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2020 (9) TMI 278 - AT - Income TaxValidity of reopening of assessment - non independent satisfaction regarding escapement of income - borrowed satisfaction - disallowing business development and marketing expenses holding the same to be capital expenditure, as against revenue expenditure claimed by the assessee - HELD THAT:- We find that in the reasons, the Assessing Officer himself has mentioned “The scrutiny of assessment revealed”. This itself shows that the details were very much available in the assessment record. We find that in the original assessment proceedings, the Assessing Officer raised a query asking the assessee to give details of expenditure of more than ₹ 10 lakhs. The assessee filed complete list of expenses which were more than ₹ 10 lakhs. Expenses are found to be debited in the Profit and Loss Account under Schedule 15 which is demonstrated at page 17 of the paper book. Under Schedule 17 of the financial statement, which is exhibited at page 20 of the paper book, the assessee has shown professional service expenses incurred during the relevant Assessment Year under the head “Expenditure in foreign currency”. In the tax audit report, in clause 17 relating to expenditure of capital nature, it is mentioned as “NIL”. This means that even the auditors were of the opinion that no capital expenditure was incurred during the year under consideration, which is debited to the profit and loss account. Since this reimbursement of professional expenses tantamount to international transactions, the assessee has, in Form 3CEB, which relates to particulars relating to International Transactions required to be furnished u/s 92E of the Act, furnished complete details in relation to transactions with NIIT Technologies INC UK and US. In column 10 of Form No. 3CEB, it was stated that amount has been paid to the sister concerns in lieu of services rendered by them and further, such transactions have been entered into at Arm’s Length price Surprisingly, no adverse inference has been drawn in so far as the payments made in the months of December and March are concerned and adverse inference has only been drawn in the months of June 2004 and September 2004, as exhibited elsewhere. Reasons for reopening the assessment do not specify any failure on the part of the assessee to disclose truly and fully all material facts. On the contrary, we find that full and true disclosure was duly made by the assessee. All material information was duly filed and was available on record before the Assessing Officer. Therefore, on perusal of reasons, it cannot be comprehended as to what more information remained to be disclosed by the assessee and moreover, no instance of any non disclosure has been pointed out by the Assessing Officer in the reasons recorded. The Revenue has heavily relied upon Explanation 1 to section 147 of the Act. In our considered opinion, the onus is also on the Assessing Officer to show that primary disclosure was not sufficient for further investigation by the Assessing Officer. Entire attempt of the assessing officer was to hold that the expenditure incurred, in respect of which details are already available on record and was examined in original assessment, as capital expenditure and such opinion is solely based out of the opinion of the audit party, which in itself is not permissible. The reassessment is bad in law and, therefore, no interference is called for. - Decided in favour of assessee.
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