Income Tax Act, 1961 – Sections 143(1) and 148 – Initiation of reassessment proceedings – Validity – Petitioner/assessee filed its return of income for AY 2011-12 – AO processed said return under Section 143(1) of the Act – AO reopened assessment vide notice issued under Section 148 of the Act – Writ petition is directed against proceedings triggered qua Petitioner under Section 148 of the Act – HELD – Impugned notice was premised on AO’s belief that income chargeable to tax in AY 2011-12 had escaped assessment – AO had in his possession a letter addressed to him by ITO, which in turn contained intimation supplied by Investigation Wing – Information furnished suggested that monies were remitted via RTGS to two bank accounts of Petitioner – Neither letter nor intimation of ADIT (Inv) was furnished to Petitioner – AO had no tangible material available with him to form a belief that income chargeable to tax had escaped assessment – AO did not carry enquiry process once he had received communication from ITO – AO did not employ diligence while triggering reassessment proceedings against Petitioner – Impugned notice issued to Petitioner under Section 148 of the Act quashed – Petition disposed of
Income Tax Act, 1961 – Sections 143(2), 144, 147 and 148 – Reopening of assessment – Improper service of notice – Via instant appeal, Appellant/revenue seeks to assail order passed by Income Tax Appellate Tribunal quashing assessment order passed under Section 147/144 of the Act – Whether notice issued under Section 148 of the Act was served at correct address of Respondent/assessee – HELD – Respondent/assessee had intimated to Income Tax Officer that its registered office had been relocated – Despite Appellant/revenue being given intimation about new address, it issued notice under Section 148 of the Act to Respondent/assessee at old address – AO had in his record the screenshot of material available indicating a change of address – Tribunal has also recorded a finding of fact that new address was available in record of AO – Tribunal was right in holding that notice under Section 148 of the Act was improperly served – Appeal dismissed. Issue 2: Absence of notice – Whether Tribunal is right in holding that Appellant/revenue was obliged to mandatorily serve a notice under Section 143(2) of the Act before passing assessment order under Section 147/144 of the Act – HELD – Before framing an assessment order under Section 147/144 of the Act, AO ought to have issued a notice under Section 143(2) of the Act – Appellant/revenue had not issued notice under Section 143(2) of the Act to Respondent/assessee – Absence of notice under Section 143(2) of the Act impregnates proceedings with a jurisdictional defect and hence, renders it invalid in eyes of law – Failure by AO to issue notice under Section 143(2) of the Act is fatal to order of re-assessment – Impugned order passed by Tribunal affirmed.
Income Tax Act, 1961 – Section 147 – Initiation of reassessment proceedings – Validity – Pursuant to Arbitration Award passed in terms of consent terms, Appellant became entitled to receive an amount in full and final settlement of all disputes and claims raised by her against her brother and other family members – Respondent No.1/Assessing Officer assessed said amount to tax in reassessment proceedings initiated under Section 147 of the Act – Said assessment stands upheld in appeal by both CIT(A) and Tribunal – Whether Tribunal ought to have held that Respondent No.1 had assumed jurisdiction under Section 147 of the Act without fulfilling jurisdictional pre-conditions and hence, reassessment proceedings were without jurisdiction – HELD – Real dispute between parties related to termination of Appellant’s partnership interest in partnership firm – Consent terms were arrived at between parties with a view to settle this dispute – Amount received in terms of Arbitration award was received for retirement from said firm – On receipt of amount, all claims of Appellant against her brother and their family members and against partnership firm stands duly satisfied – Bare perusal of reasons recorded for reopening of assessment shows that there was no mention as to how the amount as per arbitration Award was in nature of income – Amount can be considered as amount received by a partner upon retirement from firm and is not chargeable to tax – Reassessment proceedings have been initiated without fulfilling jurisdictional pre-conditions in Section 147 of the Act, as no income chargeable to tax had escaped assessment – Tribunal ought to have held that Respondent No.1 had assumed jurisdiction under Section 147 of the Act without fulfilling jurisdictional pre-conditions and hence, reassessment proceedings were without jurisdiction – Amount received by Appellant as per Arbitration Award was not chargeable to tax – Appeal disposed of
