Your APA year has been reopened and the officer has himself re-examined whether you complied with the APA. Can he do that without a compliance audit by the Transfer Pricing Officer?
No. Rule 10P places the compliance audit of an APA with the Transfer Pricing Officer having jurisdiction over the assessee, for each year covered by the agreement. The assessment unit had no jurisdiction to examine APA compliance on its own or to make a reassessment on that footing, and the addition of Rs 106,47,00,730 it made on that basis was beyond jurisdiction. The reopening failed independently on the s.151 sanction and because the notice was issued by the jurisdictional officer rather than the faceless assessing officer.
Decided by the High Court (Aparesh Kumar Singh CJ and G.M. Mohiuddin J) on 2025-09-25, reported as W.P. No. 4061 of 2024. It bears on section 92CC, section 92CD, section Rule 10-O, section Rule 10P, section Rule 10P(1), section 147, section 148, section 148A, section 148A(b), section 151, section 80G of the Income Tax Act 1961, in Reassessment & Reopening, Assessment & Scrutiny and Faceless Assessment & Appeals matters.
This is the commonest APA dispute in practice, an officer going behind a s.92CD modified return in a covered year. The decision fixes the Rule 10-O annual compliance report and the Rule 10P compliance audit as the machinery by which the department questions APA compliance, and puts that machinery in the hands of the Transfer Pricing Officer rather than the assessing unit. It also stacks three independent grounds on one reopening, which is how such a petition should be pleaded.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The petitioner is an Indian company for assessment year 2018-19. A notice under s.148A(b) dated 23 March 2022 alleged two items only: employees' contribution to provident fund remitted beyond the due dates, Rs 7,89,84,973, and a disallowance of corporate social responsibility expenditure claimed under s.80G, Rs 4,90,13,021. Approval under s.151 was obtained on 7 April 2022 from the Principal Commissioner, and the notice under s.148 dated 7 April 2022 was issued by the jurisdictional Assessing Officer. Meanwhile the petitioner entered into a unilateral advance pricing agreement with the CBDT on 15 February 2023 and filed a modified return under s.92CD on 28 March 2023. In the reassessment order dated 16 January 2024 the assessment unit went into the arm's length price and made an addition of Rs 106,47,00,730, an item that had formed no part of the recorded reasons. On the provident fund item the petitioner had already accepted the addition, its appeal having been dismissed on 31 July 2023, and had paid the tax.
The reassessment could not stand. On the APA point the Court set out Rule 10-O and Rule 10P(1) - 'Rule 10P(1) of the Rules provides that the TPO having the jurisdiction over the assessee shall carry out the compliance audit of the agreement for each of the year covered in the agreement' (para 41) - recorded that the Transfer Pricing Officer had submitted no finding of failure on the part of the assessee to comply with the terms of the agreement, and concluded that the assessment unit 'or the Jurisdictional Assessing Officer does not have the jurisdiction to examine and to make reassessment on its own' (para 42). It held that the officer 'committed jurisdictional error in not accepting the modified return under Section 92CD of the Act' and 'could not have made any addition to the income of the petitioner based on the terms of the APA' (para 44), and that he therefore 'went beyond jurisdiction to make addition of Rs.106,47,00,730/- in relation to the modified return filed in terms of APA on 28.03.2023 under Section 92CD(1) of the Act' (para 45). On sanction, the three year period had expired on 31 March 2022, so approval given on 7 April 2022 had to come from the Principal Chief Commissioner, Principal Director General, Chief Commissioner or Director General and not from the Principal Commissioner who gave it, and the proviso to s.151 inserted by the Finance Act 2023 could not be applied retrospectively to validate it; both conclusions are in para 50 - 'the reopening of assessment without sanction/approval of the specified authority in accordance with Section 151 of the Act was bad in law. Consequently, reassessment order dated 16.01.2024 also is bad in law.' After setting out the Bombay High Court's decision in Vodafone Idea, the Court held that the reopening and the consequent reassessment order suffer from jurisdictional error (para 51). On jurisdiction, the notice dated 7 April 2022 issued by the jurisdictional Assessing Officer rather than the faceless assessing officer was without jurisdiction (para 52). On the recorded reasons, the provident fund item had already been assessed and taxed and adding it again was a double assessment, and the arm's length price adjustment was outside both original grounds (paras 54 to 55).
