TaxTMI 
TaxTMI 
2011 (12) TMI 229
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....tors Reports in prescribed forms. Such return was taken in scrutiny assessment under section 143(3) of the Act. Such assessment previously framed after scrutiny was sought to be reopened by notice dated 28.10.09 on the ground that book profit under section 115JB of the Act was not computed correctly and further that excess deduction under section 80HHC was allowed. The petitioner approached this Court by filing Special Civil Application No.3580 of 2010 which was allowed by this Court by an order dated 4.5.2010 quashing the notice of reopening dated 28.10.2009. Once again the Assessing Officer issued a fresh notice dated 18.3.2011 seeking to reopen the assessment of the same year. At the request of the assessee, the reasons recorded by the Assessing Officer for reopening were supplied. The petitioner raised its objections vide communication dated 16.8.11. Such objections, however, were disposed of by the Assessing Officer by his order dated 11.10.11. At this stage, the petitioner has approached this court raising various grounds challenging the impugned notice for reopening the assessment. Before adverting to the rival contentions, we may notice that th....
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....ng that the assesseee was required to deduct TDS on payment of Rs.51.94 lacs as suggested by the Assessing Officer. Counsel vehemently contended that the entire issue has cropped up on the insistence of the Audit Party. He submitted that mere opinion of the audit party cannot form a basis for the Assessing Officer to believe that the income chargeable to tax has escaped assessment. In this regard, counsel relied on the following decisions : (i) CIT v. Lucas T.V.S. Ltd., 249 ITR 306 in which the Apex Court upheld the the decision of the High Court in which the High Court had quashed the reopening proceedings wherein apart from the information furnished by the audit party, the Income Tax Officer had no other information for reopening the assessment. (ii) Agricultural Produce Market Committee v. ITO, (2011) 15 Taxmann.com. 170(Gujarat) wherein Division Bench of this Court was pleased to quash the notice for reopening where the only basis was the revenue audit objection as regards the eligibility of the assessee for exemption. (iii) Adani Exports v. Deputy C.I.T., 240 ITR 224 wherein Division Bench of this Court held as under: "It is tr....
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....eason to believe is a mere pretence to give validity to the exercise of power. In other words, it was a colourable exercise of jurisdiction by the assessing officer by recording reasons for holding a belief which in fact demonstrably he did not held that income of assessee has escaped assessment due to erroneous computation of deduction u/s 80HHC, for the reasons stated by the audit. The reason is not far to seek." On the other hand, learned counsel Shri Bhatt appearing for the Revenue opposed the petition contending that the petitioner had not made full and true disclosures in the return filed. Relying on the explanation to section 147, counsel submitted that mere indication that any tax was required to be deducted at source in the return would not absolve the assessee from disclosing other relevant aspects. Counsel further submitted that the Assessing Officer, on the basis of what is pointed out by the audit party, can still form his own opinion with respect to escapement of income and merely because it was pointed out by the Audit party would not render his opinion invalid or the notice illegal. In this regard, counsel relied on the decision of C.I.....
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....ust 1995, TDS was not required to be deducted. Taking note of the explanation of the assessee she stated as under: "In view of the above explanation, there was no under assessment in the assessee company's case in both the assessment years i.e. A.Y.2004-05 & A.Y. 2005-06. Further, basis requirement of deducting tax u/s.195 is that whether payment of sum to an non-resident is chargeable to tax under the provisions of the Act or not. TDS liability u/s.195 arises only when income is credited to account of payee or on actual payment of same. Therefore, as the above mentioned expenditure is in the nature of reimbursement of expenses no TDS is required to be deducted in view of Board's circular No.715 dt. Aug 8,1995." Under the circumstances, it clearly emerges from the record that the Assessing Officer was of the opinion that no part of the income of the assessee has escaped assessment. In fact, after the audit party brought the relevant aspects to the notice of the AO, she held correspondence with the assessee. Taking into account the assessee's explanation regarding non-requirement of TDS collection and ultimately accepted the explanation concluding that ....