Income Tax Act, 1961 – Sections 143(3), 153A and 254(2) – Application for rectification of mistake – Dismissal of application – Sustainability – Department conducted search at different premises of Venus Group and seized several documents pertained to Respondents/assessees – Assessing Officer initiated proceedings under Section 153C of the Act against Respondents after recording satisfaction – Based on these search proceedings, AO completed assessment under Section 143(3) read with Section 153A of the Act by making certain additions to income of Respondents – After order passed by CIT(A), issues travelled to Tribunal – Tribunal passed order in favour of Respondents – Aggrieved by findings of Tribunal, Petitioner/Revenue filed Misc. Applications under Section 254(2) of the Act before Tribunal for rectification of mistake in order of Tribunal – Tribunal dismissed said applications – Whether there is any apparent mistake in order of Tribunal as alleged by Revenue in its miscellaneous applications – HELD – Section 254(2) of the Act makes it amply clear that a 'mistake apparent from record' is rectifiable – To attract jurisdiction under Section 254(2) of the Act, mistake should exist and must be apparent from record – Power to rectify mistake does not cover cases where a revision or review of order is intended – Mistake which can be rectified under Section 254(2) of the Act is one which is patent, obvious and whose discovery is not dependent on argument – When a detailed order has been passed by Tribunal, no rectification can be made on ground that order passed by Tribunal was erroneous either on facts or in law, as in that case, only remedy was to prefer an appeal – Appreciating the provisions of Section 153A of the Act, Tribunal observed that assessment orders under Section 143(3) read with Section 153A of the Act have to be framed strictly on basis of incriminating material found during course of search carried out in case of assessee and material collected during course of search action carried out in cases of third parties cannot be considered – Tribunal after elaborate discussion on issue of reason to believe has taken a view that reason recorded by AO was nothing but borrowed satisfaction – In holding so, Tribunal analyzed facts available on record, given various reasoning and also referred several judicial precedents – Once Appellate Tribunal had considered issues on merits and undertaken a detailed discussion, no rectification could be made on grounds stated in respective Miscellaneous Applications – There is no apparent mistake in order of Tribunal as alleged by Revenue in its miscellaneous applications – Petitions dismissed
Income Tax Act, 1961 – Sections 50C, 148 and 148A(d) – Re-opening of assessment – Validity – Petitioner is a company engaged in business of undertaking real estate projects, filed its return of income for AY 2015-16 – Respondent No.1/Assessing Officer completed assessment by accepting returned income – Subsequently, AO reopened assessment vide notice issued under Section 148 of the Act – AO passed an order under Section 148A(d) of the Act by holding that sale consideration offered being lesser than stamp duty valuation inviting applicability of Section 50C of the Act – Whether re-opening of assessment is sustainable in eyes of law – HELD – In original assessment order, sale of property and resultant capital gains has been elaborately discussed by AO – AO clearly accepted non-applicability of Section 50C of the Act to transaction of sale while issuing original assessment order – Basis on which AO issued notice under Section 148 of the Act was an internal audit objection – Audit memo raised an objection that Petitioner has shown lower amount of sale consideration than value adopted by Stamp Duty Authority, thus, inviting applicability of Section 50C of the Act to transaction – Information as explained in Section 148 of the Act to mean "any objection raised by Comptroller and Auditor General of India" and no one else – Audit memo was raised by an internal audit of Department and not by CAG as required by provision – Information which formed basis of re-opening itself does not fall within meaning of term ‘information’ under 1st Explanation to Section 148 of the Act and hence, re-opening is not permissible as it clearly falls within purview of a ‘change of opinion’ which is impermissible in law – Notice issued under Section 148 of the Act and order passed under Section 148A(d) of the Act are quashed – Petition allowed
