ITA No. 4353/MUM/2025 (AY: 2009-10) & ITA No. 4352/MUM/2025 (AY: 2012-13)

Parties Involved

Facts Summary

The assessee-company, M/s Essar Power Gujarat Limited, is engaged in the business of generation of electricity. The case was reopened under Section 147 based on information from the Directorate of Revenue Intelligence (DRI) regarding over-invoicing of goods purchased by the Essar Group of Companies through Global Supplies FZE UAE. The Assessing Officer formed an opinion that the assessee inflated its expenditure in the import of goods, resulting in an escapement of income. The Assessing Officer issued a notice under Section 148 and proceeded for re-assessment. During the re-assessment, the Assessing Officer made a reference to the Transfer Pricing Officer (TPO) for computation of Arm’s Length Price (ALP). The TPO suggested an upward adjustment of 27% on the value of equipment supplied, leading to an addition of Rs. 73.74 Crore. Aggrieved by this, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) (CIT(A)), challenging the validity of the re-opening, the issuance of the notice, and the addition on merit. The CIT(A) directed the deletion of the addition made by the TPO, leading the Revenue to file an appeal before the Tribunal.…

Legal Issues

• 1. Whether the CIT(A) erred in deleting the TP adjustment made by the TPO.
• 2. Whether the re-opening of assessment u/s 147 of the Act is illegal and bad in law.
• 3. Whether the Assessing Officer made an addition in respect of transfer pricing adjustment which was not the issue in reasons for reopening.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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