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quashes against Flyjac for missing
A Notice That Never Came
The has set aside a passed against , holding that the mandatory under the was never served on the company. The Division Bench of Justice B.P. Colabawalla and Justice Farhan P. Dubash ruled that the failure to serve the notice .
The Background
Flyjac's case for the 2020-21 was selected for scrutiny. The referred the matter to the for determining the of with its . Over several months, the TPO issued notices under Section 92CA(2) of the Act, seeking information and documents. Flyjac responded to each.
On , the TPO claimed to have issued a under Section 92C(3), asking why the should not be determined based on material in the officer's possession. However, that notice never reached Flyjac. On , the TPO passed an order making an adjustment of ₹20.16 crore to the , recording that Flyjac had not responded to the show cause.
The Arguments
Flyjac, represented by , contended that it never received the . It learned of its existence only from the impugned order. The company argued that the notices under Section 92CA(2) were merely information-seeking, not the mandated by the proviso to Section 92C(3).
The Revenue, through , fairly admitted that the was not served. The Department's affidavit revealed that the email carrying the notice had bounced, a technical glitch in the ITBA system prevented it from appearing on Flyjac's e-filing portal, and no SMS alert was generated. Still, the Revenue argued that since earlier notices were served and replied to, no further opportunity was needed.
The Statutory Requirement
The court examined the interplay between Sections 92C and 92CA of the . Section 92C(3) provides the mechanism for determining the , and its proviso requires the to serve a before proceeding. Section 92CA(3) directs the TPO to determine the in accordance with Section 92C(3). The court held that this means the TPO must also follow the procedure under Section 92C(3), including issuing the .
The Bench drew a sharp distinction between the two types of notices.
"Further the notice issued by the Transfer Pricing Officer under Section 92CA(2) of the Act seeking information from an Assessee cannot be said to be a
issued as per the proviso to Section 92C(3) of the Act,"
the court observed.
What the Court Said
The court found that the
of
was the only notice that complied with the statutory requirement. Since it was never served, Flyjac had no opportunity to respond. The court declared:
"the said
is statutorily required to be issued in terms of Section 92CA(3) read with Section 92C(3) of the Act, the impugned order... passed without serving the said
on the Petitioner, is therefore,
and liable be set aside."
Order Set Aside, Matter Remanded
The court quashed the TPO's order dated and remanded the matter to the stage of issuance of the . Flyjac was directed to file its reply within two weeks from the uploading of the High Court order. The TPO was instructed to pass a fresh order under Section 92CA(3), preferably within 12 weeks, after granting a personal hearing to the company.
The petition was disposed of with no order as to costs. The ruling underscores the non-negotiable nature of the show cause requirement in transfer pricing proceedings and reaffirms that information-seeking notices cannot substitute for the statutory .