Income Tax Act 1961 – Section 250(6A) – Delay in disposal of appeals – Public interest litigation – Present petition has been filed in nature of a Public Interest Litigation prayed to issue necessary directions to Commissioners (Appeals) to take steps for expeditious disposal of appeals or within time limit envisaged by Section 250(6A) of the Act and to increase number of Commissioner (Appeals) – HELD – Delay in disposal of appeals by Commissioners (Appeals) is adversely affecting large number of assessees and it is difficult for all of them to approach this Court, therefore, this Writ Petition is being filed by Petitioner in interest of public at large – Prayers as sought by Petitioner have been suitably addressed by Respondent No.2/Central Board of Direct Taxes (CBDT) – CBDT has submitted that more than 570 Commissioners (Appeals) would be needed to deal with pending appeals – So far as increasing the sanctioned strength or filing up of vacant posts of Commissioner (Appeals) is concerned, CBDT may not have any role to play – Respondent No.1/Union of India may take appropriate measures and decision in that regard inasmuch as filling up of all present posts lying vacant, which would greatly assist in disposal of pending appeals – Union of India may also consider increasing the sanctioned strength of Commissioner (Appeals) substantially at least to extent of 570 of such posts to achieve aims and objects of Central Action Plan which is formulated every year – Petition disposed of
Income Tax Act, 1961 – Sections 50B and 54EE – Capital gains exemption – Failure to notify long term specified asset – Petitioner is a partnership firm engaged in business of wholesale dealerships in pharmaceutical products – Petitioner transferred business of firm under ‘slump sale’ method on a ‘going concern basis’ for a lump sum consideration to its sister concern – Petitioner had computed capital gains as per Section 50B of the Act – Petitioner approached this Court for a writ in nature of mandamus commanding Respondent No.1/Union of India to notify ‘long term specified assets’ for availing capital gains exemption under Section 54EE of the Act – Whether failure to notify ‘long term specified asset‘ by Central Government under clause-b of explanation (2) to Section 54EE of the Act is arbitrary – HELD – Section 54EE of the Act allows capital gains exemption upto a limit of Rs.50 lakhs, if capital gain proceeds are invested by assessee in long term specified assets notified under Section 54EE of the Act for a minimum period of 3 years – Despite said provision having been brought into statute with effect from 1-4-2017, Central Government had not notified 'long term specified asset' for investment of long term capital gains arising from transfer of long term capital asset – Reasons for not notifying 'long term specified asset' by Central Government is in domain of fiscal policy and prudence – Court should not enter into area of making fiscal policy and decision taken in this regard – If Central Government has not notified scheme/fund under Section 54EE of the Act, it cannot be said that such a decision is arbitrary – Petition dismissed. Issue 2: Doctrine of promissory estoppel – Applicability – Whether Central Government can be held to be bound by doctrine of promissory estoppel and direction be issued for notifying long term specified asset under Section 54EE of the Act – HELD – It is the prerogative of Central Government to issue notification under Section 54EE of the Act notifying specified long term asset for investment of capital gain arising from transfer of long term capital asset and Court cannot hold Central Government to be bound by stated position in exercise of power of judicial review – It is not a case that Petitioner had made investment on a specified long term asset as notified by Government, and thereafter, Government had withdrawn said notification – Doctrine of promissory estoppel is not applicable in facts of present case – Argument of Petitioner that Central Government should be held bound by its promise made for notifying specified long term asset/fund is not meritorious and is rejected. Issue 3: Legitimate expectation – Whether Petitioner has legitimate expectation of notification to be issued by Central Government notifying 'long term specified asset' for investment from proceeds of sale/transfer of long term capital asset by Petitioner – HELD – Without a notification having been issued for long term specified asset/fund for investment, Petitioner could not claim exemption from tax on his capital gain arising from transfer of his long term capital asset – Issuing particular notification under provisions of the Act lies in domain of executive to carry out object and purpose of said provision – Court is not empowered to go behind reasons for not issuing notification under Section 54EE of the Act – Petitioner has no legitimate expectation for issuing notification specifying long term asset/fund for investment of capital gain arising out of transfer of long term capital asset by him – No writ of mandamus can be issued to Central Government to issue notification under Section 54EE of the Act.
