Income Tax Act, 1961 (for short|‘Act 1961’) further, followed by another notice under Section|142(4) of the Act. In the process of assessment, a reference |was made to the Transfer Presiding Officer (TPO) undersection 92CA of the Act. Certain information were sought|from the petitioner in order to meet the assessment process.Petitioner is stated to have completed the requisite material|sought by the authorities. Thereafter, several inquiries weremade by the Assessing Officer (AO) as well as TPO. AOproceeded to pass a Drait Assessment Order under Section|144C for which the petitioner had certain objections and.matter was forwarded to Dispute Resolution Panel (for short|“‘DRP). 3. DRP consists of 3 Officers who are in the cadre of |Commissioner, who have examined the Drait assessmentorder and objections of the petitioner under Sub-clause ofsection 144 against Drait Assessment Order and DRP issuedcertain directions on 31.12.2003. Consequently, AO passedFinal Assessment Order on 31.01.2014. 3. DRP consists of 3 Officers who are in the cadre of |Commissioner, who have examined the Drait assessmentorder and objections of the petitioner under Sub-clause ofsection 144 against Drait Assessment Order and DRP issuedcertain directions on 31.12.2003. Consequently, AO passedFinal Assessment Order on 31.01.2014. 4. On 08.02.2016, Principal Commissioner of Income|Tax, Bengaluru while invoking Section 263 of Act, 1961issued a notice in respect of Assessment Order for the year2009-10 pursuant to the return filed by the petitioner on23.09.2009 declaring loss of Rs.21,72,53,/09/- read withthe conclusion of the assessment under Section 143(3) readwith Section 144C on 31.01.2014 while determining taxableincome of the asssessee at Rs.17,98,34,440/- whichresulted in net tax NHability at Rs.3,71,45,9160/-. Theaddition/disallowance made to arrive at the taxable income.The respondent aiter assessing various issues relating toinvestment made by Deutsche Telekom Asia Pvt. Ltd.,Telekom Centre Singapore and M.G.Chandrasekhar whohave invested USD 75000000 (INR 3232500000.00), INR30000 and 2839 Class C Equity Shares and 3000 Class E Equity Shares respectively and in terms of the investorsamount of intlow read with the number of shares and theface value of share was Rs.10/- and the same were issued atpremium of Rs.1,14,015/- during the relevant year read withprevious year, the shares have been issued at premium ofRs.21,445.82/-, Rs.25,904.56 and Rs.1,14,015.19/- inMarch 2006, June 2007 and March 2008 respectively.Further, there was cancellation of agreement between theassessee and M/s Antrix Corporation. In such a scenario,status of the company itself was at stake, huge investmentsin the form of securities premium without valuationappeared to be without reasonable basis. As such it haddefinite tax implication. The credit in bank accountsthrough banking channel was not sufficient to explain thecriteria of Sec.68 and no additional information had beenprovided by the assessee. The sharp rise in share valuationhad the possibility of gains accruing to beneficiaries whichled to tax demands and with a questionable going concernstatus of the assessee, the issue had tax implications. Thus,respondent intended to revise order of AO and issued noticeunder Section 263 of Act 1961. | Oo. Petitioner feeling aggrieved and dissatisfied of the|notice dated O&8.02.2016 issued under Section 263 of Act1961 for the assessment order for the year 2009-10(Annexure — A), presented this petition. 6. Shri Udaya Holla, learned Senior Counsel for|petitionervehementlycontendedthat|PrincipalCommissioner of Income Tax has no jurisdiction to invokesection 263 of Act 1961 in issuing notice to the petitioner on08.02.2016 in respect of Assessment Order for the year2009-10 which has attained finality by the AO in passing theFinal Assessment Order on 31.01.2014. Undisputedly, AOnotified Draft Assessment Order while invoking Section 144Con 15.03.2013 for which petitioner had grievance under theprovisions of Section 144C(1)(b)read with Section QOZJCrelates to TPO (international transactions). Accordingly,|petitioner is stated to have filed objections for Drait|Assessment Order dated 15.03.2013. Consequently, matter|was referred to DRP and proceeded to pass order on31.12.2003. In terms of the DRP decision dated 31.12.2003,the AO proceeded to pass Final Assessment Order on31.01.2014. The DRP consists ot three Commissioner’s (Panel), in such circumstances, respondent being a PrincipalCommissioner cannot sit over the decision of the DRPconsisting of three Commissioners. Therefore, respondentPrincipal Commissioner has no jurisdiction. On this scoreitself, the impugned notice issued by the respondent ininvoking Section 263 of Act 1961 is liable to be set-aside. (Panel), in such circumstances, respondent being a PrincipalCommissioner cannot sit over the decision of the DRPconsisting of three Commissioners. Therefore, respondentPrincipal Commissioner has no jurisdiction. On this scoreitself, the impugned notice issued by the respondent ininvoking Section 263 of Act 1961 is liable to be set-aside. T. Learned Senior Counsel further submitted that|while invoking Section 263 of Act 1961 by the respondent inissuing notice to the petitioner, two ingredients likeerroneous decision of the AO and it is prejudicial to theinterest of revenue are not appraised. Perusal of notice, it isevident that the aforesaid ingredients are not forthcoming inthe notice. Further, DRP decision has not been addressed.Therefore, even on the ground of non-compliance of theingredients stated in Section 263 of Act 1961, impugnednotice dated 08.02.2016 is liable to be set-aside. 