TMI Blog2019 (10) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out by the learned DR, the assessee had returned a loss in the original return, which has been converted into positive income by virtue of the income, computed during the assessment completed u/s 147. This would definitely have an impact on the MAT credit to be given to the assessee in the subsequent A.Ys. But, as far as the relevant A.Y is concerned, there is no change in the assessed income and no prejudice is caused to the assessee as far as its taxable income for the relevant A.Y is concerned. Therefore, the additional ground of appeal No. 1.6 is also rejected. As regards the decision of the Hon'ble Delhi High Court in the case of Nalwa Investment Ltd [ 2010 (8) TMI 40 - DELHI HIGH COURT] we find that it is a case of penalty u/s 271(1)(c) and therefore, it is not applicable mutatis mutandis to the case before us. - ITA No.864/Hyd/2017 - - - Dated:- 18-10-2019 - Smt. P. Madhavi Devi, Judicial Member AND Shri S. Rifaur Rahman, Accountant Member For the Assessee : Sri Nishant Thakkar For the Revenue : Sri Y.V.S.T. Sai, CIT-DR ORDER PER SMT. P. MADHAVI DEVI, J.M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order dated 24.3.2017 against which the assessee is in appeal before us. Originally along with Form 36, the assessee has raised the following grounds of appeal: Each ground given below is independent and without prejudice to the other grounds of appeal preferred by the Appellant: RE-ASSESSMENT PROCEEDINGS 1. That on the facts and circumstances of the case, the Ld. AO has erred in law as well as in facts in assuming jurisdiction u/s 147 of the Act and issuing notice u/s 148 of the Act to the Appellant, in as much as there has been no escapement of assessment of income chargeable to tax for the year under appeal. TRANSFER PRICING ('TP') MATTERS - Corporate Guarantee Fee 2. The Ld. TPO erred in making TP adjustment of ₹ 6,63,99,205/- on shareholder corporate guarantee provided to Bank without appreciating the specific facts of the case (i.e., the wholly owned subsidiary ('WOS') was set up as a SPY for acquisition of business in USA) 3. The Ld. DRP/TPO erred in not appreciating that the shareholder corporate guarantee is not cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief provided by the DRP on corporate guarantee fees as ₹ 19,72,603/- instead of ₹ 23,29,8901/- 13. The Ld. AO inadvertently allowed short deduction uls 10B - ₹ 10,98,79,594/- 14. The Ld. AO provided a short credit of TDS to an extent of ₹ 9,70,814/- 15. The Ld. AO erred in computing interest uls 234B of ₹ 31, ] 6,646/- 16. The Ld. AO erred in computing interest uls 234C of ₹ 37,20,1301/- 17. The appellant craves to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal . 3. Subsequently, vide letter dated 4.4.2018, the assessee has requested for admission of additional grounds of appeal under rule 11 of ITAT Rules 1963. The additional grounds raised are as under: Grounds on Reassessment proceedings: The Learned Assessing Officer / Dispute Resolution Panel, erred in law and facts, in initiation / not quashing the reassessment proceedings as: 1.1 There was no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der passed by the Learned Deputy Commissioner of Income-tax, Circle 3(1), following the directions of the Learned Dispute Resolution Panel in relation to the re-assessment proceedings initiated against the Appellant. Considering the fact that the Appellate had undergone a detailed scrutiny assessment for the said year, prior to initiation of reassessment proceedings, on tracing certain submissions made to the Assessing Officer, which are filed as Paper Book - 2 on 28 March 2018 and subsequent discussions with the Counsels, the Appellant believes to raise specific grounds in relation to the initiation of reassessment proceedings. The ground raised earlier in respect of re-assessment proceedings is general in nature and on discussions with the Counsel, the Appellant wishes to have more specific grounds with respect to the re-assessment proceedings, for sake of clarity. The Appellant submits that it has merely raised a legal claim and the omission to raise the aforesaid grounds of appeal in the memorandum of appeal filed before the Hon'ble Bench of the Tribunal was neither willful nor deliberate. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be the basis for the reopening of the assessment, while the learned DR, submitted that the audit objection is also material which was available with the AO to make up his mind about the escapement of the income and is not the sole reason for the reopening of the assessment. Therefore, according to the DR, the reopening is validly made. 9. Upon hearing both the parties and on consideration of the material available on record, we find that the AO has properly recorded the reasons for reopening and there is no material produced by the assessee to submit that the reopening of the assessment is only on the basis of audit objection. As rightly pointed out by the learned DR, as long as the AO has the material before him to come to a prima facie conclusion that there is escapement of income, the reopening of the assessment is valid. The audit objection