Can the TPO’s order be subjected to revision u/s 263?

In a recent ruling, in the case of Essar Steel Ltd [TS-698-ITAT-2012(Mum)-TP], Mumbai ITAT has held that the Commissioner (CIT) does not have power to revise the TPO’s order. In this case, the TPO made a proposal for revision of his order to the DIT, who in turn forwarded it to the CIT. Accordingly, the CIT passed an order revising the assessment order, which was set aside by ITAT. ITAT also observed that the TPO’s functions are under the administrative jurisdiction of the DIT and not CIT. ITAT felt that there is no clarity in provisions as to who can revise the TPO’s order. At one place, ITAT observed, "We are not considering the issue whether the TPO order could be revised by the CIT or by the DIT as that issue is not before us at this moment."  But, it also mentioned that the DIT should have revised the TPO’s order instead of forwarding to the CIT. 

 

In this respect, it is interesting to analyze the provisions of IT Act.

 

As per Sec. 263, the CIT has the power to revise the order of the AO, if it is erroneous and prejudicial to the interests of the Revenue.  Sec 2(16) defines the term ‘Commissioner’ as a person appointed to work as CIT or DIT u/s 117.  So, it appears that the DIT can exercise powers u/s 263. 

 

But, the moot question is if the TPO can be treated as an ‘AO’ for the purpose of Sec. 263. The term TPO has been defined by way of an Explanation to Sec 92CA as Joint Commissioner or Deputy Commissioner or Assistant Commissioner authorized by CBDT to perform all or any functions of an AO specified in Sec 92C and 92D. The term AO has been defined in Sec 2(7A). As per that definition, Joint Commissioner, Assistant Commissioner or Deputy Commissioner who are vested with jurisdiction by virtue of orders / direction u/s 120(1) &(2) or who are directed to exercise or perform all or any powers and functions of AO are covered under the definition of  the term AO. 

 

Can the functions, duties or powers of a TPO be treated as only a 'subset' of that of the AO? If yes, will the AO, for the purposes of Sec 263, also include the TPO?  Answers to these questions would be relevant to decide if the TPO's order can be revised u/s 263.

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