8. Learned Senior Counsel for the petitioner relied on|R.SRINIVASAN vs THE ASST./DEPUTY COMMISSIONER| OF INCOME TAX, CENTRAL CIRCLE I COIMBATOREdecided by the High Court of Judicature at Madras in Tax Case (Appeal)No.394 of 2006 disposed of on 11.09.2012,para.20 which is relevant reads as under: “OO. Given the fact that the revisiona|ljurisdiction:ottheCommissioner|under Sections 263 or 264 of the Act enablesthe Commissioner to call tor and examine|the record of any proceedings under the Act|and ‘record' is defined under Section 263|Explanation (b) to “include and shall be.deemed to always to have included all|records relating to any proceedings under|this Act" available at the time of examination|by the Commissioner and the approval.under Section 158BG also being part of the|record1n thepassingottheOrder|under Section 1o8BC, we agree with the.assessee's contention that the self-samerank Officer cannot once again review an_order passed under Section 158 BC made|with the approval of the Commissioner of|Income Tax. Further, apparently, faced with|the situation of the nature as one prevailingherein, Section 158 BG, after amendment in 1997substitutestheapprovalbytheCommissioner to an approval by the Joint|Commissioner in respect of search done after|1.1.97, and that an appeal remedy to the|CommissionerotIncomeTax|(Appeal)thereon is provided under the Act as against|the original appeal remedy before the Income.Tax Appellate Tribunal, we hold that going.by the scheme of Act. Thus, once approvalis |siven by the Commissioner in respect of|proceedingsmadebefore1.1.1997,the"approval" being an expression indicating|application of mind on the part of the higher|authority viz., the Commissioner, to the.materialsseized|leadingTO|theblockassessment and the approving authority not. being lower in rank than that of the|revisional Appellate Authority himself and_hence an appeal remedy thereupon before|the Tribunal alone is provided thereon, we|do not find any justifiable ground to accept.the plea of the Revenue that the approval on theOrder|passedunderSection158BC would be a mere administrative nod|and hence, the assessment is amenable to|be proceeded under Section 263 of the Act.|As pointed out by the Karnataka High Court|in the decision reported in |2012] 204TAXMAN 158CLT. v. SMT.ANNAPOORNAMMA|CHANDRASHE KA, the act of approval is not|for a mere passing of an order under Section 158BC, but an approval which takes note of|the subject matter of assessment and there.is application of mind before granting the.approval. The Apex Court in the decision|reported in AIR 2006 SC 2879 ASHOK|KUMAR SAHU v. UNION OF INDIA held that|the expression ‘approve’ means to have or|express a favourable opinion of to accept as satisfactoryasTO|thecontentoT|theassessment made under Section 158BC. TheKarnataka High Court pointed out the.differencebetweentheapprovalandpermission by referring P.Ramanatha Aliyar'sLaw Lexicon and held that when approval is given it means the approving authority has|full knowledge about the contents of whatis |approved and confirmed authoritatively the.order of the lower authority. 9. Further, he relied on Brief Note submitted during|the course of arguments on Section 263 of Act 1961 (Para.6to 9 and 13 to 16) which reads as under: 6. Section 144C was inserted in the Act by|the Finance Act, 2009 and came into effect from1[0,]October, 2009. In the Notes on Clauses tothe Finance Bill, 2009, the reason for insertionof Section 144C was as under: “The subjects of transfer pricingaudit and the taxation of foreigncompany are at nascent stage inIndia. Often the Assessing Officersand Transfer Pricing Officers tend totake a conservative view. ‘Thecorrection of such view take verylong time with the existing appellateSTruCcTUFEe With a view to provide speedydisposal, it 1s proposed to amendthe Income-tax Act so as to createan alternative dispute resolutionmechanism within the income-taxdepartment and accordingly, section144C has been proposed to beinserted so as to provide inter aliathe Dispute Resolution Panel as analternativedisputeresolutionmechanism.” ¢7. Itis with this intention i.e. “with a view|to provide speedy disposal, it is proposed toamend the [ncome-tax Act so as to create analternative dispute resolution mechanism withinthe income-tax department....”, the DRP waintroduced to shorten the length of tax disputes1n internationaltransactions|involvingcomputation of Arm’s Length Price. Further,since theDRP|constitutes|acollegium|comprising of three Commissioners of Income-tax, the directions given are binding on theAssessing Ofticer which is evident from Section144C (10) of the Act. Therefore, by providing analternative, the intention of the Legislature wasto reduce lengthy litigations and put an end tothe disputes. In the present case, the Respondent by issuing the Impugned Notice hasdone the exact opposite. 