TMI Blog2024 (4) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... eeking further information. Petitioner by its letter dated 26th September 2018 furnished further information as additionally sought by the AO. Thus, it is evident that Petitioner had disclosed completely and fully all relevant information to the satisfaction of the AO and the assessment order was passed. Be that as it may, the impugned notice is, in any case, based on the contents and findings of the CIT (International) Mumbai in his revision order, which order is already set aside by the ITAT. That the order passed by ITAT is subjected to a challenge before this Court does not aid the Department since there is no order passed by this Court staying the effect of the order. On the contrary, the AO himself has given effect to the ITAT order and passed an Order Giving Effect ( OGE ) to the ITAT order. In this view of the matter, the impugned notice is nothing but a change of opinion by the AO and as held in Aroni Commercials Limited [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] a reopening based upon change of opinion is impermissible in law. We agree with the submissions that if change of opinion concept is given a go by, that will result in giving arbitrary powers to the AO to reopen asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted in India, computation of total income and tax computation, Form 3CEB, copy of tax residency certificate, explanation on high ratio of refund to TDS, etc. 5. Vide its reply dated 6th August 2018, Petitioner submitted the descriptive note on the activities carried out and other details required by the AO. During the course of assessment, the AO called for certain additional details from time to time, which also Petitioner provided by its detailed submission dated 26th September 2018. Upon consideration of all the relevant material provided by Petitioner as required by the AO, assessment order dated 21st December 2018 under Section 143(3) of the Act was passed accepting the income returned by Petitioner. Despite this, Petitioner was issued show cause notice dated 27th March 2023 under Section 148 A(b) of the Act calling upon Petitioner to show cause as to why notice under Section 148 of the Act should not be issued against it. The notice was accompanied by reasons to believe escapement of income. Another notice dated 30th March 2023, also under section 148A(b) of the Act, was issued once again calling upon Petitioner to similarly show cause. Petitioner brought to the notice of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst proviso of Section 149(1) of the Act, no notice under Section 148 of the Act can be issued at any time for an assessment year beginning on or before 1st April 2021. If a notice under Section 148 of the Act could not have been issued at that time on account of being beyond the time limit specified under Section 149(1)(b) of the Act as it stood immediately before the commencement of the Finance Act, 2021, the only period to be excluded in the facts of the present case for computing the period of limitation is that provided in the fifth proviso to Section 149(1) of the Act. In any event, as per Section 149 (1)(b) of the Act, notice cannot be issued under Section 148 of the Act after a period of three years unless the AO had in his possession books of accounts or other evidence, pointing to income chargeable to tax represented in the form of an asset or expenditure or entry in the books of account which has escaped assessment of Rs.50 Lakhs or more. Thus, the impugned notice dated 25th April 2023, being issued after a period of three years is bad in law. (d) Petitioner, admittedly, only has a DAPE in India and as per various decisions of the Apex Court, once an agent has been remun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information flagged as per the risk management strategy. The flagging of information on the insight portal being under the supervision of the CBDT is hence valid information under the amended provisions of the Act. In these circumstances, the AO is well within his rights to arrive at a satisfaction that the case of Petitioner is fit for reopening of assessment on the ground that income has escaped assessment. v. According to the AO, his satisfaction is discretionary, and sufficiency of satisfaction is not a matter of judicial interpretation at the stage of issuance of notice under Section 148 of the Act. vi. Even on merits Petitioner has no case. Findings and conclusions 9. At the outset, we will deal with the contention of Mr. Pardiwalla relating to the gist of information available with the AO prompting him to issue the impugned notice dated 30th March 2023 giving reasons for reopening assessment. The reasons for reopening indicated in the notice is an order passed under Section 263 of the Act for AY 2017 18. Petitioner had been attributing 24% of its Global profit to itself on the FAR analysis carried out by it. The order dated 25th March 2022 passed by the Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as determined in the order u/s 263 would be appropriate in this case. b) It is also clear that the assessee had adopted a dual taxpayer and part of the profit attributable to operations in India was held taxable in the hands of DAPE. This fact was relevant in determining the ALP for the Associated Enterprise i.e. MFE India. It is seen that the compensation made to AE are not at ALP. The difference/adjustment has to be taxable in the hands of DAPE. c) The method of computation of taxable profits in India is incorrect as the marketing fees paid to AE is after attribution of Gross Profit in India instead of being deducted before attribution of Profits in India. From Page 28 of aforesaid show cause notice 7. XXXXXXX 8. Therefore, based on the above observations which originate from the material/information available on record with this office, income to the tune of Rs. 11,98,30,019/- has escaped assessment for the year under consideration. 9. You are hereby requested to furnish your reply explanation along with supporting documents/evidence on or before 14.04.2023, whichever is earlier. The explanation/reply furnished by you in response to this Show Cause Notice, will be considered at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the revision proceedings When the above proposition was so put to the parties, learned counsel for the assessee submitted that when the very existence of DAPE, in the light of the above legal position, is tax neutral, the attribution of profits in the dual taxpayer approach and the FAR analysis for that purpose is wholly academic, from the point of view of the revision proceedings, inasmuch as the profit computation under the dual taxpayer approach cannot be said to be prejudicial to the interest of the revenue when tax liability computed, in accordance with the law laid down by the Hon'ble, jurisdictional High Court, is NIL 6. XXXXXXXX 7. XXXXXXXXX 8. XXXXXXXXX 9. In view of the above discussions, as also bearing in the entirety of the matter, we are of the considered view that unless the order sought to be revised cannot be said to be prejudicial to the interest of the revenue, its being erroneous, even if that be so, cannot be said to reason enough to invoke Section 263 of the Act, and the order cannot be said to be prejudicial to the interests of the revenue unless there is a categorical finding that the dependent agent has not been paid arm's length remuneration for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, Petitioner provided all the details as sought vide its reply dated 6th August 2018, which followed another letter by the AO seeking further information. Petitioner by its letter dated 26th September 2018 furnished further information as additionally sought by the AO. Thus, it is evident that Petitioner had disclosed completely and fully all relevant information to the satisfaction of the AO and the assessment order was passed. Be that as it may, the impugned notice is, in any case, based on the contents and findings of the CIT (International) Mumbai in his revision order, which order is already set aside by the ITAT. That the order passed by ITAT is subjected to a challenge before this Court does not aid the Department since there is no order passed by this Court staying the effect of the order. On the contrary, the AO himself has given effect to the ITAT order and passed an Order Giving Effect ( OGE ) to the ITAT order. In this view of the matter, the impugned notice is nothing but a change of opinion by the AO and as held in Aroni Commercials Limited v. Deputy Commissioner of Income Tax 2(1) (2014) 44 taxmann.com 304 (Bombay)., a reopening based upon change of opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer while passing the assessment order. As held in Aroni Commercials (supra) even if assessment order has not specifically dealt with that issue, once the query is raised it is deemed to have been considered and the explanation accepted by the Assessing officer. It is not necessary that an assessment order should contain reference and/or discussion to disclose his satisfaction in respect of the query raised. The Division Bench of this court in Aroni Commercials Ltd. (supra) held it is not necessary that the assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Paragraph 14 of Aroni Commercials Ltd. (supra) read as under: 14. We are of the view that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If an Assessing Officer has to record the consideration bestowed by him on all issues raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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