Income Tax Act, 1961 – Sections 40(a)(i), 143(3) and 148 – Reopening of assessment – Issuance of notice – Validity – Petitioner filed return of income for Assessment Year 2013-14 – After verification of records of Petitioner, AO passed assessment order under Section 143(3) of the Act – Subsequently, AO reopened case of Petitioner vide notice issued under Section 148 of the Act – Whether impugned notice issued by AO under Section 148 of the Act is sustainable – HELD – Perusal of reasons to believe escapement of income indicate that Petitioner made foreign remittance on account of legal and professional fees, however, no deduction of TDS was made and hence, same is required to be disallowed under Section 40(a)(i) of the Act – During course of assessment proceedings, Petitioner was asked to submit details of all outward remittances and TDS deducted if any – Petitioner had provided details to AO regarding outward remittances – After considering submissions and on basis of verification of records, AO passed assessment order under Section 143(3) of the Act – AO reopened assessment on basis of very same records which were placed at time of original assessment – Details regarding issue under consideration was already examined by AO and therefore, it was not open for AO to reopen same or revisit his opinion because of a “change of opinion” – Impugned notice under Section 148 of the Act issued by AO quashed – Petition allowed
Income Tax Act, 1961 – Sections 132, 147, 148 and 245 – Reopening of assessment – Validity – By way of present petition, Petitioner has challenged notice issued under Section 148 of the Act for Assessment Year 2014-15 – HELD – Consequent to search and seizure action carried out under Section 132 of the Act, proceedings were initiated against Petitioner – Petitioner had approached Income Tax Settlement Commission by filing an application under Section 245C(1) of the Act – Settlement Commission passed order under Section 245D(4) of the Act by assessing total income and directed Petitioner to pay tax along with interest – Act envisages only one order concerning a case of assessee, it may either be an order of settlement passed by Settlement Commission or an order of assessment passed by Assessing Officer, but not both – Once an order has been made by Settlement Commission under Section 245D(4) of the Act, same is conclusive and final in respect of assessment for assessment year in relation to which such order has been passed – Since assessment has been concluded by Settlement Commission, Assessing Officer has no jurisdiction to reopen assessment by invoking provision of Section 147 of the Act – Impugned notice issued under Section 148 of the Act is quashed and set aside – Petition allowed
Income Tax Act, 1961 – Sections 10(38), 254 and 260A – Dismissal of miscellaneous application – Filing of appeal – Maintainability – Respondent/assessee filed its return of income for AY 2014-15 declaring total income after claiming exemption under Section 10(38) of the Act in respect of Long Term Capital Gain (LTCG) arising on sale of shares – AO rejected exemption claimed by assessee and added LTCG as Income from Other Sources – CIT(A) deleted addition made by AO – Tribunal dismissed appeal of Appellant/Revenue on ground that tax effect is below monetary limit – Revenue filed Miscellaneous Application before Tribunal for consideration of case on merit, but Tribunal dismissed said application – Whether order passed in Miscellaneous Application under Section 254(2) of the Act is appealable before this Court or not – HELD – Section 260A of the Act envisages about appeal to High Court – Perusal of Section 260A of the Act make it clear that an appeal shall lie to High Court from every order passed in appeal by Appellate Tribunal before date of establishment of National Tax Tribunal, if High Court is satisfied that case involves a substantial question of law – There is no dispute that Miscellaneous Application arises out of appeal was dismissed by Tribunal on account of low tax effect – Order so passed under Section 254(2) of the Act cannot be covered under expression “every order passed in appeal” as has been mentioned under Section 260A of the Act – Order passed in Miscellaneous Application is not appealable before this Court – Present appeal is not maintainable – Appeal dismissed