8. Further, the Hon’ble Bombay High)Court 1nVodatone India Services Pvt. Ltd. vsUnion of India and Others (2013) SCC OnlineBom 1534 held as under:| “The proceeding before the DRP isnot an appeal proceeding but acorrecting mechanism in the natureof a second look at the proposedassessmentorder by|highfunctionaries of the revenue keepingin mind the interest of the assessee.It1SacontinuationOT theAssessment proceedings till suchtime a final order ot assessmentwhich is appelable is passed by theAssessing Officer. This also findsSUppOTrtfromSection144C(6)which enables the DRP to collectevidence or cause any enquiry to bemade before giving directions to theAssessingOtticer under.Section144C (5). The DRP procedure canonly be initiated by an assesseeobjecting to the drait assessmentorder. This would enable correction1n theproposed|OTCer(drait assessment order) before a_ finalassessmentOrder1Spassed.Therefore, we are of the view that inthe present facts this issue could beagitated before and rectified by theDRP.” Q It is submitted that the issue totaxability of shares being issued at a)premium has already been well settled. —The Revenue had raised a similar issue|regarding discrepancy in valuation of the)share premium received in the case of)Vodafone India Services (P) Ltd vs UOI(2014) 368 ITR 1 (Bom).A. transter pricing adjustment was made to thevaluation of the shares, holding that)valuationot|sharesadoptedby|theaSSESSEEC1Sincorrect. TheHon’bleBombay High Court in no uncertain terms|laid down the law stating as under:- Q It is submitted that the issue totaxability of shares being issued at a)premium has already been well settled. —The Revenue had raised a similar issue|regarding discrepancy in valuation of the)share premium received in the case of)Vodafone India Services (P) Ltd vs UOI(2014) 368 ITR 1 (Bom).A. transter pricing adjustment was made to thevaluation of the shares, holding that)valuationot|sharesadoptedby|theaSSESSEEC1Sincorrect. TheHon’bleBombay High Court in no uncertain terms|laid down the law stating as under:- “OS. But we have examined.the issue afresh. The word.income for the purpose of the|Act has a well understood|meaning as defined in Section|2(24) of the Act. This even|when the definition in Section|2(24) of the Act is an inclusivedefinition.It cannot bedisputed that income willnot in its normal meaningincludecapitalreceiptsunless it 1s so specified, as|in Section 2(24) (vi) of the.Act. In such a case, Capital|Gains.chargeableCO|Taxunder Section 45 of the Act.are, denied to be income.The amounts received onissueof sharecapitalincluding the premium is.undoubtedly Oncapitalaccount.Share premiumhave been made taxable by a|legal fiction under Section|06(2)(viib) of the Act and the|Same1Senumerated|aS|Income in Section 2(24)(xvi) ptthe Act. However, what is/|bought into the ambit of|income.1Sthepremiumreceived {rom a resident in/excess of the fair market value of the shares. In this case.what is being sought to be|taxed is capital not received|from|anon-resident1.€,premiumallegedlyNNOT received on application of ALP. |Therefore,absentCAPTesslegislation,fhLamountreceived, accrued or arising|Of|capitalaccounttransaction can be subjectedto tax as Income..... 13.Prior to the year 2016, an appeal wasprovided trom the order/directions of theDRP to the Appellate Tribunal as persection 253(2A) of the Act. Bearing inmind the decision of the Hon’ble SupremeCourt referred to above, Parliament in itswisdom deleted Section 293(2A) of the Act,therebygiving finalityCO|theorder/directions of the DRP. 14. By not allowing appeals against thedirections of the DRP and giving finality tothe order/directions of the DRP, theLegislature implicitly conceded to the factthat, in matters of determining tax liabilityrelating to international transactions, theDRP is an independent mechanism withinthe framework of Income Tax Departmentseparate from the Revenue. Also, the 2016amendment which omitted the appeal toITAT provision (253(2A)) cities the reasonbeing minimization of litigation to be thereason [tor omission. lo. Further, the law on the propositionthat ‘what cannot be done directly cannotbe done indirectly is well settled. Asexplained hereinabove, a separate ADRmechanism was created for resolving thedisputes relating to Transfer Pricing inInternational Transactions. Further videthe 2016 amendment, the right to appealwas specifically taken away in order tominimize these disputes. 16. Once the DRP has exercised its powerunder Section 144C of the Act, theCommissioner loses his jurisdiction to exercise power under Section 263 of theAct. Consequently, the Commissionercannot issue a show cause notice undersection 263 exercising his revisionarypowers, especially when the legislature hasspecifically(a)createdaseparate|mechanism of DRP; and (b) has barred anystatutoryappealagainsttheorder.Therefore, by virtue of issuing a noticeunder Section 263, the Respondent isattempting to assume jurisdiction, when ithas done and is trying to have a re-look atthe final DRP order, when the jurisdictionto do so is barred under the Act. (Reliancein this regard is placed on the unreportedjudgment passed by the Division of MadrasHigh Court in Appeal No.354/2006 para20). 16. Once the DRP has exercised its powerunder Section 144C of the Act, theCommissioner loses his jurisdiction to exercise power under Section 263 of theAct. Consequently, the Commissionercannot issue a show cause notice undersection 263 exercising his revisionarypowers, especially when the legislature hasspecifically(a)createdaseparate|mechanism of DRP; and (b) has barred anystatutoryappealagainsttheorder.Therefore, by virtue of issuing a noticeunder Section 263, the Respondent isattempting to assume jurisdiction, when ithas done and is trying to have a re-look atthe final DRP order, when the jurisdictionto do so is barred under the Act. (Reliancein this regard is placed on the unreportedjudgment passed by the Division of MadrasHigh Court in Appeal No.354/2006 para20). 