The onus is entirely on the Revenue to establish existence of PE every year

The existence or otherwise of PE has to be determined on year to year basis, as the existence of PE has to be decided based on the definition of PE in the relevant tax treaty. Merely because in one year, the assessee had a PE in India, that by itself cannot lead to the conclusion that the assessee must be having a PE in subsequent assessment year, without looking into the relevant facts. In the case of E-Funds IT Solution Inc. (supra), Hon’ble Supreme Court has held that the onus is entirely on the Revenue to establish existence of PE.

The departmental authorities, without dealing with the submissions of the assessee and evidences brought on record through proper reasoning or by bringing any contrary material to controvert them, cannot merely follow their earlier decision without making any effort to look into the specific facts of the impugned assessment year.

Incase there is a specific averment regarding vacation of office premises in India ; no visit by expatriates in India during the year; it is the duty of the departmental authorities to examine these evidences on merits and thereafter, either to accept them or to reject them with proper reasoning by bringing on record contrary material/evidence.

Even if there is an information received from third party, though such information can form basis for an examination/investigation by the Assessing Officer, but the decision to Act has to be of the Assessing Officer and not of the third party. The Assessing Officer cannot merely do a cut and paste job without independent application of mind or verification or investigation. The departmental authorities cannot merely follow the decision taken by them and higher appellate authorities in past assessment years without independent application of mind to the facts brought on record by the assessee or making proper verification/investigation of the evidences.

In the matter of GE ENERGY PARTS INC., WILDWOOD PARKWAY ATLANAT GA US VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, (INTERNATIONAL TAXATION) CIRCLE-1 (3) (1) , NEW DELHI - 2024 (2) TMI 833 - ITAT DELHI, the department did not follow the above procedure and the Court did not even consider remitting the matter back to the Assessing Officer to provide him a second inning to improve upon the deficiencies in the original assessment order; and directed the AO to delete the addition.