Income Tax Act, 1961 – Sections 143(3), 148 and 156 – Reopening of assessment – Issuance of notice – Validity – Petitioner is a company engaged in business of recycling and trading of aluminium scrap filed its Income Tax Return for AY 2014-15 – After considering all relevant documents submitted by Petitioner, AO completed assessment under Section 143(3) of the Act and issued notice of Nil demand in accordance with Section 156 of the Act – After a period of five years, Petitioner was served with notice under Section 148 of the Act for reopening of assessment – Whether impugned notice issued by Respondent under Section 148 of the Act is sustainable – HELD – It is a well settled principle of law that AO has power to re-open assessment, if there is "tangible material" to come to conclusion that there is escapement of income from assessment – There was no fresh tangible material available with assessing authorities so as to assume jurisdiction under Section 148 of the Act – Case of revenue is that there was large increase in cenvat creditors against reduction in business income as compared to preceding year and there was mismatch in amount paid to related persons – Petitioner had furnished copies of audited financial accounts, copy of assessment order of year 2013-14, details of payments made to persons specified, copy of ledger, accounts of loans taken by company etc. – After consideration of all these materials, AO passed assessment order under Section 143(3) of the Act and raised no demand – After a period of five years, revenue has thought it fit to reopen assessment proceedings purportedly under guise of same records on ground that material embedded in records could not be discovered – Stand taken by revenue is based on change of opinion, as return filed by Petitioner for AY 2014-15 was scrutinised under Section 143(3) of the Act – It is a clear case of change of opinion – Impugned notice issued under Section 148 of the Act is quashed and set aside – Petition allowed
Income Tax – Illegal collection of money – Entitlement of refund – Writ application has been preferred by Petitioner for declaration that action of Respondent Nos.1 and 2 (CCL) and Respondent Nos.3 to 5 (Revenue) in not granting refund of monies illegally realised from Petitioner in guise of Tax Collected as Source (TCS) is illegal – HELD – Root cause of present lis lies in illegality committed by Revenue in compelling Respondent Nos.1 and 2 in effecting TCS qua transactions of purchase of coal which was genuinely used by Petitioner in generation of power – Such TCS was effected by Respondent Nos.1 and 2 even though appropriate Form 27C was issued by Petitioner with a verification that goods so purchased would be used for purposes of generation of power – In compliance with this Court’s directions, Respondent Nos.3 to 5 provided procedure for issuance of TCS certificates by Respondent Nos.1 and 2 to Petitioner – Petitioner highlighted that TCS certificates which would be issued by Respondent Nos.1 and 2 would not be capable of being utilized by Petitioner because of lapse in time in issuance thereof – In such circumstances, it is proper to direct that entire sums of money collected as TCS from Petitioner along with interest should be refunded by Respondent Nos.3 to 5 to Respondent Nos. 1 and 2, who should thereafter forthwith refund same to Petitioner in a time-bound manner – Application disposed of
Income Tax Act 1961 – Sections 148, 148A and 149(1) – Reopening of assessment – Issuance of notice – Validity – Petitioner has filed present application seeking review of order dated 7-8-2023, whereby, petition filed by Petitioner challenging notice issued under Section 148 of the Act for reopening assessment for AY 2019-2020 was dismissed – HELD – Notice issued under Section 148 of the Act clearly sets out the transactions forming basis of income that had escaped assessment – According to Petitioner, notice under Section 148 of the Act was issued beyond period of limitation – Section 149(1) of the Act expressly provides time limit for issuing notice under Section 148 of the Act – Notice under Section 148 of the Act is required to be issued within period of three years from end of relevant assessment year – Notice was within stipulated period after excluding period afforded to Petitioner to respond to notice under Section 148A(b) of the Act and time for passing order under Section 148A(d) of the Act under fifth and sixth proviso to Section 149 of the Act – Petitioner’s contention that notice was issued beyond period of limitation was erroneous – There is no ground to review order dated 7-8-2023 – Application dismissed
