TaxTMI 
TaxTMI 
2013 (12) TMI 246
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....e ITA in the absence of the specified jurisdictional conditions. 2. The reassessment proceeding is therefore bad in law and consequently the assessment order passed by the learned DDIT ought to be quashed. Order passed by the learned DDIT is invalid, bad in law and ought to be quashed 3. The learned DRP erred in issuing directions under section 144C(5) without providing the appellant company with a reasonable opportunity of being heard thereby making the order passed by the learned DDIT pursuant to the directions of the DRP as invalid and bad in law and therefore ought to be quashed. Taxability of payment received under Offshore Supply Contracts 4. The learned DDIT erred in giving effect to the directions given by the DRP for enhancement of assessment even though such directions were issued contrary to the specific provisions of law. 5. The learned DDIT/ DRP erred in holding that the amount received under the Offshore Supply Contracts s covered by the provisions of section 44BBB of the ITA and consequently liable to tax in India even though the supplies were completed outside India. Interest under Section 234B of the ITA 6. The learned DDIT erred in levying ....
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....om NPCIL and has offered to tax 10% of the total amount under the above contracts which comes to Rs. 10,99,93,415/- at the rates as applicable to a foreign company. NPCIL had withheld taxes @ 10% of the fees paid to the assessee. In view of the above, the tax deducted in excess of the same has been claimed as refundable to the assessee for the A.Y. 2006-07. 7. Return of income was filed on 29.10.2007 declaring a total income of Rs. 10,99,93,415/-. The return was processed u/s. 143(1) of the I.T. Act. Subsequently the case was reopened u/s. 147 of the Act after recording the reasons for doing so. Accordingly, a notice u/s. 148 was issued on 9.3.2009. The assessee informed the Assessing Officer vide letter dt. 9.3.2009 that the return filed by it on 20.10.2007 may be treated as filed in response to the notice u/s. 148 of the Act. The assessee also asked for the reasons for reopening the assessment. The reasons recorded for reopening the assessment which read as under : "With reference to the above, the reasons recorded for re-opening assessment are reproduced as under for your reference: The assessee has filed its Return of Income on 12.11.2007 declaring a income of Rs.10,99....
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....ices Contract" are in the nature of Royalties; and in pursuance to the Contract for Deputation of Specialists and Offshore Training Contract are in the nature of "fees for technical Services" and accordingly the income is to be taxed at the rate of 10% as provided in Article 12 of the DTAA between Russian Federation (of which the assessee is resident) and India.[ bold letters by us ] In view of the above facts, income chargeable to tax has escaped assessment within the meaning of Sec.147 Explanation 2(c) on account of failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment. Therefore, I have reason to believe that the income has escaped assessment within the meaning of Sec.147 Explanation 2(c) and it is a fit case to reopen assessment." 8. Subsequently a notice u/s. 143(2) and 142(1) of the I.T. Act alongwith the questionnaire were issued and served upon the assessee. The assessee raised objection against reopening of the assessment before the DRP. The DRP summarily rejected the objections raised by the assessee. The assessee has strongly contended this action before us vide ground No. 1. 9. The Ld. Counsel for the assess....
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....emedies and held that the AO has clearly acted in excess of the restraints on his jurisdiction to reopen an assessment in exercise of powers u/s. 147 r.w. Section 148 of the Act. The Ld. Counsel further relied upon the decision of the Hon'ble Supreme Court in the case of Kamalakshi Finance Corporation Ltd AIR 1992 (SC) 711 wherein the Hon'ble Supreme Court observed as under: With the fact that the officers, in reaching their conclusion, by-passed two appellate orders in regard to the same issued which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasi- judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant collectors working within his jurisdiction and the order of the Tribunal is ....
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....A.Y. 2005-06 is dt. Rs. 13.1.2009 which means that the very basis for reopening the assessment was struck down by the Ld. CIT(A) on 13.1.2009 which order was very much available to the AO when he recorded his reasons for reopening the assessment .The assessment order of AY 2005 -06 stood merged with the order of the CIT[A]. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authorities is not acceptable to the department is in itself an objectionable phrase and is a subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. For these observations, we draw support from the decision of the Hon'ble Supreme Court in the case of Kamalakshi Finance Corporation (supra). It is also pertinent to note that the AO has given appeal effect to the order of the Ld. CIT(A) on 5.3.2009 which was also prior to the date of issuing notice u/s. 148 of the Act. As the entire reopening was based on what happened in assessment year 2005-06 that very basis being struck down by th....