The Court read Rule 10-O, which requires the assessee to furnish an annual compliance report in Form 3CEF for each year covered by the agreement, together with Rule 10P(1), which provides that the Transfer Pricing Officer having jurisdiction over the assessee shall carry out the compliance audit of the agreement for each of the years covered (para 41). Having placed the compliance audit with a named officer, and no finding of failure to comply with the agreement having come from that officer, the scheme leaves no room for the assessment unit to form its own view on whether the APA was complied with; the addition built on such a view was outside jurisdiction (paras 42, 44 and 45). On s.151 the Court fixed the date on which approval was in fact given, 7 April 2022, tested it against the authority competent on that date given that the three year period had run out on 31 March 2022, and refused to read the 2023 proviso backwards, concluding in para 50 that both the reopening and the reassessment order were bad in law. It then set out and quoted the Bombay High Court in Vodafone Idea Limited before holding the reopening and reassessment vitiated by jurisdictional error (para 51). The faceless point was taken on the e-Assessment Scheme (para 52). On the additions the Court noted the appellate history of the provident fund item and the absence of the arm's length price adjustment from the reasons recorded (paras 54 to 55).
went beyond jurisdiction to make addition of Rs.106,47,00,730/-
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Handle my notice → Ask a CA on WhatsAppNo. Rule 10P places the compliance audit of an APA with the Transfer Pricing Officer having jurisdiction over the assessee, for each year covered by the agreement. The assessment unit had no jurisdiction to examine APA compliance on its own or to make a reassessment on that footing, and the addition of Rs 106,47,00,730 it made on that basis was beyond jurisdiction. The reopening failed independently on the s.151 sanction and because the notice was issued by the jurisdictional officer rather than the faceless assessing officer. This was decided by the High Court (Aparesh Kumar Singh CJ and G.M. Mohiuddin J) and bears on section 92CC, section 92CD, section Rule 10-O, section Rule 10P, section Rule 10P(1), section 147, section 148, section 148A, section 148A(b), section 151, section 80G of the Income Tax Act 1961. It is reported as W.P. No. 4061 of 2024. This is the commonest APA dispute in practice, an officer going behind a s.92CD modified return in a covered year. The decision fixes the Rule 10-O annual compliance report and the Rule 10P compliance audit as the machinery by which the department questions APA compliance, and puts that machinery in the hands of the Transfer Pricing Officer rather than the assessing unit. It also stacks three independent grounds on one reopening, which is how such a petition should be pleaded. If it applies to you, the first step is this: Ask for the Rule 10P compliance audit report for the year. If none exists, or none is adverse, say so in terms and put the department to proof.
The petitioner is an Indian company for assessment year 2018-19. A notice under s.148A(b) dated 23 March 2022 alleged two items only: employees' contribution to provident fund remitted beyond the due dates, Rs 7,89,84,973, and a disallowance of corporate social responsibility expenditure claimed under s.80G, Rs 4,90,13,021. Approval under s.151 was obtained on 7 April 2022 from the Principal Commissioner, and the notice under s.148 dated 7 April 2022 was issued by the jurisdictional Assessing Officer. Meanwhile the petitioner entered into a unilateral advance pricing agreement with the CBDT on 15 February 2023 and filed a modified return under s.92CD on 28 March 2023. In the reassessment order dated 16 January 2024 the assessment unit went into the arm's length price and made an addition of Rs 106,47,00,730, an item that had formed no part of the recorded reasons. On the provident fund item the petitioner had already accepted the addition, its appeal having been dismissed on 31 July 2023, and had paid the tax. The matter was decided on 2025-09-25 by the High Court (Aparesh Kumar Singh CJ and G.M. Mohiuddin J). On those facts the High Court held as follows. The reassessment could not stand. On the APA point the Court set out Rule 10-O and Rule 10P(1) - 'Rule 10P(1) of the Rules provides that the TPO having the jurisdiction over the assessee shall carry out the compliance audit of the agreement for each of the year covered in the agreement' (para 41) - recorded that the Transfer Pricing Officer had submitted no finding of failure on the part of the assessee to comply with the terms of the agreement, and concluded that the assessment unit 'or the Jurisdictional Assessing Officer does not have the jurisdiction to examine and to make reassessment on its own' (para 42). It held that the officer 'committed jurisdictional error in not accepting the modified return under Section 92CD of the Act' and 'could not have made any addition to the income of the petitioner based on the terms of the APA' (para 44), and that he therefore 'went beyond jurisdiction to make addition of Rs.106,47,00,730/- in relation to the modified return filed in terms of APA on 28.03.2023 under Section 92CD(1) of the Act' (para 45). On sanction, the three year period had expired on 31 March 2022, so approval given on 7 April 2022 had to come from the Principal Chief Commissioner, Principal Director General, Chief Commissioner or Director General and not from the Principal Commissioner who gave it, and the proviso to s.151 inserted by the Finance Act 2023 could not be applied retrospectively to validate it; both conclusions are in para 50 - 'the reopening of assessment without sanction/approval of the specified authority in accordance with Section 151 of the Act was bad in law. Consequently, reassessment order dated 16.01.2024 also is bad in law.' After setting out the Bombay High Court's decision in Vodafone Idea, the Court held that the reopening and the consequent reassessment order suffer from jurisdictional error (para 51). On jurisdiction, the notice dated 7 April 2022 issued by the jurisdictional Assessing Officer rather than the faceless assessing officer was without jurisdiction (para 52). On the recorded reasons, the provident fund item had already been assessed and taxed and adding it again was a double assessment, and the arm's length price adjustment was outside both original grounds (paras 54 to 55).