Income Tax Act, 1961 – Sections 10(A), 143(3), 147 and 148 – Reassessment notice – Validity – Petitioner is a company engaged in business of providing healthcare technology services, filed its return of income for AY 2015-16 declaring total income after claiming deduction under Section 10(A) of the Act of profits earned from Special Economic Zone (SEZ) – After considering details furnished by Petitioner, AO allowed deduction claimed by assessee and completed assessment under Section 143(3) of the Act – Petitioner received notice under Section 148 of the Act proposing re-opening of assessment for AY under consideration – Respondent No.3 rejected objections filed by Petitioner contesting re-opening of assessment on various grounds – Whether Petitioner has failed to disclose fully and truly all material facts during course of original assessment to justify re-opening of assessment – HELD – AO can only re-open an assessment, if he has ‘reason to believe’ that undisclosed income has escaped assessment – Admittedly, notice under Section 148 of the Act has been issued more than four years after expiry of relevant assessment year and assessment under Section 143(3) of the Act has been completed – In such circumstances, proviso to Section 147 of the Act will apply, therefore, there is a bar in reopening unless there is a failure to truly and fully disclose material facts – Fact that Petitioner is conducting its operations from SEZ unit is evident in notes to accounts forming part of financial statements furnished by Petitioner during assessment proceedings – Petitioner was also specifically asked to produce Form No.56F with respect to SEZ unit and deduction under Section 10A of the Act was allowed after scrutiny of said forms – Petitioner has furnished all details and relevant documents during assessment proceedings – AO has perused documents and thereafter passed original order – There is no failure on part of Petitioner to make full and true disclosure during assessment proceedings to justify re-opening of proceedings – Reopening of assessment is merely based on a change of opinion on same set of facts and material before AO which was available to him at time of original assessment – Impugned notice issued under Section 148 of the Act and order rejecting objections filed by Petitioner are quashed – Petition allowed
Income Tax Act, 1961 – Sections 2(31) and 148 – Reassessment notice – Validity – Petitioners challenged impugned notices issued under Section 148 of the Act – HELD – Petitioner No.1 company had already amalgamated with transferor company – It is well settled proposition of law that upon a scheme of amalgamation being sanctioned, amalgamating company is dissolved and therefore ceases to exist – Amalgamating company cannot be regarded as ‘person’ in terms of Section 2(31) of the Act and it would no longer be amenable to assessment proceedings considering the fact that extinct entity would not be covered within ambit of provisions of the Act – impugned notices issued under Section 148 of the Act to an erstwhile non existing entity are quashed and set aside – Petitions allowed
Income Tax Act, 1961 – Sections 54 and 139(5) – Sale of residential flat – Investment of sale proceeds in residential property – Entitlement of benefit of deduction – Petitioner is a Non-Resident Indian working in USA had sold a residential flat in India and purchased another residential flat in USA for a consideration more than amount of Long Term Capital Gain (LTCG) within time limit prescribed by Section 54 of the Act – Under a mistaken presumption, Petitioner deposited an amount higher than amount of LTCG into Capital Gain Account Scheme – Upon learning correct provisions of law, Petitioner filed rectification application accompanied by correct return of income – Respondent No.1 rejected application on ground that Petitioner was not eligible for deduction under Section 54 of the Act, as investment was made in a house property situated outside India – Whether benefits of Section 54 of the Act are available to Petitioner having transferred his residential house in India and purchased another house property in United States of America – HELD – It is an admitted position that Petitioner has sold his house property in India and invested sale proceeds in a residential house in USA within specified period – Petitioner has satisfied conditions stipulated in Section 54 of the Act as it stood prior to amendment and was applicable to relevant Assessment Year – Language of Section 54 of the Act before its amendment was that sale proceeds should be invested in a residential property within stipulated