10. On the other hand, learned counsel for the|Respondent Sri K V Aravind vehemently contended thatcontention of the petitioner that respondent has nojurisdiction to invoke Section 263 of Act 1961 in respect ofAssessment Order which was pursuant to the DRP decision|and further, its acceptance by the AO is without any legal|substance. Even though, contention of the petitioner that|DRP consists of three Commissioners and their decision hasbeen taken note off by the AO while passing a Final|Assessment Order, still there is no statutory provision|barringthejurisdictionOT theRespondent/ PrincipalCommissioner to invoke Section 263 of Act 1961 to revise| Assessment order of the Assessing Officer. On the otherhand, Clause (c) to Explanation (1) of Section 263 of Act1961 there is a bar in respect of the following issue: “263(1)(c): Where any order referred to inthis sub-section and passed by the Assessing|Officer had been the subject matter of any)appeal (filed on or before or aiter the 1[0,]day ofJune, 1988), the powers of the (Principal|Commissioner or) Commissioner under this)sub-section shall extend (and shall be deemed|always to have extended) to such matters as)had not been considered and decided in such|appeal)”. Thus, Section 263 of Act 1961 provides for revision of order,if it is erroneous and prejudicial to revenue, which earmarksthat Principal Commissioner is empowered to Section 263 ofAct 1961 in order to rectify the Assessment Order made bythe AO. Further, respondent counsel pointed out by readingof Explanation 2(a to d), it is crystal clear that there is noprohibition to the Principal Commissioner to invoke Section263 of Act 19J61 even in an assessment matter where DRPhas examined the Drait Assessment Order along withassessee objections.| Ll.Learned counsel for the Respondent submittedthat any short coming relates to twin ingredients of Section 263 of Act 1961 which cannot be agitated in the presentpetition. Petitioner has a remedy before the respondent bysubmitting his explanation. If his explanation is satisfactory,respondent may drop further proceedings or else, if he is notsatisfied, in such an event he shall proceed in accordancewith the provisions of Section 263 of Act 1961 whileproviding ample opportunity to the petitioner. 12.The cited decision on behalf of the petitioner hasno application to the present case for the reasons that thereis no bar in respect of invoking Section 263 of Act 1961 by|the Principal Commissioner even in the event of examinationof Drait Assessment Order by the DRP. The respondent is |prohibited in invoking Section 263 of Act 1961 only under|one circumstance which is stated in Sub-clause (c) of|Explanation (1) to Section 263 of Act 1961 cited supra.Thus, petitioner has not made out a case in respect of issue|relation to, “Jurisdiction of the respondent in invokingsection 263 of Act 1961”. Consequently, if there is anyshortcoming in the impugned notice, petitioner has otherremedy of furnishing explanation and appraising the respondent. Thus, writ petition is not maintainable and it isto be rejected at threshold.| 13.Heard learned counsel for the parties. 14.The questions for consideration in the presentpetition 1s: respondent. Thus, writ petition is not maintainable and it isto be rejected at threshold.| 13.Heard learned counsel for the parties. 14.The questions for consideration in the presentpetition 1s: (1) Whether respondent could invoke.section 263 of Act 1961 in respect of anassessment order of the AO pursuant to DRPdecision or not? (2) Impugned notice dated 08.02.2016)is in terms of the Section 263 of Act 1961 ornot? 15.Petitioner who is an assessee had filed!return of income on 23.09.2009 for the assessment year|2009-10. In view of the fact that International Money|Transaction was involved in the petitioner’s business,|AO is required to initially proceed with the draft|assessment order and communicate the same to the|petitioner/assessee for either acceptance or filing of|objection. Petitioner had filed objections. Consequently, objections were examined by the DRP consisted of threepanel members who were in the cadre of Commissioner.On receipt of DRP’s decision, AO proceeded to pass a|Final Assessment Order. In this backdrop, question is,“Whether the Respondent — Principal Commissioner|could invoke Section 263 of Act 1961 to examine the|Assessment Order of the AO or not’? 16.Learned counsel for the petitioner submittedthat if a Draft Assessment Order was scrutinized by theDRP and followed by Final Assessment Order by AO>insuchcircumstances,respondentPrincipalCommissioner has no jurisdiction for the reasons that,DRP consists of three Commissioners and such decision|cannot be examined by sole Principal Commissioner —|respondent. The hierarchy is required to be taken note)of. Respondent — Principal Commissioner is equivalent|to one ot the Commissioner of DRP where as three suchCommissioners have taken a decision on the Draft|Assessment Order of the AO. Consequently, it is not)appropriate for the respondent/ Principal Commissioner alone to examine the decision of the DRP. At the best, itcould be examined by the Tribunal. 