116. Cancellation of an agreement.—

(1) An agreement shall be cancelled by the Board for any of the following reasons:

(a) the compliance audit referred to in rule 114 has resulted in the finding of failure on the part of the assessee to comply with the terms of the agreement; or

(b) the assessee has failed to file the annual compliance report in time; or

(c) the annual compliance report furnished by the assessee contains material errors; or

(d) the agreement is to be cancelled under rule 115(4) or rule 117(7).

(2) The Board shall give a reasonable opportunity of being heard to the assessee, before proceeding to cancel an application.

(3) The competent authority of India shall communicate with the competent authority of the other country or countries and provide reason for the proposed cancellation of the agreement in case of bilateral or multilateral  agreement.

(4) The order of cancellation of the agreement shall be in writing and shall provide reasons for cancellation and for non-acceptance of submission of the assessee, if any.

(5) The order of cancellation shall also specify the effective date of cancellation of the agreement, where applicable.

(6) The order under section 168(7), declaring the agreement as void ab initio, on account of fraud or

misrepresentation of facts, shall be in writing and shall provide reason for such declaration and for non-acceptance of submission of the assessee, if any.

(7) The order of cancellation shall be intimated to the Assessing Officer and the Transfer Pricing Officer, having jurisdiction over the assessee.