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TMI Blog2018 (7) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... w and without jurisdiction and the reassessment order passed is also illegal, bad in law, without jurisdiction and liable to be quashed. 2. There is no escapement of income as the earlier assessment was completed U/s 143(3) after considering all relevant material and facts. The notice issued U/s 148 is illegal, bad in law has been issued without any application of mind. 3. The notice U/s 148 has been issued on the basis of change of opinion and such notice is illegal, bad in law and without jurisdiction. 4. That no Notice U/s 143(2) has been issued within 12 months from the end of the month in which the return is filed, hence the reassessment framed is illegal, bad in law and without jurisdiction and no addition could have been made by the AO. The notice issued U/s 143(2) on 23.3.2009 is much before the service of notice U/s 148 and the same is illegal and bad in law and do not conform with the legal requirements. 5. That the directions issued by Dispute Resolution Panel U/s 144C are incorrect, bad in law and have been passed without properly and judicially considering the submission of the appellant. The directions issued are against the principle of natural justice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO recorded the reasons on 17.03.2009 and notice u/s 148 of the Act was issued on 23.03.2009. The assessee filed the return of income u/s 148 of the Act on 19.11.2009 declaring an income of Rs. 97,66,700/- and also filed the objections to the reopening of the assessment. The said objections were disposed off by the AO on 26.11.2009. The AO passed the draft assessment order dated 11.12.2009 u/s 144C(1) of the Act on the basis of assessment order earlier passed u/s 143(3) of the Act wherein gross receipts of Fees for Technical Services (FTS) for certain projects, the agreements for which were entered into before 1st day of April 2003, were taxed u/s 44D r.w.s. 115A of the Act. The AO held that the assessee was providing the services through project offices, therefore, it was having a Permanent Establishment (PE) in India. It was also held that the special provision for computing the income by law etc. in case of foreign companies/non-residents is provided in Section 44D of the Act which applies in case where the agreement made by the foreign company with the Government or with the Indian concern is after 31st day of March, 1976 but before 1st day of April, 2003. The AO applied th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. It was further submitted that the notice was issued u/s 143(2) of the Act on 08.09.2009 while the return was filed by the assessee in response to the notice issued u/s 148 of the Act on 19.11.2009. Therefore, the reassessment framed was invalid. The reliance was placed on the following case laws: * Somlata Ghalaut Vs ITO in ITA No. 413/Del/2013 order dated 23.04.2018 * Halcrow Group Ltd. Vs ADIT in ITA Nos. 5161 & 5162/Del/2010 order dated 20.05.2011 * CIT Vs Batra Bhatta Company (2010) 321 ITR 526 (Del.) * Bakulbhai Ramanlal Patel Vs ITO (2011) 56 DTR 212 (Guj.) * CIT Vs Orient Craft Ltd. in SLP CC No. 1589/2013 (SC) * CIT Vs Orient Craft Ltd. (2013) 354 ITR 536 (Del.) * CIT Vs Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) * Hindustan Lever Ltd. Vs R.B. Wadkar (2004) 268 ITR 332 (Bom.) * Mohan Gupta (HUF) Vs CIT (2014) 366 ITR 115 (Del.) * Ranbaxy Laboratories Vs DCIT (2013) 351 ITR 023 (Del.) * Atma Ram Properties Pvt. Ltd. Vs DCIT (2011) 343 ITR 141 (Del.) * NYK Line (India) Ltd. Vs DCIT (2013) 346 ITR 361 (Bom.) * CIT Vs Excel Industries Ltd. (2013) 358 ITR 295 (SC) * Madhukar Khosla Vs ACIT (2014) 367 ITR 165 (Del.) * Pr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely connected to the PE (i.e. Project Offices) of the assessee, the provisions of Section 44D r.w.s.115A should have been applied upon those receipts. In the case of the assessee, an assessment order for A.Y. 2006-07 has recently been passed on 18.12.2008. During the assessment proceedings, it was noticed that the assessee has wrongly been computing Its tax liability since beginning, being lesser of tax payable @ 41.82% or 42% on net profit of the PE or tax @ 20.91% on gross amount of FTS. As an undisputed fact, the consideration received by the assessee is determined in the said