The Court read Rule 10-O, which requires the assessee to furnish an annual compliance report in Form 3CEF for each year covered by the agreement, together with Rule 10P(1), which provides that the Transfer Pricing Officer having jurisdiction over the assessee shall carry out the compliance audit of the agreement for each of the years covered (para 41). Having placed the compliance audit with a named officer, and no finding of failure to comply with the agreement having come from that officer, the scheme leaves no room for the assessment unit to form its own view on whether the APA was complied with; the addition built on such a view was outside jurisdiction (paras 42, 44 and 45). On s.151 the Court fixed the date on which approval was in fact given, 7 April 2022, tested it against the authority competent on that date given that the three year period had run out on 31 March 2022, and refused to read the 2023 proviso backwards, concluding in para 50 that both the reopening and the reassessment order were bad in law. It then set out and quoted the Bombay High Court in Vodafone Idea Limited before holding the reopening and reassessment vitiated by jurisdictional error (para 51). The faceless point was taken on the e-Assessment Scheme (para 52). On the additions the Court noted the appellate history of the provident fund item and the absence of the arm's length price adjustment from the reasons recorded (paras 54 to 55). In the words reproduced by the source cited on this page: "went beyond jurisdiction to make addition of Rs.106,47,00,730/-" The decision followed or applied Vodafone Idea Limited (Bombay High Court) - set out and quoted on the s.151 sanction, and its reasoning adopted (para 51); the full cause title and citation of that decision were not reachable on the copy read.
It was decided by the High Court on 2025-09-25 and is reported as W.P. No. 4061 of 2024. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 92CC, section 92CD, section Rule 10-O, section Rule 10P, section Rule 10P(1), section 147, section 148, section 148A, section 148A(b), section 151, section 80G, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The reassessment could not stand. On the APA point the Court set out Rule 10-O and Rule 10P(1) - 'Rule 10P(1) of the Rules provides that the TPO having the jurisdiction over the assessee shall carry out the compliance audit of the agreement for each of the year covered in the agreement' (para 41) - recorded that the Transfer Pricing Officer had submitted no finding of failure on the part of the assessee to comply with the terms of the agreement, and concluded that the assessment unit 'or the Jurisdictional Assessing Officer does not have the jurisdiction to examine and to make reassessment on its own' (para 42). It held that the officer 'committed jurisdictional error in not accepting the modified return under Section 92CD of the Act' and 'could not have made any addition to the income of the petitioner based on the terms of the APA' (para 44), and that he therefore 'went beyond jurisdiction to make addition of Rs.106,47,00,730/- in relation to the modified return filed in terms of APA on 28.03.2023 under Section 92CD(1) of the Act' (para 45). On sanction, the three year period had expired on 31 March 2022, so approval given on 7 April 2022 had to come from the Principal Chief Commissioner, Principal Director General, Chief Commissioner or Director General and not from the Principal Commissioner who gave it, and the proviso to s.151 inserted by the Finance Act 2023 could not be applied retrospectively to validate it; both conclusions are in para 50 - 'the reopening of assessment without sanction/approval of the specified authority in accordance with Section 151 of the Act was bad in law. Consequently, reassessment order dated 16.01.2024 also is bad in law.' After setting out the Bombay High Court's decision in Vodafone Idea, the Court held that the reopening and the consequent reassessment order suffer from jurisdictional error (para 51). On jurisdiction, the notice dated 7 April 2022 issued by the jurisdictional Assessing Officer rather than the faceless assessing officer was without jurisdiction (para 52). On the recorded reasons, the provident fund item had already been assessed and taxed and adding it again was a double assessment, and the arm's length price adjustment was outside both original grounds (paras 54 to 55). It arises in Reassessment & Reopening, Assessment & Scrutiny and Faceless Assessment & Appeals matters, on section 92CC, section 92CD, section Rule 10-O, section Rule 10P, section Rule 10P(1), section 147, section 148, section 148A, section 148A(b), section 151, section 80G of the Income Tax Act 1961, and was decided by Aparesh Kumar Singh CJ and G.M. Mohiuddin J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Put the Form 3CEF annual compliance report filed under Rule 10-O on record for each covered year. Check whether the addition actually made matches the reasons recorded for reopening; here an arm's length price adjustment appeared that was outside both original grounds. Count the three years from the end of the relevant assessment year and identify which authority had to sanction under s.151 on the date approval was in fact given. Check whether the s.148 notice came from the jurisdictional officer or through the faceless machinery, and take the point separately.
