Rule 116 sets the grounds on which the Board cancels an advance pricing agreement — failure found in a compliance audit, a late or materially wrong annual report, or cancellation under rules 115(4) or 117(7) — and the safeguards: a hearing, a written reasoned order, and intimation to the officers.
116
Rules 2026 · Rule 116
Cancellation of an agreement (advance pricing agreement)
Rules 77-130
Grounds (sub-rule 1). The compliance audit under rule 114 finds that the assessee failed to comply with the agreement; the assessee failed to file the annual compliance report in time; the report contains material errors; or the agreement is to be cancelled under rule 115(4) or 117(7).
Process (sub-rules 2 to 7). The Board gives the assessee a reasonable opportunity of being heard first. In a bilateral or multilateral case the competent authority of India tells the other country's authority the reason. The order of cancellation is in writing with reasons, including reasons for not accepting the assessee's submission, and states the effective date where applicable. An order under section 168(7) declaring the agreement void ab initio on account of fraud or misrepresentation of facts is also in writing with reasons. The order is intimated to the Assessing Officer and the Transfer Pricing Officer having jurisdiction.