TaxTMI 
TaxTMI 
2013 (5) TMI 413
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.... support charges etc. received from the holding company. The details furnished by the AR shows that no substantial or specific services have been rendered by the holding company. Hence, the business support charges, guarantee fees paid to the holding company are not for business expediency. These payments are also subject matter of TP and this issue was apparently not verified in the transfer pricing proceedings by the TPO. The facts being the same for the AY 2006-07, the above expenses need to be disallowed. I have therefore reasons to believe that the income of Rs.18,62,02,246/- has escaped assessment under the provisions of Income Tax Act, 1961 for the AY 2006-07 and remedial action by issuance of notice u/s 148 will be appropriate in the case because all the conditions for issue of such notice are fulfilled in this case. Hence the assessment for A.Y. 2006-07 is hereby re-opened." (i) Before the order of assessment was passed in the present case, requisitions were issued by the Transfer Pricing Officer and thereafter even by the Assessing Officer during the course of which explanatory statements were furnished by the assessee in regard to the interest on external commercial bo....
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.... relevant Assessment Year. In such a case the jurisdictional requirement is that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that Assessment Year. On the other hand, where the assessment has been reopened within a period of four years, as in the present case, the test is as to whether there is tangible material before the Assessing Officer for reopening an assessment. Once there is tangible material, the reopening would have to be sustained; (iv)The mere fact that the parent company has been assessed on the basis of the same income would not be conclusive of the allow-ability of the expenditure under Section 37(1) of the Income Tax Act 1961; and (v) Similarly, the order under Section 195(2) was only concerned with the deduction of tax on payments which have been made to a non-resident and would not be conclusive of whether the assessment could be legitimately reopened under Section 148 of the Income Tax Act 1961. 4. In the present case, the assessment is sought to be reopened within a period of four years of the end of the relevant Assessment Year. Where an assessment is sought to be reopened....
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.... Clagett Brachi Co. Ltd. v. Commissioner of Income tax (1989) 177 ITR 409 where the Income tax Officer came to realise that income had escaped assessment for two assessment years when he was in the process of making an assessment for a subsequent assessment year. While making that assessment, he came to know from the documents pertaining to that assessment that the overhead expenses related to the entire business including the business as commission agents and were not confined to the business of purchase and sale. The Supreme Court held that it is true that this information could have been acquired by the Income-tax Officer if he had exercised due diligence at the time of the original assessment itself. The reopening of the assessment was upheld, on the basis of information which came into the possession of the Assessing Officer when taking assessment proceedings for the subsequent year. 6. In Raymond Woollen Mills Ltd. v. Income Tax Officer (1999) 236 ITR 34 an assessment was sought to be reopened and the reasons recorded for reopening under Section 147(a) of the Income Tax Act 1961 showed that according to the Revenue the assessee was charging to its Profit and Loss Account, fi....
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....a cause or justification and if the Assessing Officer has cause or a justification to know or suppose that income had escaped assessment, he can be said to have reason to believe that income had escaped assessment. That expression, the Supreme Court held cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence on conclusion. At the stage of a notice under Section 148, the final outcome of the proceedings is not relevant and at the stage of initiation what is required is a reason to believe, but not an established fact of the escapement of income. At the stage of the issuance of a notice, the only question is whether there was relevant material on the basis of which a reasonable person could have formed a requisite belief and whether the materials could conclusively prove the escapement of income is not a concern at that stage. The Supreme Court has also cautioned that at the stage of the issuance of a notice under Section 148, it is not necessary that the material must be extensive and detailed, since there is a difference in the material for the purpose of initiation and that required for successfully completing a reassessment. ....