17.Before examining the contentions of the.petitioner, it iS appropriate to take note of few|provisions of Act, 1961. Q2A. (1) For the purposes of thissection and sections 92, 92B, 92C, 92D, 92E|and 92F, associated enterprise”, in relation|to another enterprise, means an enterprise- "1#Whichparticipates, directlyOT|indirectly, or through one or moreintermediaries, in the management orcontrolOT|capitalottheotherenterprise; or)indirectly, or through one or moreintermediaries, in the management orcontrolOT|capitalottheotherenterprise; or) "<#in respect of which one or morepersons who participate, directly orindirectly, or through one or moreintermediaries, in its management orcontrolOT|capital,are|theSamepersons who participate, directly orindirectly, or through one or moreintermediaries, in the management orcontrolOT|capitalottheotherenterprise.persons who participate, directly orindirectly, or through one or moreintermediaries, in its management orcontrolOT|capital,are|theSamepersons who participate, directly orindirectly, or through one or moreintermediaries, in the management orcontrolOT|capitalottheotherenterprise. QICA,.(1) Where any person, being|theASSCSSCE,has.enteredintoallinternational|transaction|(or|specified domestic transaction) in any previous year,|and the Assessing Officer considers it.necessary or expedient so to do, he may,with the previous approval of the (Principal| Commissioner or) Commissioner, refer the.computation of the arm’s length price in|relation to the said international transaction|(or specified domestic transaction) under|section 92C to the Transfer Pricing Officer. (2)Where a reference is made under|sub-section (1), the Transfer Pricing Officer,shall serve a notice on the assessee requiring|him to produce or cause to be produced on a|date to be specified therein, any evidence on which the assessee may rely in support of|the computation made by him of the arm’s|length price in relation to the internationaltransaction(OFspecified domestic.transaction) referred to in sub-section (1). Commissioner or) Commissioner, refer the.computation of the arm’s length price in|relation to the said international transaction|(or specified domestic transaction) under|section 92C to the Transfer Pricing Officer. (2)Where a reference is made under|sub-section (1), the Transfer Pricing Officer,shall serve a notice on the assessee requiring|him to produce or cause to be produced on a|date to be specified therein, any evidence on which the assessee may rely in support of|the computation made by him of the arm’s|length price in relation to the internationaltransaction(OFspecified domestic.transaction) referred to in sub-section (1). (2A) Where any other internationaltransaction (other than an _ internationatransaction referred under sub-section (1),_comes to the notice of the Transfer Pricing.Officer during the course of the proceedings|before him, the provisions of this Chapter|Shall apply as if such other internationaltransaction iS an international transaction|referred to him under sub-section (1)). (2B) Where)inrespectoT|ay#international transaction, the assessee has|not furnished the report under section 92K,and such transaction comes to the notice ofthe Transfer Pricing Officer during the.course of the proceeding before him, the.provisions of this Chapter shall apply as ilfsuchtransaction1S allinternationaltransaction reterred to him under sub-section (1). (2C) Nothing contained in sub-section(2B) shall empower the Assessing Officer|either to assess or reassess under section| 147 or pass an order enhancing the|assessment or reducing a refund already|made or otherwise increasing the liability ofthe assessee under section 194, for anyassessment year, proceedings for which havebeen completed before the 1[0,]day of July,2012.| 3.)On the date specified in the noticeunder sub-section (2), or as soon thereafter|as may be, after hearing such evidence as|the assessee may produce including any|intormation or documents referred to in sub-section(3)otSectionOAD)andaiterconsidering such evidence as the Transfer)Pricing Officer may require on any specified|points and after taking into account all.relevant materials which he has gathered,the Transfer Pricing Officer shall, by order inwriting, determine the arm’s length price in|relation to the international transaction (or,specified domestictransaction)inaccordance with sub-section (3) of Section.92C and send a copy of his order to the.Assessing Officer and to the assessee. ((SA) Where a reference was made under|sub-section (1) before the 1[0,]day of June,|2007 but the order under sub-section (3) has|not been made by the Transfer Pricing|Officer before the said date, or a reference|under sub-section (1) is made on or after the.i[0,]day of June, 2007, an order under sub-section (3) may be made at any time before.sixty days prior to the date on which the.period of limitation referred to in section|153, or as the case may be, in section 193B|for making the order of assessment or|reassessment or recomputation or fresh|assessment, as the case may be, expires:) (Provided that in the circumstancesreferred to in clause (ii) or clause (x) of,Explanation 1 to section 153, if the period oflimitation available to the Transfer PricingOfficer for making an order is less than sixty|days, such remaining period shall be deemed.to have been extended accordingly.) (4.On receipt of the order under|sub-section (3), the Assessing Officer shallproceed to compute the total income of the|assessee under sub-section (4) of section.92C in conformity with the arm’s length|price as so determined by the Transfer.Pricing Officer.) 