Searched for later treatment; none was found. That is not the same as a source affirming it. Decided on 25 September 2025. Nothing applying, doubting or overruling it was found, and nothing was located about any appeal to the Supreme Court. The Rule 10P proposition it turns on does not appear to have been considered elsewhere at High Court level on the material found. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The copy of this judgment available on indiankanoon truncates: the highest paragraph number reachable is 55, and the formal disposition of the writ petition was not reached. The Court's substantive conclusions were all read, and each of them is against the reassessment, but the precise terms of the final order, including whether the s.148A order and notice as well as the reassessment order were quashed and on what terms, could not be verified and are therefore not stated. The double assessment and recorded reasons points could be fixed only to the range paras 54 to 55. The sentence setting out Rule 10P(1) at para 41 is the Court reproducing the rule, not an independent proposition of the Court; the Court's own conclusion on jurisdiction is at para 42. A later reading of the judgment against this entry corrected three paragraph pins: the sentence on the addition of Rs 106,47,00,730 is at para 45, para 44 being where the Court finds jurisdictional error in not accepting the modified return; the Rule 10P(1) text and the jurisdiction conclusion are at paras 41 and 42; and both s.151 conclusions sit in para 50, para 51 being where the Bench sets out the Bombay High Court in Vodafone Idea before holding the reopening and reassessment vitiated by jurisdictional error. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The reassessment could not stand. On the APA point the Court set out Rule 10-O and Rule 10P(1) - 'Rule 10P(1) of the Rules provides that the TPO having the jurisdiction over the assessee shall carry out the compliance audit of the agreement for each of the year covered in the agreement' (para 41) - recorded that the Transfer Pricing Officer had submitted no finding of failure on the part of the assessee to comply with the terms of the agreement, and concluded that the assessment unit 'or the Jurisdictional Assessing Officer does not have the jurisdiction to examine and to make reassessment on its own' (para 42). It held that the officer 'committed jurisdictional error in not accepting the modified return under Section 92CD of the Act' and 'could not have made any addition to the income of the petitioner based on the terms of the APA' (para 44), and that he therefore 'went beyond jurisdiction to make addition of Rs.106,47,00,730/- in relation to the modified return filed in terms of APA on 28.03.2023 under Section 92CD(1) of the Act' (para 45). On sanction, the three year period had expired on 31 March 2022, so approval given on 7 April 2022 had to come from the Principal Chief Commissioner, Principal Director General, Chief Commissioner or Director General and not from the Principal Commissioner who gave it, and the proviso to s.151 inserted by the Finance Act 2023 could not be applied retrospectively to validate it; both conclusions are in para 50 - 'the reopening of assessment without sanction/approval of the specified authority in accordance with Section 151 of the Act was bad in law. Consequently, reassessment order dated 16.01.2024 also is bad in law.' After setting out the Bombay High Court's decision in Vodafone Idea, the Court held that the reopening and the consequent reassessment order suffer from jurisdictional error (para 51). On jurisdiction, the notice dated 7 April 2022 issued by the jurisdictional Assessing Officer rather than the faceless assessing officer was without jurisdiction (para 52). On the recorded reasons, the provident fund item had already been assessed and taxed and adding it again was a double assessment, and the arm's length price adjustment was outside both original grounds (paras 54 to 55).
TaxSphere, “Deloitte Consulting India Pvt Ltd v Assessment Unit, NFAC”, https://taxnotice.vittsphere.com/caselaw/case/deloitte-consulting-india-apa-year-reopened-rule-10p-compliance-audit-is-the-only-route/ (validity last checked 2026-09-16)
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