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TaxTMI 
TaxTMI 
TaxTMI 
2011 (6) TMI 329
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....t the assessee company was conducting its business operations in India through TPIL and it had a permanent establishment (PE) in India. Since no return of income for the year under consideration was filed by the assessee company declaring income arising out of its business operations attributable to the PE in India, the Assessing Officer initiated reassessment proceedings by issuing notice under section 148 on 7-3-2008 after recording the reasons. In response to the said notice, return of income was filed by assessee on 12-12-2008 declaring total income at Nil. In the assessment completed under section 143(3) read with section 147, the Assessing Officer held that assessee company had a permanent establishment in India and the income arising to the assessee out of its business operations attributable to the said PE was taxable in India. Since assessee failed to give the global financial statements for the year under consideration, the Assessing Officer proceeded to determine such income attributable to the PE in India on the basis of the material found during the course of search. In this record, he found from page No. 81 of Annexure A-2 that revenue of assessee company for the year....
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....submissions made on behalf of the assessee challenging the validity of assessment made by the Assessing Officer under section 143(3) read with section 147 and rejecting the same, he upheld the validity of the said assessment for the following reasons given in paragraph No. 2.3 of his impugned order :-- "2.3 I have considered the facts and perused the material on record. It is seen that a search and seizure operation was carried out in the M/s. Ingram Micro India P. Ltd. (IMIL)/M/s. Tech Pacific (India) Ltd. (TPIL) being Indian companies at their business premises situated at Mumbai and Bangalore. The appellant i.e., Ingram Micro (India) Exports Pte. Ltd (IMIEL) formerly known as Tech Pacific (India) Exports Pte. Ltd (TPIEPL) is a Singapore based company and is wholly owned subsidiary of IMIL having its registered office at Bangalore. The search proceedings revealed that the appellant has been carrying on its business operation in India through the Indian companies. Therefore, it was having a PE within the meaning of Article 5 of India-Singapore DTAA. The appellant has not filed any return of income under section 139 of the Act. Even though the sized material showed that the appell....
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....preliminary issue challenging the validity of assessment made by the Assessing Officer under section 143(3) read with section 147. Ground No. 4 challenges the action of the authorities below in holding that assessee company had permanent establishment in India whereas ground No. 5 challenges the quantification of income attributable to the PE in India as made by the Assessing Officer at Rs. 4,27,78,581 and confirmed by the learned CIT(A). Ground No. 5 raised by assessee is without prejudice to ground No. 4, which challenges the very existence of PE in India. 7. First we shall take up ground Nos. 2 & 3, which involve a preliminary issue relating to the validity of assessment made by the Assessing Officer under section 143(3) read with section 147 on the ground that initiation of reassessment proceedings itself was bad in law. 8. The learned counsel for the assessee submitted that there was no business whatsoever carried on by assessee company in the previous year relevant to assessment year 2001-02 and in the absence of any business activity carried on in that year, there was no question of earning of any income by assessee in that year as well as escapement of such income to warr....
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.... consideration and the reopening of assessment by him for the year under consideration on the basis of such figures, which were pertaining to the subsequent year, was not justified. In support of this contention, he relied on the decision of the Hon'ble Bombay High Court in the case of Ramkrishna Ramnath v. ITO [1970] 77 ITR 995 wherein it was held that information relating to subsequent year could not be the basis for reopening the assessment for the earlier year. He also relied on the decision of the Hon'ble Bombay High Court in the case of Prashant S. Joshi v. ITO [2010] 324 ITR 154/189 Taxman 1 wherein it was held that validity of reopening is to be judged on the basis of reasons only and it is not permissible to rely on some exterior material which is not referred to in the reasons recorded to supplement the said reasons. Relying further on the decision of the Hon'ble Bombay High Court in the case of Hindustan Lever Ltd. v. R.B. Wadkar, Asstt. CIT [2004] 268 ITR 332/137 Taxman 479, he contended that reasons should be self-explanatory. He also relied on the decision of the Hon'ble Bombay High Court in the case of Technocraft Industries v. G.S. Tung, Second ITO [1990] 185 ITR 46....
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.... the total revenue of assessee company for that period September 2001 to December 2001 was 57,79,041 Singapore $. He submitted that these two figures aggregating to Singapore $ 1,55,55,946 was reflected in the relevant seized documents as total revenue for the calendar year 2001. He submitted that these details would clearly show that there was no revenue generation by assessee company for the period up to 31-3-2001 and even the figure of Singapore $ 1,55,55,946 reflected in the relevant seized document as of the year 2001 did not include any income/revenue of the assessee company pertaining to the previous year relevant to assessment year 2001-02. He pointed out from the P & L Account of TPIL placed at page No. 39 of his paper book that the entire revenue of Singapore branch for the period ending 31-3-2001 as reflected in the relevant seized document was duly declared by the said company in its return of income filed in India and there was no question of any escapement of income for the year under consideration which could be inferred on the basis of material found during the course of search, much less escapement of income of assessee company. He contended that there was thus no ....
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.... such voluminous seized material available before the Assessing Officer in those cases as was available before the Assessing Officer in the present case, on the basis of which he entertained the belief and reopened the assessment after duly recording the reasons. 13. In the rejoinder, the learned counsel for the assessee submitted that the documents which are now sought to be relied upon by the learned D.R. to justify reopening have not been specifically referred to by the Assessing Officer in the reasons recorded. He submitted that there is nothing in the said reasons to show that these seized documents were specifically relied upon by the Assessing Officer to entertain the belief about escapement of assessee's income. He contended that even in these documents relied upon by the learned D.R., there is nothing to show that any business was done by assessee company in India during the period ending 31-3-2001 and any income was earned by it in that period which had escaped assessment. 14. We have considered the rival submissions and also perused the relevant material on record. It is observed that the assessment for the year under consideration was reopened by the Assessing Officer....
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.... income, the same should have been certainly relied upon by the Assessing Officer. 16. A perusal of the seized documents filed by the learned D.R. however shows that there is nothing even in the said documents to indicate specifically that any income of assessee for the year under consideration had escaped assessment, except page No. 8 of Annexure A-2 on which the Assessing Officer has relied upon to quantify the income of assessee at the assessment stage. As held by the Assessing Officer relying of the said document and further pointed out by the learned D.R. at the time of hearing before us, the total revenue of assessee for the calendar year 2001 was shown at Singapore $1,55,55,946. However, as explained by the learned counsel for the assessee from Note No. 3 given in the said document itself as well as from the P & L Account of TPIL and assessee company, the said figure was a combined figure of revenue of Singapore branch of TPIL from January to November 2001 to the extent of Singapore Dollars 97,76,904 and of assessee company from 7th September to 31-12-2001 to the extent of Singapore Dollars 57,79,041. The revenue of Singapore branch to the extent of Singapore $ 97,76,904 wa....