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TMI Blog2012 (7) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... sent proceedings for the A.Y. 2004-2005. The very material relied upon had not only been produced before the AO in the previous years but had been brought to his notice and considered by him while passing the assessment orders of the earlier years. It is to demonstrate this that it is necessary to state the facts in some detail. These facts unfold in the three stages leading to the assessment order. 4. The petitioner is a non banking financial company, registered with the Reserve Bank of India and carries on business relating inter-alia to investments and financial and strategic advisory services. On 1.4.2002, the petitioner entered into several business support agreements with its ultimate parent company Co-operative Centrale Raiffeisen - Boerenleenbank B.A., Amsterdam (Rabobank International). Under the agreements, Rabobank International was required to provide a variety of services. The petitioner has set out the nature of the services in considerable detail under various heads. It is not necessary to set them out in this judgment. It would be sufficient to note only some of the heads of services :- IT Infrastructure, Systems & Development Credit Risk Management (CR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner furnished the name and addressed of the associated enterprises with whom the transactions had been entered into and the description of the services provided. In clause 12 of Form No.3 CEB, the petitioner affirmed that it had entered into the international transactions with an associated enterprise and furnished the details as per Annexure "B" thereto including the payment for the support services. (B). The petitioner filed the annual report which also accompanied the return. The same mentioned the operating costs. Note 19 in respect thereof bifurcated the operating costs and stipulated the amount towards the business support services. Note 23.1 mentioned the relationship between the petitioner and Rabobank International. Note 23.5 furnished the particulars of the transactions between the petitioner and related parties which included reimbursement expenses including towards the business support services. Note 27 which pertains to the expenditure in foreign currency mentioned the amounts paid towards the business support services. 8(A). It is equally if not more important to note that respondent No.1 issued a notice dated 22.9.2006 under section 142(1) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the facts and circumstances of the case, and, the assessee's submissions and documents furnished, the value of the international transactions with the associated enterprises, with regards to the arm's length price is not being disturbed." THE THIRD STAGE : 11. The roznama of the proceedings before the AO indicates that the AO had in fact considered the entire matter including the arm's length price in detail. (A). The roznama of 6.11.2006 records that the petitioner was called upon to justify / explain the process of the international transaction audited in the said report in Form No.3 CEB. The roznama of 20.12.2006 records that the petitioner was called upon to furnish the complete receipts and details inter-alia regarding the quantum and purpose of support charges payment made to Rabobank International and to justify the same. (B). By a letter dated 7.11.2006, the petitioner forwarded the information. Paragraph 9 of the letter reads as under :- "Details of support charges paid to Cooperative Centrale Raiffeisen - Boerenleenbank B.A. Cooperative Centrale Raiffeisen - Boerenleenbank B.A. ("CCRB") is the ultimate holding company of Rabo India Finance Private Limited. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice is located in Singapore and is a branch of Co-operative Central Raiffeisend, Boerleenbank, B.A., Amsterdam, Netherlands ("CCRB") which is our ultimate holding company. Towards these support charges, the Company has made a provision for Regional Allocation charges of Rs.1,29,86,403/- for the month of January, 2004 to March, 2004. Similarly, the Company has also made a provision for Global and Head Office charges of Rs.1,75,01,456/- for the month of January,2004 to March,2004, CCRB charges only costs for providing such services to the company. The invoices for the same are raised after the year end. Hence, the Company made the provision of such expenses during the year under consideration, based on an estimate of expense and the actual amount is determined only on receipt of the actual invoice subsequently. The Company has not deducted tax on the above provisions amounting to Rs.3,04,87,859/-. Hence, the Company wishes to offer the same as income for the captioned assessment year in accordance with provisions of Sec 40(a)(i) of the Act." Keeping in mind the above submissions of the assessee company, nature of expenditure incurred, actual bill raised in the next F.Y., the offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank International on the petitioner. 14. The facts thus far indicate that the respondents were aware not merely of the existence of the transactions between the petitioner and Rabobank International but also the details thereof. They also establish that the AO had specifically considered the same. If an AO calls for specific information relating to or in connection with the material before him, absent anything else, it is reasonable to presume that he had considered the material filed before him as well as the material called for by him before making the assessment order. Had he not considered the material filed before him originally there would be no question of his seeking further information in relation thereto. It is logical therefore, to presume that he had considered the material in relation to which he sought further information. It would equally follow that the AO would also have considered the information furnished pursuant to such demand. A view to the contrary would presume that the AO had ignored the very information that he specifically sought. We are not inclined to presume negligence or indifference on the part of an AO in such circumstances. It is reasonable theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on No.371 of 2012. By an order dated 2.3.2012, this Court quashed the order of reassessment and directed respondent No.1 to pass a fresh order on the objections raised by the petitioner to the proposed reassessment. 18. Thereafter respondent No.1 heard the matter afresh and passed the impugned order dated 27.3.2012, rejecting all the objections raised by the petitioner to the impugned. After setting out the above facts and submissions on behalf of the parties, respondent No.1 held as under :- "4.9 I have gone through the submission of the assessee very carefully and find the same without any merit. The above case laws relied upon by the assessee are materially on different facts than the facts of the assessee's case. It has been discussed in detail in the foregoing paras that the disclosure made by the assessee during the course of maiden assessment proceedings was inadequate. Since the Assessing Officer in those proceedings had not made any opinion on the said issue of "Business Promotion Expenses", the question of "change of opinion" does not arise. Accordingly, I hold that this is not a case of change of opinion and therefore the various case laws relied upon challengin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied upon paragraph 4.9 of the impugned order to the effect that the Assessing Officer in earlier had not expressed any opinion on the issue of business promotion expenses and that therefore, the question of change of opinion does not arise. 23. This finding is ex-facie incorrect. It ignores the detailed consideration by the AO in respect of the A.Y. 2004-2005 disallowing a part of the claim under section 40A(i), which we have set out earlier. The same material had been considered by the TPO and the AO in the assessment proceedings for the A.Y. 2004-2005. As stated earlier, it is evident from the roznama, the requisitions by the TPO and the AO and the petitioner's response thereto in the assessment proceedings for the year 2004-2005 that the material had been furnished by the petitioner and considered by the AO and the TPO. 24. Even if the assessment order had itself not dealt with the point expressly, it would have made no difference. A Division Bench of this Court, to which one of us (M.S. Sanklecha, J.) was a party, in a judgment dated 10.2.2012 in NYK Line (India) limited v. Deputy Commissioner of Income Tax 1(3) in Writ Petition No.159 of 2012 held :- "17 Now, in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re rejected and additions/ disallowances are made. We agree. 16. Applying the principles laid down by the Full Bench of this court as well as the observations of the Punjab and Haryana High Court, we find that if the entire material had been placed by the assessee before the Assessing Officer at the time when the original assessment was made and the Assessing Officer applied his mind to that material and accepted the view canvassed by the assessee, then merely because he did not express this in the assessment order, that by itself would not give him a ground to conclude that income has escaped assessment and, therefore, the assessment needed to be reopened. On the other hand, if the Assessment Officer did not apply his mind and committed a lapse, there is no reason why the assessee should be made to suffer the consequences of that lapse. 17. In so far as the present appeal is concerned, we find that the assessee had placed all the material before the Assessing Officer and where there was a doubt, even that was clarified by the assessee in its letter dated November 8, 1995. If the Assessing Officer, while passing the original assessment order, chose not to give any finding in this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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