The Assessing Officer cannot reopen assessment under Section 147 without new tangible material, and prior conclusions by the Transfer Pricing Officer are binding.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr. B.S. Soparkar for the petitioner and learned Senior Standing Counsel Mr. Karan Sanghani for the respondents.

2. Having regard to the controversy arising in this petition in narrow compass with the consent of the learned advocates for the respective parties the same is taken up for hearing.

3. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Karan Sanghani waives service of notice of rule on behalf of the respondents.

4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the legality and validity of the notice dated 31.03.2021 issued under Section 148 of the INCOME TAX ACT , 1961 (For Short “the Act”) for Assessment Year 2013-14. After filing of the petition and issuance of the notice by this Court on 29.03.2022, ad-interim relief was granted in terms of paragraph 7(b) whereby, implementation and operation of the notice dated 31.03.2021 was stayed. However, the respondent Assessing Officer passed the Assessment Order on 30.03.2022. The petitioner has, therefore, also challenged the Assessment Order dated 30.03.2022 by amendment, which was allowed.

5. The brief facts of the case are that the petitioner filed return of income on 29.11.2023 for the Assessment year 2013- 14 declaring total income of Rs.29,62,71,500/-. Thereafter the case of the petitioner for the year under consideration was selected for scrutiny and after detailed scrutiny, reference was made under Section 92CA (1) of the Act to the Transfer Pricing Officer to ascertain Arm’s Length Price of various international transactions undertaken by the petitioner. The notices under Section 92CA(2) of the Act were issued on 24.08.2015, 22.04.2016 and 13.06.2016 which were replied by the petitioner on 07.10.2015, 20.05.2016, 30.06.2016, 29.07.2016, 05.08.2016 and 19.09.2016.

5.1. The Transfer Pricing Officer passed the order dated 30.09.2016 without making any adjustments. Accordingly, the Assessing Officer passed the Assessment Order under Section 143(3) read with Section 92CA of the Act on 11.11.2016 assessing total income of the petitioner as per the return of income. The respondent no. 1 has thereafter issued impugned notice under Section 148 of the Act dated 31.03.2021 calling upon the petitioner to file the return of income. The petitioner without prejudice filed the above return of income in compliance of the notice on 09.04.2021 and sought for reasons recorded for reopening. The petitioner was provided with the copy of the reasons recorded on 30.07.2021 which reads as under :-

“1. The assessee is engaged in the business of manufacturing and servicing of oil field equipment, primarily down whole equipment, tool apparatus, instrument and allied product including drilling equipments, gas well installation tools and specialized equipment used in the Oil field industry for drilling and completion of oil wells. The assessee had filed its return of income u/s 139 (1) of the Act on 29.11.2013 declaring total income of Rs. 29,62,71,500. Τhe case of the assessee was selected for scrutiny for the A.Y.2013-14. A reference u/s 92CA(1) of the INCOME TAX ACT , 1961 in the case of assessee company for A.Y. 2013-14 for computation of ALP in relation to International Transaction recorded in form 3CEB was made to DCIT (TPO) Ahmedabad vide letter No. BRD/DCIT/ Cir-2(1)(2)/ TPO/WDPSIPL/2015-16 dated 05.08.2015. The TPO has passed order on 30.09.2016 without making any adjustment. The order u/s 143(3) r.w.s. 92CA was passed on 11.11.2016 at assessed income of Rs 29,62,71,500/-.

2. It is seen from the records of A.Y.2009-10, the Hon'ble DRP in its order had directed for applying the export filter of export >50%. It is observed that in A.Y.2010-11, during transfer pricing proceedings, the assessee company itself has objected to inclusion of comparables which have export sales less than 50% of the of the total turnover as company was having almost 100% export turnover. However,