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2023 (11) TMI 495 - AT - Income TaxReopening of assessment u/s 147 - assessee in default for non-deduction of tax while issuing FCCB to the non-resident assessee company - reasons to believe - HELD THAT:- We note that the essential condition prescribed under the Act for reopening the assessment u/s 147 of the Act AO is that he has to firstly record his “reasons to believe, escapement of income”. It is well settled that the “reason to believe” postulates a foundation based an information and belief based on reason. In the present case CIT(A) who was pleased to delete the direction of AO (TDS) to deduct the tax at source on the redemption premium. And this action of the Ld. CIT(A) has been upheld by the Tribunal (Pune) [2023 (1) TMI 1312 - ITAT PUNE] by holding that the income has not arisen in India in the hands of the recipient/non-resident and therefore there was no obligation on the part of the payer/M/s. Bharat Forge Ltd. to deduct tax at source on the payment of interest (redemption premium) as held by the Hon’ble Supreme Court in the case of GE India Technology Cen. (P.) Ltd. [2010 (9) TMI 7 - SUPREME COURT] In the light of the aforesaid action of the Tribunal in the case of payer/M/s. Bharat Forge Ltd., the information given by the AO (TDS) of M/s. Bharat Forge Ltd. which was the foundation on which was the AO of assessee has re-opened the assessment of assessee is no longer existing being legally incorrect. Therefore, the material/information on which AO have re-opened the assessment having been removed, the action of AO to have issued notice of re-opening of assessment u/s 148 of the Act itself fails. We may rely on the legal Maxim “Sublato Fundamento credit opus” meaning in case foundation is removed, the super--structure falls. In the case of Badarinath Vs. Tamilnadu [2000 (9) TMI 1044 - SUPREME COURT] has held that once the basis of proceeding is gone, all consequential order and acts would fall on the ground automatically which is applicable to judicial and quasi--judicial proceedings. Decided in favour of assessee.
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