For the AY 2018-19 the assessee had entered into several international transactions amounting to Rs. 2,79,457.28 crores. The Commissioner (International Taxation) noticed that the A.O. had not referred the matter of determination of the arm’s length price of international transactions to the Transfer Pricing Officer as required by Central Board of Direct Taxes Instruction No. 3 of 2016, dated March 10, 2016 ([2016 382 ITR (St.) 36). Accordingly, he initiated revision proceedings under section 263 of the Act, set aside the assessment order and directed the A.O. to make a reference to the Transfer Pricing Officer as stipulated in Instruction No. 3 of 2016 and passed an assessment order in respect of the international transactions based on the order of Transfer Pricing Officer as per law. Being aggrieved, the assessee filed appeal before Tribunal who upheld the revision. The Tribunal held that in terms of clause (c) of Explanation 2 to section 263,the order passed without complying with the Instruction issued by the Board u/s. 119 of the Act would render the order erroneous and prejudicial to the interests of the Revenue.  In view of the Instruction No. 3 of 2016, it was mandatory for the A.O. to refer the matter of determination of arm’s length price of the assessee’s international transactions to the Transfer Pricing Officer after obtaining approval from the Principal Commissioner or Commissioner, if the return of income of the assessee had been selected under “the transfer pricing risk” parameter. The A.O. having failed to follow the instructions, there was no infirmity or illegality in the revision order passed by the Commissioner (International Taxation).(AY .2018-19)