TMI Blog2012 (7) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... hange of opinion not permitting the AO or his successor to reopen the assessment of the assessee - in favour of assessee. - WRIT PETITION NO.870 OF 2012 - - - Dated:- 9-7-2012 - S.J. VAZIFDAR AND M.S. SANKLECHA, JJ. Mr.Percy Pardiwalla, Senior Counsel with Mr.Atul K. Jasani for the Petitioner. Mr.Suresh Kumar for the Respondents. ORAL JUDGMENT (PER S.J. VAZIFDAR, J.) :- 1. Rule. With the consent of the parties, the petition is taken up for final hearing. 2. The petitioner has challenged a notice dated 28.3.2011, issued under section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the A.Y. 2004-2005 and an order dated 27.3.2011 rejecting the petitioner's objections thereto. 3. We have come to the conclusion that the reopening of the assessment is based only on a mere difference of opinion. It is admittedly not on the basis of any new material or the existence or even the realization of any provision of law or a judgment which had not been noticed earlier. The change of opinion occurred in the assessment proceedings for the A.Y. 2007-2008 leading to the present proceedings for the A.Y. 2004-2005. The very material relied upon had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed before and the facts disclosed by the petitioner to the AO with the return of income. (A). The return of income was accompanied by a tax audit report in Form No.3 CEB and the annual accounts. Note 6 in the computation filed with the return read as under :- 6. The Company has paid support charges to Co-operatieve Centrale Raiffeisen-Boerenleenbank B.A. on which taxes have been deducted in accordance with the orders obtained under section 195(2) of the Act. The annexure to the same Form No.3 CEB contained the particulars relating to the international transactions. Part B of clause 7 of the Annexure required the particulars of the relationship of the assessee with associated enterprises. The details were furnished in Annexure A to the said Annexure to Form No.3 CEB. The same disclosed Rabobank International as an associated enterprise as defined under section 92(A) of the Act and stated the business to be that of banking and financial services. In clause 10 of the Annexure, the petitioner affirmed that it had entered into an international transaction in respect of the services. In Annexure B thereto, the petitioner furnished the name and addressed of the associate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rve a notice on the assessee requiring him to produce or cause to be produced on a date to be specified therein, any evidence on which the assessee may rely in support of the computation made by him of the arm's length price in relation to the International transaction referred to in sub-section (1). 10(A). The TPO issued a notice dated 12.6.2006 under sub section 2 seeking information from the petitioner in connection with the proceedings under sub-section (1). (B). The petitioner by his reply dated 5.7.2006 specifically referred the TPO to the accountants report, which had been forwarded with the income tax return and the Transfer Pricing Study Report for the financial year ending 31.3.2004. (C). It is also important to note that under cover of a letter dated 16.11.2006, the petitioner forwarded to the TPO the copies of the agreements and stated that the same specify the nature of the support services to be provided thereunder and the basis of the charge. The letter also enclosed the invoices raised in respect of the services. (D). Ultimately, the TPO by an order dated 12.6.2006, inter-alia concluded as under :- Considering the facts and circumstances of the case, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding company of the assessee company. As per the agreement, the assessee company has made a provision of regional allocation charges of Rs.129,86,403/- and Rs.175,00,000/- for global and head office charges for the month of Jan to Mar, 04 against these support charges and for providing services to the company. However, the invoices of these expenses were raised in the subsequent F.Y. It is further noticed that the assessee company has not deducted TDS on above provisions amounting to Rs.3,04,87,859/-. Accordingly, vide order sheet noting dt. 04.12.06, the assessee company was requested to justify along with supporting documentary evidences, the provisional expenditure of Rs.1.29 crs. and Rs.1.75 crs for the month of Jan to Mar 2004, for which the actual bills were raised in the subsequent F.Y. i.e. 2004-05,. In compliance to above, vide reply dt. 11.12.06, interalia, the assessee company has submitted as under : During the year under consideration, the Regional Office of Rabo group has rendered certain support services to our Company and the other group companies located in the Asia Pacific Region on a cost sharing basis. The Regional Office is located in Singapore and is a bran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ients in India. As these transactions pertain to Financial Sector and the assessee is receiving advisory fees, guarantee fee/indemnity fee as percentage of interest income of Rabo India and other remittances guised in the of the forms of reimbursements, it is held that 80% of the operations are carried out in India. Accordingly, the revenue attributable to India from its PE in India is computed at 80% of Rs.86,814,553/- amounting to Rs.69,451,642. As the assessee is engaged in the financial sector and especially engaged in providing credit facility and advisory services, 30% of the above is taken to the profits of the assessee from its Indian operations. 