9911796707
TMI Blog2013 (9) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 151 of the Act is not pressed before us, we are not dealing with the same. 3 Briefly the facts leading to the present petition are as under: ( a) On 29 November 2006, the petitioner filed its return of income for the Assessment Year 2006-07 uploading the same electronically; (b) On 30 November 2006, the petitioner filed its Form 3CEB returns/reports of Accountant under Section 92E of the Act with the Income Tax Office Ward (1)( 1) at Mumbai and obtained acknowledgment for the same; (c) The Petitioner's return for the Assessment Year 2006-07 filed electronically on 29 November 2006 was accepted by the Assessing Officer under Section 143(1) of the Act; (d) On 30 March 2011, a notice was issued by the Assessing Officer under Section 148 of the Act, proposing to reassess the petitioner's income for the Assessment Year 2006-07. The above notice dated 30 March 2011 under Section 148 of the Act was issued on the ground of alleged escapement of income on account of having been granted/allowed deduction under Section 10A of the Act; (e) During the course of reassessment proceedings for Assessment Year 2006-07, the Assessing Officer by notice dated 14 December 2011 called upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiation of penalty proceedings under Section 271BA of the Act; (j) On 3 May 2012, Assessing Officer issued a second notice under Section 148 of the Act, once again seeking to reassess for the Assessment Year 2006-07. On 7 May 2012, the petitioner filed its return of income for the Assessment Year 2006-07 and also called upon the Assessing Officer to furnish them with a copy of the reasons recorded for the purposes of issuing the notice dated 3 May 2012 under Section 148 of the Act; (k) On 21 June 2012, the Assessing Officer furnished the following reasons to the petitioner as the reasons recorded for reopening the assessment for the Assessment Year 2006-07 under Section 148 of the Act: "The case of the assessee was reopened by issue of notice u/s. 148 dated 30.3.11 to withdraw excessive deduction allowed u/s. 10A of the I. T. Act. In the course of reassessment proceedings u/s. 147 of the Act, it was noticed that the assessee did not file the requisite Audit Report in Form No.3CEB. Hence, vide notice u/s. 142(1) of the I. T .Act dated 14.12.2011, the assessee was asked to furnish a copy of the report in Form no. 3 CEB. However, the assessee did not produce the same. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fit case for issue of notice under section 148 of the I. T. Act, 1961." (l) 25 June 2012, the petitioner filed its objections with the Assessing Officer objecting to reopening of the assessment for Assessment Year 2006-07. In its objections, the petitioner recorded that their return of income for the Assessment Year 2006-07 had been uploaded on 29 November 2006 and had the acknowledgment for the same. Further, the Form 3CEB report was filed on 30 November 2006 at Centralized place in Aayakar Bhavan, Mumbai and, therefore, acknowledgment bears the stamp of ITO ward 1 (1)(1). It was also stated that material information with regard to the petitioner's International Transactions was already made available on record. Therefore, it was submitted that there was no failure to disclose material facts necessary for the purpose of assessment on the part of the petitioner. It was also submitted that in spite of the fact that the Assessing Officer was aware that there were International Transactions entered into with associated persons took a decision not to make a reference to the Transfer Pricing Officer (TPO). Consequently, the basis of the present notice was only a change of opinion and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 92E of the Act had been filed with the Income Tax Office Ward 1 (1)(1) on 30 November 2006 of which it has an acknowledgment. This filing of Form 3CEB with the above office was only on account of the fact that the Income Tax Department had directed that all filing on 30 November 2011 had to be done at the Centralized place in Aayakar Bhavan, Mumbai. In support of the aforesaid submission, reliance is placed upon the Affidavit dated 14 May 2012 of the petitioner's Chartered Accountant. (ii) In any event, disclosure of International Transactions was done by them in their Accounts as filed. Thus mere nonfiling of Form 3 CEB does not result into nondisclosure. (b) In the present facts, there is no reason to believe that any income for the Assessment Year 2006-07 has escaped assessment. The only reason stated in the notice for believing that income has escaped assessment for the Assessment Year 2006-07 was that for the Assessment Year 200809, the TPO had made an adjustment of Rs. 9.9 Crores on account of arm's length price in respect of International Transactions entered into by the appellant with its Associated Enterprises. Thus, it is submitted that there is no reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner for the reopening of the Assessment Year 2006-07 under Section 148 of the Act is unexceptionable and calls for no interference. In view of the above, learned Counsel appearing for the Revenue submits that the petition should be dismissed. 