TMI Blog2012 (6) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... Ankit Gupta for the Appellant. A.K. Mahajan for the Respondent. ORDER I.P. Bansal, Judicial Member. Both these appeals are filed by the assessee. They are directed against the assessment orders dated 15-10-2010 passed under section 143(3) read with section 144C(5) of the Income-tax Act, 1961 for assessment years 2002-03 and 2003-04. The grounds of appeal read as under:- ITA No. 5161/Delhi/2010 1. That the notice issued under section 148 is illegal, bad in law, barred by time limitation and without jurisdiction and the reassessment order passed is also illegal, bad in law, barred by time limitation and without jurisdiction and liable to be quashed. 2. There is no failure on the part of the assessee to disclose all material facts truly and fully and there is no such allegation in the reasons recorded hence the notice issued under section 148 after four years from the end of the assessment year is illegal, barred by time limitation and without jurisdiction. 3. The notice under section 148 has been issued on the basis of change of opinion and such notice is illegal, bad in law and without jurisdiction. 4. That the notice issued under section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erly considered and judicially interpreted and the same do not justify the addition made. 12. That the additions/disallowances made are based on mere surmises and conjectures and the same cannot be justified by any material on record. 13. The appellant craves leave to add, amend, alter and/or delete any of the above grounds of appeal at or before the time of hearing. ITA No. 5162/Delhi/2010 1. That the notice issued under section 148 is illegal, bad in law, barred by time limitation and without jurisdiction and the reassessment order passed is also illegal, bad in law, barred by time limitation and without jurisdiction and liable to be quashed. 2. There is no failure on the part of the assessee to disclose all material facts truly and fully and there is no such allegation in the reasons recorded hence the notice issued under section 148 after four years from the end of the assessment year is illegal, barred by time limitation and without jurisdiction. 3. The notice under section 148 has been issued on the basis of change of opinion and such notice is illegal, bad in law and without jurisdiction. 4. That the notice issued under section 148 has been issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Though the assessee has taken various grounds of appeal which include assailing of the impugned assessment on the basis of invalidity of initiation of reassessment proceedings, ld. Counsel of the assessee stated before us that the impugned assessment has to be struck down simply on the basis of applicability of proviso to section 147. He submitted that the facts relating to both the years are as under:- Assessment year 2002-03 ( i ) Original assessment was framed vide order passed under section 143(3), dated 30-3-2005, copy of which is placed at pages 49 50 of the paper book. The return of income was filed by the assessee on 31-10-2002 at a loss of Rs. 16,80,80,967 which was assessed project-wise as under:- Income declared from Srinagar-Nagpur Project to be fixed at 15% Rs. 1,30,000 Income from Ahmedabad-Vadodra Project to be fixed at 20% Rs. 1,11,73,007 Interest on fixed deposit In Srinagar-Nagpur Project Rs.2,67,440 In Ahmedabad-Vadodra Project to be fixed at 48% Rs.1,07,502 Rs. 3,74,942 ( ii ) The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at pages 66-70 of the paper book. The factual aspect with regard to both the years are same. The reason for reopening of the assessment is also same. 4. Ld. AR of the assessee argued the appeal on the short issue that reassessment proceedings in both the cases are invalid on the ground of application of proviso to section 147. He submitted that for both the assessment years, notice under section 148 has been issued beyond the period of four years from the end of the relevant assessment years. There is no allegation by the Assessing Officer that in the reasons recorded the assessee did not disclose fully and truly all the material facts necessary for its assessment. He, therefore, submitted that exercise of power of reassessment by the Assessing Officer is contrary to the proviso to section 147 and are required to be quashed. Ld. AR also relied upon the decisions of Hon'ble Delhi High Court in the cases of Wel Intertrade (P.) Ltd. v. ITO [2009] 308 ITR 22/178 Taxman 27 and Haryana Acrylic Manufacturing Co. v. CIT [2009] 308 ITR 38/[2008] 175 Taxman 262 (Delhi). He submitted that following the aforementioned decisions of the jurisdictional High Court, the Tribunal vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department under section 147 after the expiry of four years from the end of relevant assessment year, unless any income chargeable to tax has escaped assessment for the said assessment year for reason of failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Considering the facts of the present case in the light of the aforementioned proviso, first it has to be determined that whether the assessments originally are framed under section 143(3). It has already been observed that for assessment year 2002-03, assessment under section 143(3) was framed vide order dated 30-3-2005 and the copy of such order is placed at pages 49 and 50 of the paper book. Similarly, for assessment year 2003-04, the assessment was framed under section 143(3) vide order dated 31-3-2006 and copy of such order is placed at page 97 of the paper book. It is also not the case of the department that re-assessment is initiated for the reason of non-furnishing of return under section 139 or non-furnishin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net profit of the PE or tax @ 20.91 per cent on gross amount of FTS. As an undisputed fact, the consideration received by the assessee is determined in the said assessment order of the nature of fee for technical services as per Explanation 2 to section 9(1)( vii ) of the Act. Since the assessee provides the services through various project offices, therefore, the FTS arisen to the assessee are effectively connected to such Project Offices/Permanent Establishment of the assessee in India and are liable to be taxed as per Article 7 of the DTAA between India and UK and as per section 44D/44DA read with section 115A of the Act depending upon the date of agreement. After a detailed discussion on the above provisions of DTAA and the Act, it was held in the assessment order for assessment year 2006-07, that the income of the assessee with regard to the Projects, where contract entered before 1-4-2004, no deduction for the expenses are allowable and the assessee is liable to pay tax in India as per section 44D read with section 115A of the Act and with regard to the Projects, where contract entered after 1-4-2004, the provisions of section 44DA of the Act will apply. In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een from the above reasons that there is no allegation of the Assessing Officer regarding failure of the assessee to disclose fully and truly all material facts necessary for the assessment of the assessee for the relevant assessment years. Moreover, it is apparent that the reason for re-opening of the assessment is difference in the rate of tax to be applied on the assessable income. According to the Assessing Officer, the assessed income has been wrongly taxed at 15 per cent whereas it should have been taxed at 20 per cent. Application of rate of tax on assessed income cannot in any way be the result of the failure of the assessee to disclose fully and truly all material facts necessary for assessment. The Assessing Officer is an adjudicating authority for the purpose of levy of rate of tax on particular type of income and in case when there is no dispute regarding the assessable amount, then, it is only the Assessing Officer who has to determine that what rate of tax is payable by the assessee on a particular income. The lower rate of tax charged by the Assessing Officer on a particular category of income cannot be said to be on account of failure of the assessee to disclose ful ..... X X X X Extracts X X X X X X X X Extracts X X X X
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