period of time – Plain reading of pre-amended Section 54 of the Act leaves no room for doubt that assessee need not restrict his investment only in India – Only after amendment to Section 54 of the Act, which came into effect from 1-4-2015, condition that assessee should invest sale proceeds arising out of a sale of capital asset in a residential situated "in India" within stipulated period was imposed – Amendment is prospective in nature and cannot be applied to transaction prior to 1-4-2015 – Petitioner has not filed revised returns under Section 139(5) of the Act, but he has admitted to an inadvertent error in declaring total income as Nil vide a rectification application – Admittedly, Petitioner is entitled to refund of excess amount of tax deduction at source – Rejection of revision petition cannot be sustained – Order passed by Respondent No.1 quashed – Respondent No.1 is directed to accept rectified return of income filed by Petitioner and decide same in accordance with law – Petition allowed
Income Tax Act, 1961 – Section 10AA(1) – Finance Act, 2017 – Statutory provisions – Constitutional validity – Petitioner has prayed to declare Explanation to Section 10AA(1) of the Act inserted by 2017 Act as unconstitutional and also to direct Respondent to consider Petitioners’ claim of deduction under Section 10AA of the Act without applying aforesaid Explanation – HELD – Section 10AA of the Act provides for exemption to eligible units established in a Special Economic Zone while computing gross total income of unit – On 1-4-2018, Explanation was inserted after Section 10AA(1) of the Act by 2017 Act with effect from said date prospectively – Explanation in question did not expand scope of provision, or curtail any rights and only the scope of Section has been properly defined – Petitioner through deliberate misinterpretation of Section 10AA of the Act would add losses from ineligible unit and bring down total taxable income, and then take deduction under Section 10AA of the Act to further reduce taxable income – Legislature had to bring in Explanation to Section 10AA of the Act to prevent such tax evasion – Legislature’s intention was very clear and assessee can have no legitimate expectation of taking undue advantage of Section 10AA of the Act to evade tax by utilising its loss-making unit after merger – Principle of legitimate expectation is not applicable to case of Petitioner – Explanation to Section 10AA(1) of the Act inserted by 2017 Act is constitutional and is a valid piece of legislation – Petition dismissed
Income Tax – Transfer Pricing – Computation of arm’s length price – Respondent/assessee is a company engaged in multiple homogeneous transactions in area of airfreight and sea freight, filed its return of income for year under consideration – AO made reference to Transfer Pricing Officer (TPO) to determine Arms’ Length Price (ALP) of international transactions entered into by Respondent with its Associated Enterprises (AE) – Pursuant to TP adjustments as suggested by TPO, AO completed assessment by enhancing income of Respondent – Tribunal set aside order of AO and directed Respondent to carry out internal FAR (functions performed, assets employed and risks taken) analysis and identify proper revenue and costs vis-a-vis audited accounts to establish internal comparability under Transactional Net Margin Method (TNMM) as most appropriate method (MAM) – Whether Tribunal is justified in holding internal TNMM as the most appropriate method, even when internal TNMM was not used by assessee in its transfer pricing report – HELD – Grievance of revenue is that Tribunal could not have applied internal TNMM as MAM, because neither assessee nor AO had considered that method to be the most appropriate method – However, on behalf of Appellant/revenue, it was not demonstrated as to how change in MAM would produce better or more appropriate arms’ length price in facts of present case – TPO computed ALP of international transactions related to freight charges received on import and export by applying external TNMM as MAM for benchmarking of transactions – Tribunal gave detailed reasons for arriving at a conclusion that internal TNMM would be the most appropriate method – Tribunal proceeded further and held that if Respondent failed to demonstrate internal FAR and identification of proper revenue and costs vis-à-vis audited accounts, it would file details in respect of external comparables under TNMM as MAM and TPO would decide issue as per law – Ultimate aim of transfer pricing exercise is to determine accurate value of ALP for purpose of taxation – Appellate authorities are not precluded from adopting a method different from that adopted by assessee in transfer pricing report – In light of aforesaid, there is no substantial question of law arising in this appeal to be answered by this Court – Appeal disposed of