may also be one of the sources for the AO to make up his mind, but it is only the AO, who has to apply his mind and be satisfied that there is escapement of income. Therefore, we are not inclined to accept the objection of the assessee on this count. Thus, the argument under para 1.1 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not find that any information was filed by the assessee justifying the claim of deduction u/s 10B of the Act. Thus, it is clear that the assessee has not given the details of its claim u/s 10B and the AO without taking the same into consideration has allowed the claim of deduction u/s 10B of the Act to the assessee. Thus, it cannot be said that the assessee has given all the details and the AO has considered the same. The assessee s ground that there was no new material on record to justify that there exists a reason to believe that the income has escaped the assessment is without any basis. In fact, in the draft assessment order, the AO has clearly recorded that the AO has not called for the information nor has the assessee filed the information with regard to the claim of deduction u/s 10B OF the Act. This finding of the AO in the draft assessment order and also the DRP has not been rebutted by the assessee by filing any evidence before us to the contrary. Thus, additional grounds of appeal No.1.3 1.4 are rejected. 14. As regards Ground No.1.5, it is the case of the assessee that the assessee having filed the detailed objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee of challenging the order rejecting the assessee s objections, by disposing of the objections in the draft assessment order. Further, the assessee had filed a W.P before the Hon'ble High Court of Telangana A.P at Hyderabad, challenging the service of the DRP order after a period of 5 years. However, the assessee did not raise any objection against the findings of the AO in the draft assessment order rejecting the objections of the assessee on the reopening of the assessment. The assessee had the option of raising such a ground before the Hon'ble High Court in the W.P but the assessee has failed to do so for the reasons best known to it. Since the final assessment order was passed after disposal of the objections in the draft assessment order and the assessee had the opportunity of raising its objections before the DRP and it had already filed a Writ Petition before the Hon'ble High Court in a W.P. on a different ground, we are of the opinion that no prejudice has been caused to the assessee by disposal of the assessee s objection to the reopening of the assessment in the draft assessment order. 17. The learned DR has relied upon the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee so computed under the normal provisions being less than the income u/s 115JB of the Act and there was no change in the income of the assessee computed in the assessment completed u/s 143(3) in the assessment completed u/s 143(3) r.w.s. 147 of the Act and therefore, there is no escapement of income in the assessment completed u/s 143(3) of the Act. The assessee submitted that the assessment u/s 147 can be reopened only if the income chargeable to tax has escaped the assessment. He submitted that since the income of the assessee in the original assessment as well as the re-assessment u/s 147 of the Act was the income u/s 115JB, the reopening of the assessment u/s 147 is bad in law. He placed reliance upon the decision of the Hon'ble Gujarat High Court in the case of Motto Tiles (P) Ltd vs. ACIT reported in (2016) 386 ITR 280 (Guj.) wherein an addition of ₹ 81.18 lakhs was proposed to the income computed under the normal provisions but further even after the proposed addition, there was no change in the book profit and resultantly, there would still be no additional tax liability u/s 115JB of the Act, the Hon'ble High Court held that the reopening u/s 147 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vasion also. The learned Counsel for the assessee also placed reliance on the CBDT Circular No.25/2015 dated 31.12.2015 wherein the decision of the Hon'ble Delhi High Court was taken into consideration and it was clarified that prior to 1.4.2016 i.e. before the substitution of Explanation 4 to section 271 of the Act with prospective effect, if any adjustment is made in the income computed for the purpose of MAT, the levy of penalty u/s 271(1)(c) will depend on the nature of the adjustment. Therefore, he prayed for the re-assessment order to be set aside on this ground also. 22. Having regard to the rival contentions and the material on record, we find that at the time of initiating the re-assessment proceedings, the AO has only to be satisfied prima facie that there is escapement of income. He has only to record the reasons for being satisfied about the escapement of income but need not record a finding that there is escapement of income. By issuance of a notice u/s 148, the AO has only got the jurisdiction to verify the claim of the assessee with regard to the evidence filed and the allowability of such a claim and the AO can give a finding ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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