assessment order of the nature of fee for technical services as per Explanation 2 to Section 9(1)(vii) of the Act. Since the assessee provides the services through various project- offices, therefore, the FTS arised to the assessee are effectively connected to such Project Offices/Permanent Establishment of the assessee In India and are liable to be taxed as per Article 7 of the DTAA between India and UK and as per Section 44D/44DA r.w.s. 115A of the Act depending upon the date of agreement. After a detailed discussion on the above provisions of DTAA and the Act, ft was held in the assessment order f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresentative duly authorized in writing in this behalf or produce or cause there to be produced at the said time any documents, accounts and any other evidence on which you may rely in support of the return filed by you. Yours faithfully, Sd/- (Sudhir K. Sharma) Dy. Director of Income Tax Circle-1(2), International Taxation, New Delhi. 14. In response to the aforesaid notice u/s 143(2) of the Act, the assessee submitted a letter dated 24.09.2009 to the AO stating therein as under: "Dear Sir, Kindly refer to your notice above mentioned dated 08/09/2009 for assessment year 2004-2005. As per our records, we have filed our return of income for assessment year 2004-2005 on 31/10/2004, which has since been, assessed and thus there is no such return on record which is pending for assessment and for which notice u/s 143(2) of the Act can be served on us. It therefore seems that notice has been served on us wrongly' for the assessment aforesaid and needs to be withdrawn. Under the circumstance, we request you to kindly withdraw the notice and drop the proceedings u/s 143(2) of the Act for the assessment year aforesaid and oblige. We also wanted to brin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Thus, even if the statement of the Assessing Officer was taken at face value, it would amount to gross violation of the scheme of section 143(2) of the Act." 11. Similarly, the Hon'ble Jurisdictional High Court in the case of Pr. CIT Vs Shri Jai Shiv Shankar Traders Pvt. Ltd. (2016) 383 ITR 448 (supra) held as under: "Pursuant to a scrutiny of the return filed by the assessee, the Assessing Officer issued notice under section 148 of the Income-tax Act, 1961 and another notice under section 143(2) requiring further information and fixing a date for the assessee to appear. The notices were not served on the assessee. A further notice under section 142(1) was issued with a returnable date. On the returnable date the assessee's authorized representative gave a statement that the original return filed should be treated as a return filed pursuant to the notice under section 148. An assessment order was passed making an addition of a sum as unexplained credits under section 68. The Commissioner (Appeals) dismissed the appeal of the assessee holding that sufficient opportunity was provided through questionnaires to support his return by documentary evidence and that non issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him under the Act was not served upon him or not served in time or was served in an improper manner. The failure of the Assessing Officer, in reassessment proceedings, to issue notice under section 143(2) of the Act, prior to finalizing the reassessment order, cannot be condoned by referring to section 292BB of the Act." 13. We, therefore, by keeping in view the ratio laid down by the Hon'ble Jurisdictional High Court in the aforesaid referred to cases, are of the confirmed view that the reassessment framed by the AO u/s 143(3)/147 of the Act, in the present case, on the basis of the notice issued u/s 143(2) of the Act dated 12.10.2011 i.e. prior to the furnishing of return of income on 27.10.2011 in response to notice u/s 148 of the Act, was not valid. Accordingly, the same is quashed." 17. In the present case also, since the notice u/s 143(2) of the Act was issued prior to the furnishing of return by the assessee in response to the notice u/s 148 of the Act. Therefore, the notice issued u/s 143(2) of the Act was not valid and the reassessment framed on the basis of said notice deserves to be quashed. We, therefore, quash the reassessment framed by the AO. 18. The facts for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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