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2022 (5) TMI 326 - ITAT DELHIReopening of assessment u/s 147 - AO was of the opinion that the assessee was having business connection as well as Permanent Establishment [PE] in India and the PE was engaged in activities which cannot be termed as auxiliary and preparatory - HELD THAT:- We find that in the appeals under challenge before us, the assessee had raised specific objections to the notice issued u/s 148 of the Act qua the reasons recorded therein. Therefore, the findings of the Tribunal given on specific facts of those Assessment Years are totally distinguishable on the facts of the years under consideration. As mentioned elsewhere, in the reasons recorded for reopening the assessment, we do not find any mention of any expat employee present during the relevant year nor there is any mention of such employees in the assessment order. In our considered opinion, there needs to be close nexus between the material before the Assessing Officer and the belief which he has formed. The Hon'ble Supreme Court in the case of Ganga Saran & Sons [1981 (4) TMI 5 - SUPREME COURT] has remarked “The words “has reason to believe” are stronger than the words "is satisfied.". The belief entertained by the Income Tax Officer must not be arbitrary or irrational. It must be reasonable or, in other words, it must be based on reasons which are relevant and material. We are of the view that the belief of the Assessing Officer is a condition precedent for assuming jurisdiction and without such belief, the Assessing Officer would not have jurisdiction to initiate proceedings u/s 147 of the Act. We are of the view that the fulfillment of this condition is not a mere formality but it is mandatory and failure to fulfill that condition would vitiate the entire proceedings. We find that there is no rationale connection between the information in the possession with the Assessing Officer and formation of belief that there has been escapement of income for Assessment Years 2008-09 to 2011-12. On a perusal of the assessment order/DRP order, we find that strong reliance has been placed on various documents found during the course of survey which was carried out at the premises of General Electric International Operations India Liaison Office on 02.03.2007 whereas the assessment orders under challenge pertain to Assessment Years 2008-09 to 2011-12. Therefore, evidence being sought to be used for initiating fresh enquiry against the assessee does not even pertain to the Assessment Year under consideration. In our considered opinion, whether a PE exists or not is a fact specific issue and is to be decided on year on year basis. We are of the considerAssessment Years under challenge, no new tangible material has been brought by the Assessing Officer to justify the reopening and as mentioned elsewhere, the reason why reopening was upheld by this Tribunal in Assessment Year 2001-02 which was followed by it in subsequent years i.e. 2002-03 to 2006-07 are totally distinguishable, in as much as, in those years in the reasons itself, as mentioned elsewhere, the Assessing Officer had given specific findings in respect of expat employees present in India, which fact finding is absent in the Assessment Years under consideration. Reasons for reopening the assessment cannot be improved in the body of the assessment order. Appeal of assessee allowed.
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