TMI Blog2013 (5) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... :- After going through the details of communications made by the assessee to AO we are convinced that there was no failure on part of the assessee to disclose truly and fully all material facts. Though an attempt on behalf of the Revenue was made before us to contend that by supplying the list of only those dealers who received commission in excess of Rs. 50 lakh, the petitioner failed to discharge such onus of disclosing true and full facts, we are afraid such a contention cannot be accepted for variety of reasons. Firstly, this issue is nowhere borne out from the reasons recorded. Secondly, the petitioner replied to a query of the AO and supplied such details in this regard which were called for. Thirdly, with respect to liability to deduct tax at the source, there is no distinction even suggested by the AO on the basis whether such payment was in excess of Rs. 50 lakhs or below. In the result, petition is allowed. Impugned notice dated 7.3.2012 is quashed. - SPECIAL CIVIL APPLICATION NO. 16453 of 2012 - - - Dated:- 5-3-2013 - AKIL KURESHI AND MS. SONIA GOKANI, JJ. For the Appellant S.N. Soparkar and B.S. Soparkar. For the Respondent Ms. Paurami B. Sheth. JUDGMEN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributors, in its very substance and effect, is commission which is paid for services rendered by the network of distributors. On analysis of facts, it is clear that in the case of the telecom operators, the margin retained by the distributors which is termed as 'discount' is nothing but commission payment for the services rendered by the distributors on which, like in the case of postpaid connections, TDS is required to be deducted u/s.194H on margin retained by distributors on sale of prepaid SIM-cards and recharge vouchers. On this very issue, the Kerala High Court, the Calcutta High Court and the Delhi Bench of the ITAT have given the decisions in favour of the Department in the following cases : (i) Idea Cellular Ltd. v. DCIT 208-TIOL-739-ITAT, Delhi (ii) Vodafone Essar Cellular Ltd. v. ACIT 2010-TIOL-655-HC-Kerala-IT (iii) Bharti Cellular Ltd. v. ACIT (2011) ITA No.222 of 2006 (Calcutta) In the Calcutta High Court's decision which is the most recent, the Hon'ble High Court has observed : (i) Property of pre-paid Coupons even after transfer remains with the telecom companies only. (ii) Distributors acted only as facilitators for providing services by the tax payer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges in the case of Vodafone Essar Mobile Services Ltd. However, TDS has not been deducted on such payments (roaming charges). Consequently, the entire expenditure claimed by the assessee in his books needs to be disallowed u/s 40(a)(ia) of the Act. The assessee has neither disclosed this fact nor filed any details in respect of the fact that the TDS has not been deducted on such expenditure during the assessment/reassessment proceedings. Therefore, the assessee has not made full and true disclosure of all material facts necessary for his assessment." 3. The petitioner raised detailed objections to such proposal for reopening the assessment under communication dated 22.5.2012. In such objections, the petitioner contended inter-alia that the petitioner had made true and full disclosures. The issues were examined by the Assessing Officer in the original assessment. Reopening beyond a period of four years therefore, would not be permissible. 4. The Assessing Officer however, rejected such objections by his order dated 16.11.2012. Hence this petition. 5. Taking us through the reasons recorded by the Assessing Officer and the assessment proceedings, counsel for the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. In such letter, the petitioner conveyed to the Assessing Officer as under : "(iv) Dealer Commission : Commission is paid to dealer on activation of the new subscriber and recharge by the existing prepaid subscriber. During the financial year 2004-05 total 11.59 lacs gross subscriber were added as against the 9.90 lacs in the financial year 2003-04. Further, due to cutthroat competition rate of commission was also increased compared to last year. Further, increase in prepaid base results into higher recharge and hence higher commission." As stated in the said communication the petitioner also supplied a list of dealers who received such commission in excess of Rs. 50 lakhs. Such list was as under : Name of Dealer Amount (Rs.) PRARTHANA COMMUNICATION 5,140,577.00 NEST TELECOM 5,192,858.00 ASCENT COMMUNICATION 6,320,530.00 CELFONE COMMUNICATION 6,508,710.00 SMART COMMUNICATION 6,596,745.00 MEX TELECOM 6,766,101,00 CEL-LINK 7,744,364.00 Total 44,269,885.00 9. Like-wise with respect to roaming charges paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for the same. Surely, it was not the responsibility of the assessee to raise the contention that such tax at source was not required to be deducted and justify the same by pointing out legal provisions and judgements, if any. The fact that tax at source was not deducted on such payments made by the petitioner was part of the returns filed. There was no dispute nor disguise in this respect. When full facts recording such charges been paid having come on record during such proceedings, it cannot be stated that in the present case there was failure on part of the petitioner to disclose true and full material facts. 13. In case of Calcutta Discount Co. Ltd. v. ITO[1961] 41 ITR 191 (SC), the Constitution Bench of Supreme Court held and observed that to confer jurisdiction on assessee to issue notice of reopening of assessment beyond a period of four years, two conditions are required to be simultaneously satisfied. Such conditions are that the Assessing Officer must have reason to believe that income, profits or gains chargeable to income tax have been under- assessed and the second is that he must also have reason to believe that such under-assessment has occurred by reason of eit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case to case. Calcutta Discount Co. Ltd. [1961] 41 ITR 191 (SC) (xx) The assessee's obligation, to disclose all material facts necessary for his assessment fully and truly, is in the context of the two requirements - called conditions precedent - which must be satisfied before the Income Tax Officer gets jurisdiction to re-open the assessment under Section 147/148. This obligation can neither be ignored nor watered down. Sri Krishna Pvt. Ltd. [1996] 221 ITR 538 (SC)" 14. Coming back to the facts of the case, we are convinced that there was no failure on part of the assessee to disclose truly and fully all material facts. Though an attempt on behalf of the Revenue was made before us to contend that by supplying the list of only those dealers who received commission in excess of Rs. 50 lakh, the petitioner failed to discharge such onus of disclosing true and full facts, we are afraid such a contention cannot be accepted for variety of reasons. Firstly, this issue is nowhere borne out from the reasons recorded. Secondly, the petitioner replied to a query of the Assessing Officer and supplied such details in this regard which were called for. Thirdly, with respect to liability to d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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