Calcutta High Court quashed a transfer pricing assessment order for failure to grant a personal hearing and record adequate reasons, affirming procedural fairness.
Calcutta HC Quashes Transfer Pricing Order Under Section 92CA(3)
The Calcutta High Court has quashed a transfer pricing assessment order issued under Section 92CA(3) of the Income Tax Act, 1961, holding that the failure to grant a personal hearing and record reasoned findings vitiated the assessment process.
The court emphasized that when the Assessing Officer proposes to make adjustments under transfer pricing mechanisms, the taxpayer has a right to personal hearing under CBDT guidelines and judicial precedents. The absence of such a hearing, coupled with non-speaking or inadequate reasoning in the final order, constitutes a breach of principles of natural justice.
Non-grant of personal hearing and failure to record specific reasons in transfer pricing order renders it liable to be set aside.
This ruling reinforces due process in complex tax assessments. Tax practitioners must ensure clients are afforded hearings and that reasons in transfer pricing orders are specific and justiciable, failing which they remain vulnerable to judicial intervention.
