TMI Blog2017 (8) TMI 1346X X X X Extracts X X X X X X X X Extracts X X X X ..... These two appeals filed by the Revenue and the C.Os. filed by the assessee are directed against the orders of Dy.Director of Income Tax (International Taxation) II, Pune dt.15.01.2015 for the assessment years 2006-07 and 2008-09. 2. Before us, at the outset Ld.D.R. submitted that though the appeals filed by the Revenue are for different assessment years but the facts and issues involved in all the appeals are identical except for the assessment year and the amounts involved and therefore the submissions made by the Revenue while arguing one appeal would be equally applicable to other appeals also and therefore, both the appeals can be heard together. The aforesaid submission of the Ld.D.R. has not been objected to by Ld.A.R. We therefore for the sake of convenience, proceed to dispose of both the appeals by a consolidated order. However, we proceed with narrating the facts for the appeal in ITA No.250/PUN/2015 for the assessment year 2006- 07. 3. The facts as culled out from the material on record are as under: Assessee is a non-resident company incorporated in Australia, is a tax resident of Australia under the Double Taxation Avoidance Agreement (DTAA) between India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... une as required under section 151(2) of the Act. 4. On the facts and circumstances of the present case, the DRP was not correct in observing that there was no material on the basis of which the belief is formed since the material for formation of belief was definite and not vague and fanciful. The re-opening of the assessment was well within the scope of provisions of Income-tax Act and the reasons recorded by the Assessing Officer before issuing notice u/s 148 are explicit and good enough to make out a fit case for re-opening of the assessment. 4. Assessee in the CO.No.48/PUN/2016 has raised the following grounds : 1. Without prejudice to the relief granted by the Hon'ble Dispute Resolution Panel [ the DRP ] in relation to reopening of the assessment proceedings, the Learned DRP erred in not adjudicating upon Objection No.2 being non appreciation of the order passed by Pune Income Tax Appellate Tribunal by AO in connection with taxability of IT Support Services in respondents own case. 2. Without prejudice to the relief granted by the DRP in relation to reopening of the assessment proceedings and ground No. 1 above, the Learned DRP erred in not adjudicating upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the receipts. The said receipts are claimed by the assessee to be reimbursement of expenditure and not as income. It is clearly evident from records that the assessee had already made disclosure of the receipts from SAL and Walter Tools India Pvt. Ltd. at the time of filing of return of income. The Assessing Officer has erred in invoking the provisions of section 148 r.w.s. 147 of the Act, for reopening on the basis of same information derived from the documents of group concern, i.e., SAL. The Assessing Officer can have reason to believe for reopening assessment if there is any tangible material in his possession. In the present case we are of considered view that the Assessing Officer had no new information or tangible material to come to the conclusion that there is escapement of income. If the Assessing Officer chooses to close his eyes on the material/documents furnished by assessee and starts scanning the documents of other concerns and in the process comes across some information about assessee, which the assessee has already disclosed, such information cannot partake the character of new tangible material . 16. In so far contentions of the department that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 143(1) and thereafter issue notices to reopen the assessment. An interpretation which makes a distinction between the meaning and content of the expression reason to believe in cases where assessments were framed earlier under Section 143(3) and cases where mere intimations were issued earlier under Section 143(1) may well lead to such an unintended mischief. It would be discriminatory too. An interpretation that leads to absurd results or mischief is to be eschewed. 17. The Hon ble Bombay High Court in the case of Khubchandani Healthparks (P) Ltd. Vs. ITO (supra) has reiterated that notice issued u/s.148 would be without jurisdiction for absence of reason to believe that income has escaped assessment even in case where assessment has been completed earlier by intimation u/s.143(1) of the Act. The Hon ble High Court while holding so, considered the decisions rendered by the Hon ble Apex Court in the case of CIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. reported as 291 ITR 500 and CIT Vs. Zuari Estate Development investment Co. Ltd. (supra). The relevant extract of the judgment rendered in the case of Khubchandani Healthparks (P) Ltd. Vs. ITO (supra) reads as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that income has escaped assessment. The reassessment proceedings initiated by the Assessing Officer u/s.147 are without jurisdiction and hence, are not sustainable. Accordingly ground No.1 to 3 raised by Department in appeal are dismissed. 7. On the issue of DRP having power to annul assessment the Co-ordinate Bench of the Tribunal in ITA No.128/PUN/2014 and C.O.No.10/PUN/2015 order dt.28.12.2016 held as under : 19. The second issue in appeal is, Whether the DRP has power to annual assessment. Before proceeding further to decide the issue, it would be relevant to first see the relevant provisions of the Act which define the powers of DRP. Reference to DRP is made u/s.144C. The scope of DRPs jurisdiction is envisaged in subsection (5) to (8) of section 144C. For the sake of quick reference, the relevant provisions of section 144C are reproduced hereinunder : (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in subsection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -C. Thus, sub-section (8) of section 144-C empowers the DRP to confirm, reduce or enhance the variations proposed in the draft order as a whole and not the variations in the arm s length price of the international transactions alone. The DRP, therefore, is entitled to confirm, reduce or enhance any variations in the draft order and the draft order, as we have held, may contain variations in the income or loss return generally. 86. We also agree with the Advocate General that if the assessee chooses to file an objection before the DRP, he must do so in respect of the entire draft order and not merely in respect of a part thereof. In other words, once an assessee opts to file objections before the DRP he cannot restrict the same only insofar as it relates to the international transactions. A view to the contrary would render the entire assessment proceedings unworkable. The assessee cannot possibly have a part of the assessment order decided by the DRP and a part of it decided in an appeal before the CIT(Appeals). There is, in any event, no provision for the same in the Act. 87. Moreover, the DRP has vide jurisdiction as is evident, inter-alia, from sub-section (8) of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al against the order of the DRP lies only to the ITAT. The Legislature could hardly be expected to have intended to deprive an assessee of a valuable right of an appeal without express words to that effect. We do not suggest that the Legislature is not competent to do so. We are not inclined, however, to ascribe to the Legislature an intention to deprive an assessee of such a right in the absence of any provision or even words to that effect. Again in Vodafone-II case, where the petitioner/assessee had contended that the powers of DRP are limited and the DRP has no power to set aside any proposed variation, the Hon ble High Court reiterated the law laid down in Vodafone India Services Pvt. Ltd. Vs. UOI (supra) and held : 28. Thus it would be open to DRP to consider all issues, including the jurisdictional issue of no income arising and/or affected by the International Transaction. This the DRP can do by issuing final directions under section1 44C(5) to the Assessing Officer or before issuing final directions, by issuing directions under section 144C(7) to the assessing officer to make a further enquiry and report. 21. In view of the law laid down by the Hon ble Bombay H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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