5With a view to rectifying any mistakeapparent from the record, the Transfer|Pricing Officer may amend any order passed|by him under sub-section (3), and the.provisions of section 154, shall so far as may.be, apply accordingly. (Provided that in the circumstancesreferred to in clause (ii) or clause (x) of,Explanation 1 to section 153, if the period oflimitation available to the Transfer PricingOfficer for making an order is less than sixty|days, such remaining period shall be deemed.to have been extended accordingly.) (4.On receipt of the order under|sub-section (3), the Assessing Officer shallproceed to compute the total income of the|assessee under sub-section (4) of section.92C in conformity with the arm’s length|price as so determined by the Transfer.Pricing Officer.) 5With a view to rectifying any mistakeapparent from the record, the Transfer|Pricing Officer may amend any order passed|by him under sub-section (3), and the.provisions of section 154, shall so far as may.be, apply accordingly. 6.Where any amendment is made by theTransfer Pricing Officer under sub-section|(5), he shall send a copy of his order to the|Assessing Officerwhoshall|thereatterproceed to amend the order of assessment inconformity with such order of the Transfer|Pricing Officer.TThe Transfer Pricing Officer may, forthe purposes of determining the arm’s length|price under this section, exercise all or any|of the powers specified in clauses (a) to (d) ofsub-section (1) of section 131 or sub-section|(6) of section 133 (or Section 133A). Explanation:- For the purposes of this|section, “Transfer Pricing Officer” means a.JointCommissionerOT|Deputy Commissioner or Assistant Commissioner|authorized by the Board to perform all or|any of the functions of an Assessing Officer|specified in sections 92C and 92D in respect|of any person or class of persons. 144C,(1)XXXXX (2) XXxXxx (b) file his objections, if any, to such)variation with,- (i) the Dispute Resolution Pane; and(ii) the Assessing Officer. 263. (1)The (Principal Commissioner — or) Commissioner may call for and examine the.record of any proceeding under this Act, and|if he considers that any order passed therein by the (Assessing) Officer is erroneous in so.far as it is prejudicial to the interests of the.revenue, he may, after giving the assessee anopportunity of being heard and after making.or causing to be made such inquiry as he.deems necessary, pass such order thereon|as the circumstances of the case justify,including an order enhancing or modifying.the assessment, or canceling the assessment,and directing a fresh assessment. (Explanation)- For the removal of doubts, it|is hereby declared that, for the purposes of|this sub-section.- (a)an order passed (on or before or afterthe 1[0,]day of June, 1988) by the AssessingOfficer shall include- (1)an order of assessment made by.the Assistant Commissioner (or Deputy.Commissioner) or the Income-tax Officer on)the basis of the directions issued by the|(Joint) Commissioner under section 144A.(11)an order made by the (Joint),Commissioner in exercise of the powers or in the performance of the functions of an_Assessing Officer conferred on, or assigned|to, him under the orders or directions issued|by the Board or by the (Principal Chief,Commissioneror) DirectorGeneral OT|(Principal Commissioner or) Commissioner|authorized by the Board in this behalf under|section 120. (b)“record” (shall include and shall bedeemed always to have included) all records.relating to any proceeding under this Act|available at the time of examination by the|(Principal Commissioner or) Commissioner. (c)where any order referred to in this sub-section and passed by the Assessing Officer|had been the subject matter of any appeal.(filed on or before or after the I[0,]day of.June, 1988), the powers of the (PrincipalCommissioner or) Commissioner under this)sub-section shall extend (and _ shall bdeemed always to have extended) to such.matters as had not been considered and|decided in such appeal. (Explanation 2.- For the purposes of this|section, it is hereby declared that an order|passed by the Assessing Officer shall be|deemed to be erroneous in so far as it 1S)prejudicial to the interests of the revenue, if,in the opinion of the Principal Commissioner|or Commissioner-| (c)where any order referred to in this sub-section and passed by the Assessing Officer|had been the subject matter of any appeal.(filed on or before or after the I[0,]day of.June, 1988), the powers of the (PrincipalCommissioner or) Commissioner under this)sub-section shall extend (and _ shall bdeemed always to have extended) to such.matters as had not been considered and|decided in such appeal. (Explanation 2.