CONSTITUTION OF INDIA, 1950

Article 226

Writ - Notice issued under section 148 - Objections by assessee vis-a-vis reference to TPO - AO required to adjudicate upon the preliminary objections raised by assessee

Assessee was engaged in the business of trading in ophthalmic lenses, optical meters and processing of semi-finished ophthalmic lenses. AO issued notice under section 148 sought to reopen the assessment on the ground that certain income had escaped assessment. On the plea made by assessee to furnish the reasons recorded for reopening of the assessment, AO furnished the reasons recorded for reopening of the assessment. AO was of the opinion that assessee had earned exempt income but had not made any disallowance of expenses corresponding to the same. Objecting the same, assessee filed objections questioning the jurisdiction of the officer to reopen the assessment under section 147. AO without passing order on the objections submitted by the petitioner had made reference to TPO to make the TP adjustment with regard to advertising, marketing and promotional expenses incurred by assessee. Held: AO was required to adjudicate upon the preliminary objections raised by assessee, inasmuch as the jurisdiction aspect was concerned, without disposing of the objections raised by assessee, no further proceedings can be initiated by AO. The reasons recorded for reopening of assessment under section 147 did not indicate any escapement of income due to the wrong TP adjustment/ALP. On the other hand, it was confined to disallowance under section 14A. Action of AO in referring the matter to TPO for TP adjustment cannot be countenanced at this stage. Hence, the notice issued under section 148 was quashed.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2015-16

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