TMI Blog2011 (6) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... n law and allow the appeal of the assessee on this preliminary issue. - 2537 (MUM.) OF 2010 - - - Dated:- 14-6-2011 - P.M. JAGTAP, V. DURGA RAO, JJ. J.D. Mistry and Nishant Thakkar for the Appellant. Smt. Malathi Shridharan for the Respondent. ORDER P.M. Jagtap, Accountant Member. This appeal filed by the assessee is directed against the order of the learned CIT(A) X, Mumbai dated 26-2-2010. 2. The assessee in the present case is a company, which was formerly known as Technical Pacific (India) Exports Pte. Ltd. It is registered in Singapore and is a fully owned subsidiary of M/s. Technical Pacific (India) Ltd. (TPIL)/M/s. Ingram Micro (India) Pvt. Ltd. (IMIL). A search and seizure action under section 132(1) of the Income-tax Act, 1961 was conducted in the case of TPIL/IMIL on 6-9-2007. Simultaneously a survey under section 133A was also carried out at the premises of TPIL/IMIL at Mumbai and Bangalore. According to the Assessing Officer, the material found and seized during the course of search in the case of TIPL/IMIL revealed that the assessee company was conducting its business operations in India through TPIL and it had a permanent establishment (PE) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o question of any escapement of income for that year. It was pointed out that provisions of section 147 could be invoked only in a case where the Assessing Officer has reason to believe that assessee has earned income and that the said income has escaped assessment. It was contended that in the absence of any income earned by assessee company in the previous year relevant to assessment year 2001-02, there was no question of any escapement of its income for the year under consideration and reopening of assessment by the Assessing Officer for that year without any basis was bad in law. It was contended that the assessment completed by the Assessing Officer under section 143(3) read with section 147 in pursuance of such reopening thus is invalid and the same should be cancelled. Reliance in support of this contention was placed by the assessee on the decision of the Hon'ble Supreme Court in the cases of ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 and Indian Oil Corporation v. ITO [1986] 159 ITR 956/26 Taxman 336. 4. The learned CIT(A) did not find merit in the submissions made on behalf of the assessee challenging the validity of assessment made by the Assessing Officer under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, I hold that the Assessing Officer has sufficient reason to believe that income chargeable to tax has escaped assessment. Moreover, this is not a case of re-assessment but a case of an assessment only where no return of income was filed. Therefore, the issuance of notice under section 148 of the Act is proper and just and as per law hence the action of the Assessing Officer is hereby upheld. Accordingly, this Ground of appeal is treated as dismissed." 5. The learned CIT(A) also upheld the decision of the Assessing Officer that the assessee company had a permanent establishment in India during the year under consideration and confirmed addition of Rs. 4,27,78,851 made by the Assessing Officer to the total income of the assessee on account of income arising out of its business operations in India as attributable to the said PE. Aggrieved by the order of the learned CIT(A), assessee has preferred this appeal before the Tribunal. 6. Ground No. 1 raised by the assessee in this appeal is general seeking no specific decision from us. Ground Nos. 2 3 involve a preliminary issue challenging the validity of assessment made by the Assessing Officer under section 143(3) read with se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the period covered by the said returns was from 4-4-2001 to 31-8-2001 and the turnover declared therein was Nil. He then invited our attention to the copy of GST return filed for the month of September 2001 placed at page 12 of his paper book to show that the declaration of turnover made therein for the first time by the assessee was sufficient to show that business of assessee company had commenced in the month of September 2001. 9. The learned counsel for the assessee submitted that the above documentary evidence is sufficient to show that there was neither any business activity carried on by the assessee company in the year under consideration nor were there any sales effected by it in that year. He pointed out that in the absence of any business activity or turnover up to 31-3-2001, there was no question of earning of any income by the assessee or of escapement of such income. He submitted that relevant seized document relied upon by the Assessing Officer indicated the figures of revenue of assessee company for the subsequent years and not for the year under consideration and the reopening of assessment by him for the year under consideration on the basis of such figures, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. He submitted that a Note No. 3 was also given in the said document making in clear that in the year 2001 two entities were in operation viz., IPIL's Singapore branch from January to November and assessee company from February to December. It was also mentioned that the figure indicated for 2001 was a combined figure of these two entities. 11. The learned counsel for the assessee submitted that prior to incorporation of the assessee company in Singapore, TPIL had a branch in Singapore and after incorporation of assessee company and commencement of its business in the month of September 2001, Singapore branch was closed by TPIL in the month of November 2001. He then invited our attention to the copy of P L Account of TPIL Singapore Branch placed at page No. 69 of his paper book to point out that the total revenue of the said branch for the period 1-1-2001 to 30-11-2001 was 97,76,904 Singapore $. He further pointed out from the details of sales made by assessee company during the period from 7-9-2001 to 31-12-2001 placed at page Nos. 16 to 19 of his paper book that the total revenue of assessee company for that period September 2001 to December 2001 was 57,79,041 Singapore $. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantification of escaped income is a different aspect from the jurisdictional aspect. She also contended that if at all there was no income earned by assessee company for the year under consideration as sought to be pointed out by the learned counsel for the assessee, the assessee is free to give relevant evidence and get relief as far as quantum of escaped income is concerned. She submitted that validity of reopening on this quantification aspect, however, cannot be challenged and if the reasons recorded by the Assessing Officer are considered along with the material found and seized during the course of search, there was sufficient basis for the Assessing Officer to have reasons to believe that income of assessee had escaped assessment. She contended that the reopening of assessment by the Assessing Officer for the year under consideration thus was in accordance with law as rightly held by the learned CIT(A). As regards the case laws relied upon by the learned counsel for the assessee, she submitted that the same are distinguishable on facts inasmuch as there was no such voluminous seized material available before the Assessing Officer in those cases as was available before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned by the Assessing Officer, the said evidences clearly established that assessee company was operating in India through TPIL, which was its permanent establishment in India. There is, however, no reference to any specific document on the basis of which this belief was entertained by the Assessing Officer. At the time of hearing before us, the learned D.R. has filed a paper book containing some of the seized documents and has made an attempt to justify the reopening of assessment made by the Assessing Officer on the basis of the said documents. In response to a query raised by the Bench, she has agreed that there is nothing either in the reasons recorded by the Assessing Officer or in the assessment records to show that these documents now filed before us were specifically relied upon by the Assessing Officer for reopening the assessment. She, however, has contended that the entire seized material was available before the Assessing Officer at the time of reopening of assessment and the said documents being relevant for entertaining the belief about escapement of assessee's income, the same should have been certainly relied upon by the Assessing Officer. 16. A perusal of the sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the learned counsel for the assessee, if there was no income actually earned by assessee for the year under consideration, there is no question of escapement of any income from assessment giving jurisdiction to the Assessing Officer to reopen the assessment. In the present case, there was no basis for the Assessing Officer to have reason to believe that income of the assessee for the year under consideration had escaped assessment and as established by the learned counsel for the assessee, the only document which was relied upon by the Assessing Officer specifically at assessment stage also could not have been the basis for the Assessing Officer to have reason to believe that any income of the assessee for the previous year relevant to assessment year 2001-02 had escaped assessment. As a matter of fact, there being no business carried on by the assessee company in that year, there was no question of earning of income which could be said to have escaped assessment. 18. In the case of Raja Bahadur Motilal (P.) Ltd. v. K.R. Vishwanathan, ITO [1990] 183 ITR 80 (Bom.), the Hon'ble Bombay High Court has held that even if it is assumed that the ITO had in possession some informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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