9911796707
TMI Blog2023 (10) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... mand Notice u/s 156 of Act. 3 Facts in brief are as under: 3.1 The petitioner filed the return of income for the Assessment Year 2013-14 on 28.11.2014 declaring total income of Rs.86,020/-. Thereafter, the case of the petitioner was selected for scrutiny assessment and notice under Sec.142(1) of the Act was issued on 26.06.2015. The petitioner-assessee, in response to such notice submitted various details. 3.2 During the course of assessment proceedings, vide Order Sheet Entry dated 23.07.2015, the petitioner was asked to submit the details of all 'outward remittances' - Party wise, and 'TDS' deducted if any. If no TDS / low TDS was deducted, then reason / document justifying the same was also called for. 3.3 The petitioner-assessee, by the letter dated 03.11.2015, provided the details called for by the Assessing Officer regarding all "outward remittances" made during A.Y 2013-14. The petitioner also provided the chart containing the detailed breakup of all the foreign remittances made during the previous year 2012-13 along with details of TDS deducted and if not deducted,the reason for the same at Exh.1 to the said reply. 3.4 The Assessing Officer, after considering the Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee-petitioner. 3.11 The respondent subsequently issued the show cause notice as contemplated under Sec.144B of the Act along with a draft assessment order for the proposed addition and fixed the date of submission by 23:59 hours of 17.09.2021 by Email. 3.12 The petitioner-assessee, in view of the show cause notice received late in the evening of 15.09.2021, made an on-line application dated 16.09.2021 seeking reasonable time of 8 days to provide a satisfactory, detailed and thorough reply. However, without response to the application for adjournment, the respondent passed Assessment Order dated 19.09.2021 under Sec.143(3) of the Act, making addition of Rs.63,74,736/- on the ground that the commission paid to foreign nationals / agents was without deduction of tax (TDS) and raised the demand of Rs.5,13,54,720/-. The petitioner, therefore, being aggrieved by the stand and though there was full and true disclosure in filing the return as well as in the thorough scrutiny assessment framed under Sec.143(3), as a result of such reopening is constrained to file the present petition. 3.13 The petitioner, therefore, filed a draft amendment in the petition. This Court permitted the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hani, learned counsel appearing for Mrs. Kalpana Raval, learned counsel for the respondent, would submit as under: 5.1 The assessee filed its return of income for AY 2013-14 declaring total income at Rs.4,48,23,770/- on 10.10.2013. Again, the assessee filed revised return of income on 24.03.2014 declaring total income as nil. Thereafter, the case was selected for scrutiny assessment and vide assessment order u/s. 143(3) dated 23.03.2016, the total income was determined at Rs.15,30,76,690/-. Subsequently, on further scrutiny of record, it was found that the assessee made foreign remittance of Rs.63,74,736/- on account of legal and professional fees. It was also noticed that no TDS was deducted from this payment. As per section 195(1) of the Act, the assessee was required to deduct TDS on such payments. Therefore, this expense was not allowable as per section 40(a)(i) of the Act. As the same was not disallowed by the assessee suo-moto in the return, nor the same was offered for disallowance during the assessment proceedings, the income of the assessee to the extent of Rs.63,74,736/- was under assessed. In other words, the income to the extent of Rs.63,74,736/- had escaped assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings. 6 Having considered the submissions made by the Learned Advocates for the respective parties, the perusal of the reasons to believe indicate that it is the case of the revenue that the scrutiny of the assessment records reveal that the assessee made foreign remittance of Rs.63,74,736 on account of legal and professional fees. As per Section 195(1) of the Act, the assessee was required to deduct TDS on such payments. However, it was observed that no deduction of TDS was made and hence the same is required to be disallowed u/s 40(a)(i) of the Act. According to the revenue, though the petitioner had filed a copy of the annual report and audited Profit and Loss Accounts and Balance-sheet along with the return, no full and requisite disclosure was made of all material facts, vis-a vis the contention raised by the petitioner with respect to the twin challenge on the concept of "change of opinion" and that no tangible material was available so as to reopen the assessment. 6.1 Certain events preceding the notice under Section 148 need to be gone into. 1) After filing the return of income for the AY 2013-2014, on 28.11.2014, the case of the petitioner was selected for scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and export of garments. The assessee filed the return of income for the Assessment Year 2005- 06 on 31-10-2005. The return filed by the assessee was selected for scrutiny under section 143(2) of the Act. The assessee furnished the details pertaining to liabilities which included details relating to sale commissions paid to certain foreign companies and tax deducted at source on such sale commissions. The Assessing Officer after examining the details furnished by the assessee passed an original order of assessment on 31-12-2008 without making any disallowance pertaining to sales commission. The contention of the assessee that payments were made the assessee to non-residents and since, the services were rendered outside India, therefore, no income accrued or arose in India and therefore, sales commission were not exigible to tax was rejected. 3. The Assessing Officer issued a notice dated 12-3-2010 under section 148 of the Act proposing to reassess the income of the assessee on the ground that he has reasons to believe that income chargeable to tax had escaped assessment. The assessee sought reasons for reopening the assessment which was supplied to it and thereafter, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. In the result, we do not find any merit in this appeal, the same fails and is hereby dismissed." 8. It is also worth noting that the petitioner lodged its objections to the reasons recorded vide letter dated 3.6.2020 on 16.7.2020. Without disposing of the objections, notice under Section 142 was issued on 5.2.2021. This was in violation of the principles set out in the decision of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Limited v.ITO , reported in (2003) 259 ITR 19 (SC). The objections were disposed of after over a year by an order passed on 31.8.2021 which indicates that there was a clear case of procedural violations. 9. Answering the question of the reassessment being bad as no tangible material was available, as is analysed in the aforesaid paras, it is evident that while issuing notice under Section 148 of the Act, the revenue has relied on the very same assessment records where it is pointed out that there was no fresh material to hold so and therefore the notice under Section 148 and the consequential orders are bad on this ground too. Reading the reasons indicate that what was relied upon was the very same record of assessment and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Having heard the learned counsel appearing for the parties and having gone through the materials on record, we are of the view that the case on hand is one of change of opinion. There is hardly anything on record to indicate that there was failure on the part of the assessee to disclose truly and fully all material facts. There was no tangible material available for the purpose of issuing the notice for reopening beyond the period of four years." Therefore what is evident is that the notice dated 6.3.2020 and the order disposing off objections dated 31.08.2021 are bad in law and deserve to be quashed and set aside. 12. Post the order disposing off objections, the respondent issued a show cause notice dated 15.09.2021 under Section 144(B) of the Act seeking reasons as to why the assessment should not be completed as per the Draft Assessment Order. A date was fixed being 23:59 hours on 17.09,2021. The email fixing such date was received in the evening of 15.09.2021 at around 7:09 PM. The petitioner filed an application for adjournment which was updated on ITBA portal however the Assessment Order dated 19.09.2021 u/s 143(3) read with Section 144B and 147 of the Income Tax Act was p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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