6 We have considered the submissions. It is trite law that once an assessment is completed under the Act, it can only be reopened according to the express provisions of the statute i.e. Sections 147 and 148 of the Act. The policy of law is that there must be a finality to all legal proceedings including assessments and therefore, completed assessment can only be reopened if all the conditions prescribed by the Act for reopening of assessment are satisfied. The Supreme Court in the matter of CIT v/s. Kelvinator of India 320 ITR 561 has held that there is a conceptual difference between the power to review and the power to reassess. The Act gives no power to the Assessing Officer to review an assessment but only a power to reassess. However, this power can only be exercised subject to certain pre conditions as provided in the Act being satisfied. 7 In the present case, it is an undisputed position that the impugned notice for reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year." The first proviso to Section 147 of the Act specifically restricts this power to reassess only in cases where the assessee fails to make a return inter alia, in response to notice under Section 142(1) of the Act. Thus, the nonfiling of document viz: Form 3 CEB in response to notice under Section 142(1) of the Act will not by itself without anything more entitle the Assessing Officer to take action to reassess an assessee in respect of an assessment year after the expiry of four years from the end of the relevant assessment year. 9 In the light of the above, the petitioner's submission that the notice dated 3 May 2012 is without jurisdiction as it was issued beyond the period of four years from the end of the Assessment Year 2006-07 when all material facts necessary for Assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Assessment Year 2006-07. 10 Alternatively, the petitioner contends that in any view of the matter, the fact of International Transactions with Associated Enterprises was known to the revenue, as the order of assessment passed on 31 December 2011, records the fact that the petitioner was 100% subsidiary of M/s. Rosy Blue Jewellery Inc. New York and further, the annual audited accounts and tax audit reports also sets out that they were having International Transactions with its holding Company. In view of the above, it is stated that the Assessing Officer had full knowledge of the fact that the petitioner had entered into International Transactions with its Associated Enterprises and, therefore, the same could have been referred to by the Assessing Officer to the TPO in terms of Section 92 CA(1) of the Act. The disclosure to be made by the Assessing Officer for the purpose of satisfying the requirements of having made full and true disclosure of all material facts necessary for the Assessment is to be meaningful so as to invite the attention of the Assessing Officer to the same. Mere furnishing of the information in the audited annual accounts of International Transactions wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conceived. According to the petitioner, this alleged reason to believe is based upon the order of Assessment for the Assessment Year 200809 where the TPO had made adjustment of about Rs.9.9 Crores on account of the arms length price with regard to the International Transactions with Associated Enterprises. It is urged that the above assessment order for the Assessment Year 200809 can only lead to a reason to suspect and cannot be a reason to believe. However, it is well settled at the stage of issuing a notice under Section 148/ 147 of the Act is concerned, the Assessing Officer does not need to have a cast iron case, but only a prima facie view that there is reason to believe that income has escaped assessment. An order passed for subsequent Assessment Year could form the basis of the material i.e. tangible material leading to a reasonable belief that income chargeable to tax has escaped assessment. This belief has to be of the Assessing Officer. The submission of Mr. Pardiwala, learned Senior Counsel for the Petitioner is that for the Assessment Years 200506 and 200708, the TPO did not disturb the assessment of the arms length price declared by the petitioner and in view thereof, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the arms length price of International Transactions entered into by the petitioner with Associated Enterprises. Consequently, there is no change of opinion in issuing impugned notice dated 3 May 2012, seeking to reopen the assessment for the Assessment Year 2006-07. 14 Before we conclude, it must also be pointed out that during the earlier reassessment proceedings for the Assessment Year 2006-07 which were initiated by notice dated 30 March 2011, the Assessing Officer by letter dated 14 December 2011 called upon the petitioner to furnish Form 3 CEB. The Petitioner chose not to furnish the form as called for and instead filed a Writ Petition bearing Writ Petition (L) No.2785 of 2011 in this Court. On 21 December 2011, this Court granted adinterim stay of the reassessment proceedings. Advocate for the petitioner communicated the same to the Assessing Officer and promised to produce a copy of the order of this Court before 3.00 p.m. on 31 December 2011 before the Assessing Officer. However, same was not produced. The Assessing Officer being of the opinion that he had to pass an order before 31 December 2011 in view of constraint of limitation, passed an order reassessing the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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