INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - No lack of enquiry -

CIT invoked jurisdiction under section 263 on the ground that despite domestic transactions undertaken by assessee with sister concern same were covered within the ambit of section 92BA for which prescribed Form No. 3CEB was filed, however, the AO failed to refer the matter to TPO and in carrying out the necessary consequential inquiries. Assessee submitted that Form No. 3CEB was filed only as a matter of abundant caution and was actually not required to be filed in law owing to the fact that the sales made to the sister concern would not fall within the sweep of meaning of 'specified domestic transactions' (SDT) defined under section 92BA(i).Held: Sales made by assessee to its sister concern would not fall within the ambit of section 92BA(i) as the said section was meant to deal with 'expenditure' incurred by the assessee for the benefit of sister concern/AE. Further, the assessee did not avail any benefit under section 80-IA or any other provisions contemplated under section 92BA(ii) to (vi). As a corollary, merely because Form No. 3CEB was filed in accordance with rule 10E read with section 92BA, it would not make an assessee susceptible to onerous investigation proceedings on such transactions where the assessee prima facie demonstrated that section 92BA was wholly inapplicable in any manner at the first instance. In view of the domestic transactions with sister concern not falling in the sweep of section 92BA at the threshold, any alleged inaction attributable to the AO in that regard would not vitiate assessment order as erroneous and prejudicial to the interest of the revenue. Hence, revisional order passed under section 263 was quashed.