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2016 (10) TMI 630 - BOMBAY HIGH COURT

2016 (10) TMI 630 - BOMBAY HIGH COURT - [2016] 388 ITR 557 - Reopening of assessment - reasons to believe - Held that:- A notice of reopening, the Assessing Officer does not have to “establish” that any income has escaped assessment. He must simply be shown to have formed an opinion, which, in turn, is supported by reasons. The reasons themselves must be based on some material. A minimum requirement one would expect in the face of this scheme of things is that the material used by the Assessing .....

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Mere description as a “supplier” in a suit by the assessee against the insurance company claiming an insurance claim for loss of equipment, when the assessee insured the equipment jointly with the purchaser, can possibly have no connection with the escapement of any income arising out of sale of the equipment. Since that was the only material used by the Assessing Officer for issuance of the reopening notice, the notice is without any legal basis or justification. The authorities below were clea .....

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bligation was to insure the goods/equipment during transit done by it either on its own or through a subcontractor. - Income Tax Appeal No. 670 of 2014 - Dated:- 4-10-2016 - M. S. Sanklecha And S. C. Gupte, JJ. Mr. Tejveer Singh, for the Appellant Mr. Sunil Lala, a/w. Ms. Nikita Panhalkar, i/b. Atul Jasani, for the Respondent ORDER P. C. This appeal under Section 260A of the Income Tax Act, 1961 ( the Act ) challenges the order dated 19 July 2013 passed by the Income Tax Appellate Tribunal ( Tri .....

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palli Power Corporation Ltd.(KPCL), Andhra Pradesh to set up a power plant on a turnkey basis. Further, KPCL had awarded an onshore contract to the RespondentAssessee for supply of goods and services along with the commissioning of the plant. KPCL also awarded an offshore supply contract to Hanjung DCM Co. Ltd. (Hanjung) for supply of equipment valued at US$ 103 million. The equipment valued at US$ 103 million was supplied by Hanjung and taken delivery of outside India by the Respondent Assessee .....

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ssessment Year and the reasons recorded in support thereof were as under : 26.03.2004 Reasons to believe that income chargeable to tax has escaped assessment u/s. 147 of the Income Tax Act, 1961 1. The Original return of income was filed by the assessee on 30.11.2000 showing total income of ₹ 46,350/. Order u/s.143(3) of the Income Tax Act, 1961 passed on 26.03.2004 assessing income under MAT at ₹ 6,38,062/. 2.0 During the course of assessment proceedings in A.Y.2001-02 it was notice .....

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half of the assessee. The assessee has not disclosed the portion of the revenue amounting to USD 103 million received on account of the same from India in its return of income for this assessment year. 2.1 Thus I have reason to believe that income of USD 51.5 million chargeable to tax has escaped assessment for A.Y.2000-01. 3 Issue notice u/s. 148 of the Income Tax Act, 1961. 6. The RespondentAssessee during the Assessment proceedings consequent to reopening notice dated 26 March 2004 submitted .....

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between Plaintiff and LKPL, Plaintiff agreed to supply equipment, materials and design for the construction of LKPL's combined cycle power plant at Kondapalli IDA, Andhra Pradesh in India (the Kondapalli Project ). The value of this Supply Contract was about USD 103 million. It was on the aforesaid basis that the Assessing Officer sought to justify his reasons to believe that income chargeable to tax has escaped assessment and, therefore, proceeded to hold even on merits against the Respond .....

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he principal. Based on this policy coupled with the plaint as filed, the CIT(A) observed that the plaint has to be read as a whole. So read, the nature of the relationship between the parties is described in paragraph 4 thereof, which, as extracted in the order, reads as under : 4. A brief reference to the parties involved in relation to the subject matter of this suit is as follows : a. Lanco Kondapalli Power Pvt. Limited (formerly a public limited company) ('LKPL') is the owner of the .....

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'. n. Aistom are the suppliers of the GT & GTC, from whom Plaintiff arranged to procure the replacement equipment for ensuring completion of the project. On the aforesaid basis, the CIT(A) held that the word supply has to be read in para5 of the plaint as only referring to its responsibility for setting up of the power project under the Onshore Contract. The CIT(A) held that the assessee did not at any time declare himself as the owner of the goods but rather declared itself as an EPC co .....

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ies of the assessee for setting up of the power project as per the onshore contract. The reasons as recorded do not therefore suggest any link between the material found by him and his conclusion that there was reason to believe that the income chargeable has escaped assessment. He, therefore, concluded that there was no reason to form a belief that income chargeable to tax has escaped assessment. On appeal by the Revenue, the Tribunal, by the impugned order, confirmed the finding of the CIT(A). .....

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contractor, i.e. Respondent Assessee will provide/arrange at its own cost in the joint name of the owner and contractor a comprehensive insurance cover to the project, including any damage to the goods during transit. It was in that context that the Respondent Assessee had made a claim for insurance. Taking into account the concurrent findings of fact arrived at by the CIT(A) and by the Tribunal, the view taken is a very possible view. Nothing has been shown to indicate that the finding is perve .....

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