Income Tax Act, 1961 – Sections 143(3) and 148 – Reopening of assessment – Validity – Petitioner filed return of income for AY 2013-14 – Petitioner provided details called for by Assessing Officer regarding all “outward remittances” made during AY 2013-14 – After considering details submitted by Petitioner, Assessing Officer passed assessment order under Section 143(3) of the Act – Respondent reopened assessment by issuing notice under Section 148 of the Act – Respondent completed reassessment by making addition of commission paid to foreign agents for non-deduction of TDS – Petitioner challenged notice issued under Section 148 of the Act and reassessment order – HELD – Petitioner had provided details to Assessing Officer regarding outward remittances – Petitioner had also provided the chart containing detailed breakup of all foreign remittances along with details of TDS deducted and if not deducted, reasons for not doing so – After considering submissions and on basis of verification of records, Assessing Officer passed assessment order under Section 143(3) of the Act – Notice issued under Section 148 of the Act and reason to believe that income has escaped assessment is based on very same records which were placed at time of original assessment – Details regarding issue under consideration was already examined by Assessing Officer, for which a specific query was raised and therefore, it was not open for Assessing Officer to reopen same or revisit his opinion because of a “change of opinion” – It is not the case of authority that there was a failure to fully and truly disclose all facts that led to escapement of income so as to warrant an exercise of reassessment under Section 148 of the Act – In absence of any tangible material available, reopening beyond period of four years is bad in law – Notice issued under Section 148 of the Act and consequential assessment order are quashed and set aside – Petition allowed
Income Tax Act, 1961 – Sections 12A, 148 and 148A – Reopening of assessment – Validity – Petitioner is a charitable cum religious trust registered under Section 12A of the Act – Upon issuance of notice under Section 148A(b) of the Act, Petitioner has duly responded by filing a detailed reply and has specifically raised objection with respect to issuance of said notice – Without considering objections raised and without following criteria provided in Section 148A of the Act, Respondent/department has passed impugned order under Section 148A(d) of the Act and also issued notice under Section 148 of the Act – Whether impugned order passed by Respondent No.3 under Section 148A(d) of the Act is sustainable – HELD – Vide notice issued under Section 148A(b) of the Act, department alleged that through Risk Management System, department is in possession of information that Petitioner Trust is mostly engaged in real estate business and most of its activities are related to real estate development which are not charitable or religious activity – Notice issued under Section 148A(b) of the Act is in nature of Show Cause Notice – Bald assertion about escapement of income is not sufficient to validate issuance of notice under Section 148A(b) of the Act – There must be some material supporting allegation of escapement of income – Entire material and information relied upon by AO needs to be supplied to Assessee along with notice under Section 148A(b) of the Act – Very essence of Section 148A(b) of the Act is to provide opportunity to Petitioner – Without sharing/providing information and supporting documents to Petitioner, Respondents had clearly frustrated/violated purpose of Section 148A(b) of the Act and further restrained Petitioner to present his stand and submit his explanation in best possible manner – Impugned order passed by Respondent No.3 under Section 148A(d) of the Act for AY 2019-20 and also subsequent notice issued under Section 148 of the Act are quashed and set aside – Matter is remitted back to Respondent No.3 to supply all relied upon documents on basis of which Notice under Section 148A(b) of the Act has been issued and pass order strictly in accordance with law as mandated in provision itself – Application allowed