JUDGMENT :

JAGMOHAN BANSAL, J.

1. As common issues are involved in the captioned petitions, with the consent of both sides, the same are hereby disposed of by this common order. For the sake of brevity and convenience, facts are borrowed from CWP-893-2006

2. The petitioner is assailing notice dated 31.03.2005 under Section 148 of Income Tax Act, 1961 (for short ‘1961 Act’) for the Assessment Year (for short ‘AY’) 1999-2000 with respect to reopening of assessment.

3. The Assessing Authority issued notices under Section 147 read with 148 of 1961 Act for reassessment of returned income for the AY 1998- 99, 1999-2000, 2000-01 and 2001-02. The assessee filed return pursuant to notice and demanded reasons for initiating reassessment proceedings. The assessing authority supplied reasons for initiating proceedings for reassessment. The petitioner filed objections to reasons supplied by Assessing Authority. The Assessing Authority rejected objections of the petitioner.

4. This Court issued notice of motion and vide order dated 20.01.2006 permitted the Assessing Authority to proceed with assessment, however, restrained from passing final order. Undisputedly, the Assessing Authority has not passed final assessment order. The Assessing Authority has not even proceeded to frame assessment. This Court had permitted the Assessing Authority to proceed with assessment and not to pass final order, however, Assessing Authority did not even proceed with assessment proceedings.

5. Learned counsel for the petitioner submits that foundation of initiating proceedings is order passed by Transfer Pricing Officer with respect to AY 2002-03. The Legislature amended Section 92 w.e.f. 01.04.2002 and by amendment concept of transfer pricing was introduced. The Transfer Pricing Officer passed order dated 14.03.2005 whereby it was concluded that there should be addition of 12.24% in the remuneration received by assessee. Taking cue from said assessment, the respondent has initiated proceedings with respect to Assessment Years 1999-2000 to 2001-02. In the absence of concept of transfer pricing prevailing during those assessment years,the Assessing Authority could not rely upon order dated 14.03.2005 passed with respect to Transfer Pricing Officer. The petitioner in the present form came into existence w.e.f. 04.10.2001. The respondent has wrongly relied upon order of transfer pricing. Neither during the relevant assessment years, the petitioner existed in the present form nor concept of transfer pricing was prevailing, thus, formula of 12.24% which is foundation of transfer pricing has wrongly been proposed to be applied for the assessment years in question. Transfer pricing order for AY 2002-03 notes that income from chip design activity was received after 04.10.2001. The said order further notices that chip design activity earned 5.81% margin and comparable transactions between unrelated parties yielded 12.24% during said year. During AY 2002-03, other international transactions including software services were accepted without any adjustment of margin. It is absurd and unfathomable to assume that such deemed income escaped assessment during AY 1998-99 to 2001-02. Emphatic and positive assertion by Transfer Pricing Officer that such transaction was not existing before 04.10.2001 cannot be ignored.

6. In support of his contentions, learned counsel for the petitioner relied upon judgment of Hon’ble Supreme Court in “Union of India Vs. Rai Singh Deb Singh Bist”, [1973] 3 SCC 581 and “ITO Vs. Lakhmani Mewal Das” [1976] 3 SCC 757

7. Per contra, learned counsel for the respondent-Revenue submits that there is no bar to invoke Section 147 read with 148 on the basis of transfer pricing order. The concept of transfer pricing came into force w.e.f. 01.04.2002, however, Section 92 was existing even prior to 01.04.2002. As per Section 92, in case of transaction between resident in India and entity outside India, addition could be made if it is found that fair consideration has