- For the purposes of this|section, it is hereby declared that an order|passed by the Assessing Officer shall be|deemed to be erroneous in so far as it 1S)prejudicial to the interests of the revenue, if,in the opinion of the Principal Commissioner|or Commissioner-| "1#the order is passed without makinginquiries or verification which shouldhave been made.inquiries or verification which shouldhave been made. "<#the order is passed allowing any reliefwithout inquiring into the claim;without inquiring into the claim; ">#the order has not been made inaccordance with any order, direction oraccordance with any order, direction or instruction issued by the Board undersection 119; or| ":#the order has not been passed inaccordance by the jurisdiction HighCourt or Supreme Court in the case ofthe assessee or any other person. (2)No order shall be made under sub-section (1) after the expiry of two years fromthe end of the Financial year in which the|order sought to be revised was passed. (3)Notwithstanding anything contained insub-section (2) an order in revision under)this action may be passed at any time in the.case of an order which has been passed in|consequence of or to give effect to, anyfinding or direction contained in an order of)theAppellateTribunal,(NationalTax|Tribunal), the High Court or the SupremeCourt. Explanation — In computing the period of|limitation for the purposes of sub-section (2), the time taken in giving an opportunity to.the assessee to be reheard under the provisoto section 129 and any period during which|any proceeding under this section is stayed|by an order or injunction of any court shallbe excluded. 18.It is undisputed that Draft Assessment|Order was notified by the AO in view of the fact that|assessee’sbusiness|involvedInternationalMoneyTransaction. Petitioner/assessee was entitled to have|an opportunity to look into Draft Assessment Order. He| had option either to accept or to submit objections on|variations. If objections were filed, in such an event, theAO is required to forward Draft Assessment Order and|objections raised by the petitioner — assessee before theDRP to examine the objections raised by the assessee.DRP drew proceedings and forwarded to the AO.Consequently, AO passed the Final Assessment Order.In this background, where assessment order has|attainedfinalityandrespondent/ PrincipalCommissioner is not permitted to invoke Section 263 ofAct 1961 or not, sub-clause (c) of Explanation 1 of|section 263 of Act 1961 stipulates that there is a|prohibition in respect of a particular circumstance,|where respondent/Principal Commissioner shall not|invoke Section 263 of Act 1961 whereas similar Clause|is not forth coming in respect of the matter examined by|DRP against Draft Assessment Order of the AO along)with objections of the Assessee,Therefore, the’contention of the petitioner that respondent does not|have power to invoke Section 263 of the Act insofar as|examination of Final Assesment Order along with| Assessee’s objection pursuant to the DRP decision, is untenable. No-doubt DRP panel consists of three|Commissioners and Principal Commissioner examining|or sitting over decision of the DRP may not be|appropriate. At the same time, one cannot lose sight|off, of a statutory provision like Section 263 of Act 1961,unless and until Section 263 of Act 1961 prohibits toexamine the Final Assessment order, pursuant to the|DRP decision. One cannot go beyond the statutory|provision and so also ‘read’ or ‘add’ words by the Courtswhile interpreting a statutory provision. Time and|again, Supreme Court and other Courts have held that|in a matter of interpretation of statutory provisions,|Court cannot ‘add any words or sentence’. Even if thereis any ambiguity, at the best Court can read down or struck down such statutory provision. In the present|case, reading of Section 263 of Act 1961, it is crystal|clear that there is no bar for the Principal Commissionerto invoke Section 263 of Act 1961 to examine the Final|Assessment Order passed by the AO pursuant to the|DRP decision. 19.Supreme Court in the following decision|examined ‘jurisdiction of an officer with reference to|relevant provisions’ in the case of|GUJARAT URJA|VIKAS NIGAM LTD. Vs ESSAR POWER LTD. reportedin (2008)4 SCC 755 and has held at paras. 35, 39 and|61 as under: 35: It is well settled that where asstatute provides for a thing to be done in a|particular manner, then it has to be done in|that manner, and in no other manner||videChandraKishoreJhaVOMahavirPrasad{(1999) 8 SCC 266 : AIR 1999 SC)3908](SCCpata17.AIR|pata12),DhanajayaReddyoMV~StateofKarnataka{(2001) 4 SCC 9 : 2001 SCC (Cri)602 : AIR 2001 SC 1012] (SCC para 23 : AIR|para 22), etc.|. Section 386(1)J) provides aSpecial manner of making references to an.arbitrator in disputes between a licensee anda generating company. Hence by implication|all other methods are barred. 39. It may be mentioned that the|Mimansa rules of interpretation were our|traditional principles of interpretation laid|downbyJaimin1,whosesutrasWeETEexplained by Shabar, Kumarila Bhatta,.Prabhakar, etc. These Mimansa principles|were regularly used by our great jurists like.Vijnaneshwara(authorotMitakshara),Jimutvahana (author of Dayabhaga), Nanda.Pandit, etc. whenever they found any conflictbetweentheVarioussmritisOT|any| ambiguity,incongruity,OT|CaASUSOmI1SSUtherein. There is no reason why we.cannot use these principles on appropriate|occasions. However, it is a matter of deep|regret that these principles have rarely been|used in our law courts. It is nowhere|mentioned in our Constitution or any other.lawthat.onlyMaxwell'sprinciples|oftinterpretation can be used by the court. We.can use any system of interpretation which)helps us to resolve a difficulty. In certain|situations Maxwell's principles would be|more appropriate, while in other situations|theMimansaprinciplesbe|IfFlOsuitable. 