4. Subject to the above, total income of the assessee is as under :- Interest Income Rs. 76,34,718/- Business income as discussed in para 3 Rs.2,08,35,493/- 13. It is clear therefore, that the details of the transactions including the agreements between the petitioner and the Rabobank International had been forwarded to the AO and the TPO. The TPO and the AO had obviously considered the same as well as all the relevant documents in connection therewith including the invoices raised by the Rabobank International on the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing the same for the AY 2004-05, the above expenses need to be disallowed. There is a failure on the part of the Assessee to make a full and true disclosure of the nature of the services and assistance received from the Holding co for which payments have been made to the Holding co. I have therefore reasons to believe that the income of Rs.9,37,54,925/- has escaped assessment under the provisions of Income-Tax Act, 1961 for the AY 2004- 05 and remedial action by issuance of notice u/s. 148 will be appropriate in the case because all the conditions for issue of such notice are fulfilled in this case. This assessment is being re-opened with prior approval of CIT-1, Mumbai given vide letter dated 24.03.2011 as per sub-section (2) of section 151 of the I.T. Act. Issue notice u/s. 148 of the Income Act Act, 1961 . 17. The petitioner raised the objections to the said notice, which were rejected. However, respondent No.1 did not dispose of the objections separately but did so while passing a reassessment order dated 16.12.2011 under section 143(3) of the Act. The petitioner therefore challenged this order as well as the impugned notice by filing Writ Petition No.371 of 2012. By an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of the information that was not furnished in the earlier proceedings. There is no mention of the disclosure of the nature of payments in the assessment proceedings for A.Y. 2007-2008 which were absent in the proceedings for the relevant assessment year. The basis of the notice was thus unfounded on facts. Nor does he state that the absence of this unspecified lack of disclosure was not noticed by the AO. 21. Mr.Suresh Kumar, the learned counsel appearing on behalf of the respondents was unable to indicate what actually was the alleged inadequacy of the disclosure by the petitioner. He did not contend that the material before the AO while considering the assessment proceedings during the A.Y. 2007-2008 contained any additional material which indicated any alleged inadequacy in the disclosure during the relevant assessment year. The material respondent No.1 considered, construed and relied upon during the A.Y. 2007-2008 was the same as the material that was considered by the AO in the assessment proceedings for A.Y. 2004-2005. This therefore, clearly is a case of a plain and simple difference of opinion and nothing more. 22. Mr.Suresh Kumar then relied upon paragraph 4.9 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing observations of a Division Bench of this Court in Idea Cellular Ltd. v/s Deputy Commissioner of Income Tax ((2008) 301 ITR 407 (Bom) have relevance: 9. It was also sought to be contended that since the Assessing Officer had not expressed any opinion regarding this matter in his original assessment order, it could not be said that there was any change of opinion in this case. In our view, once all the material was before the Assessing Officer and he chose not to deal with the several contentions raised by the petitioner in his final assessment order, it cannot be said that he had not applied his mind when all material was placed by the petitioner before him. 25. A Division Bench of the Delhi High Court in CIT vs. Eicher Ltd. 294 ITR 310 held :- 15. In Hari Iron Trading Co. v. CIT [2003] 263 ITR 437, a Division Bench of the Punjab and Haryana High Court observed that an assessee has no control over the way an assessment order is drafted. It was observed that generally, the issues which are accepted by the Assessing Officer do not find mention in the assessment order and only such points are taken note of an (sic) which the assessee s explanations are rejected and addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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