61. We make it clear that it is onlywith regard to the authority which can.adjudicate or arbitrate disputes that the.Electricity Act, 2003 will prevail over Section11 of the Arbitration and Conciliation Act,1996. However, as regards the procedure to be followed by the State Commission (or the,arbitratornominated|byit)andothermatters related to arbitration (other than)appointmentoT thearbitrator)theArbitration and Conciliation Act, 1996 will|apply (except if there is a_ conflictingprovision in the Act of 2003). In other words, section 86(1)(J) is only restricted to theauthority which is to adjudicate or arbitrate|betweenlicenseesandgeneratingcompanies. Procedural and other matters|relating to such proceedings will of course be.governed by the Arbitration and Conciliation Act, 1996, unless there is a _ conflictinprovision in the Act of 2003. AO.Supreme Court in the case of.ASSISTANTCOMMERCIALTAXESOFFICERVS.MAKKAD PLASTIC AGENCIESreported in (2011) 4 SCC 750, para 195, it is held as under:- AO.Supreme Court in the case of.ASSISTANTCOMMERCIALTAXESOFFICERVS.MAKKAD PLASTIC AGENCIESreported in (2011) 4 SCC 750, para 195, it is held as under:- 15.In|#+,V.RalsonIndustriesLtd.(2007) 2 SCC 326] a similar situation|arose for the interpretation of this Court|regarding the scope and ambit of Section|154 of the Income Tax Act, 1961 vesting|the power of rectification as against the|power vested under Section 263 of the)Income Tax Act, which is a power of|revision. While examining the scope of the|power of rectification under Section 154 as|against the power of revision vested under|section 263 of the Income Tax Act, it was|held by this Court as follows at SCC para|8: (SCC p. 330) I/. The scope and ambit of a proceeding|for rectification of an order under Section|154 and a proceeding for revision under|Section 2Y63 are distinct and different.Order of rectification can be passed in|certain contingencies. It does not confer a|power of review. If an order of assessment|is rectified by the assessing officer in terms|of Section 154 of the Act, the same itselfmay be a subject-matter of a proceeding|under Section 263 of the Act. The power of|revision under Section 263 is exercised by|a higher authority. It is a special provision.The revisional jurisdiction is vested in the|Commissioner. An order thereunder can bepassed if it is found that the order of|assessment is prejudicial to the Revenue.|In such a proceeding, he may not only pass| an appropriate order in exercise of the said|jurisdiction but in order to enable him to|do it, he may make such inquiry as he|deems necessary in this behalf.” In para 12 of the said judgment it was also|held that when different jurisdictions are|conferred upon different authorities, to be|exercised on different conditions, both may|not be held to be overlapping with each|other. While examining the scope and|limitations of jurisdiction under Section|154 of the Income Tax Act, it was held that.such a power of rectification could only be|exercised when there is an error apparent|on the face of the record and that it does|not confer any power of review. It was|further held that an order ot assessment may or may not be rectified and if an order|of rectification is passed by the assessing|authority, the rectified order shall be given|effect to. Q1.scope of Section 263 examined in the case of COMMISSIONER OF INCOME TAX, SHIMLA VS.|GREENWORLD CORPORATION, PARWANOO)reported in (2009) 7 SCC 69, Paras 20, 28, 41 and 952 reads asunder:- 20.An Income Tax Officer while passing anorderotassessmentperformsjudicialfunction. An appeal hes against his order|before the appellate authority. A revisionapplicationwouldalsolie|beforetheCommissioner of Income Tax. It is trite that| the jurisdiction exercised by the revisionalauthoritypertains TO|1tsappellate jurisdiction.(SeeShankarRamchandraAbhyankarMOKrishnajtDattatreyabapat-{(1969) 2 SCC 74: AIR 1970 SC 1] .) A8.Before,however,advertingTO|thejurisdictional issue raised by the assessee.herein, we may consider the jurisdiction of,the Commissioner of [Income Jax to issuenotice in terms oft Section 263 of the Act. Itprovides for a revisional power. It has its|own limitations. An order can be intertered|with suo motu by the said authority not onlywhen an order passed by the assessing|officer iS erroneous but also when it is/prejudicial to the interests of the Revenue.Both the conditions precedent for exercising|the jurisdiction under Section 263 of the Act.are conjunctive and not disjunctive. An order)of assessment passed by an Income Tax|Officer, therefore, should not be interfered|with only because another view is possible.| 41.|The scope of provisions of Section 263 of|the Act is no longer res integra. The power to.exercise suo motu revision in terms otfsection 263(1) is in the nature of supervisoryjurisdiction and same can be exercised onlyif the circumstances specified therein viz. (.)the order is erroneous; (a) by virtue of theorder being erroneous prejudice has been.caused to the interest of the Revenue, exist. 41.|The scope of provisions of Section 263 of|the Act is no longer res integra. The power to.exercise suo motu revision in terms otfsection 263(1) is in the nature of supervisoryjurisdiction and same can be exercised onlyif the circumstances specified therein viz. (.)the order is erroneous; (a) by virtue of theorder being er