TaxTMI 
TaxTMI 
2015 (4) TMI 979
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....21/10/2007 declaring total income at Rs. 5,52,52,210/-. 2.02. That the case was selected for scrutiny and notices under section 142(1) and under section 143(2) of the Income Tax Act were issued and served upon the petitioner - assessee. It appears that in the notice dated 12/11/2010, specific query regarding Software License Fees was raised. 2.03. That thereafter the assessing officer passed the assessment order under section 143(3) of the Income Tax Act on 29/12/2010, making several additions to income under various heads of the income of the assessee. 2.04. That thereafter beyond the period of four years of the concerned assessment year, the assessing officer has issued the impugned notice under section 148 of the Income Tax Act on 27/3/2014 reopening the assessment for the A.Y. 2007-2008, 2.05. That on receiving the notice, the assessee requested for the reasons recorded for reassessment the assessment vide letter / communication dated 28/4/2014. That vide letter / communication dated 20/5/2014, the assessing officer recorded reasons for reopening of the assessment (Annexure-E to the petition). 2.06. That it appears that on receipt of the reasons recorded for reas....
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....when the Assessing Officer passed the assessment order and that as such there was no failure on the part assessee to disclose fully and truly all material facts the initiation of reassessment proceedings on the reasons recorded, is absolutely invalid, illegal and without jurisdiction and more particularly, the condition precedent for initiation of the reassessment proceedings beyond the period of four years are not satisfied. 3.03. Mr.B.S. Soparkar, learned advocate appearing on behalf of the petitioner - assessee has heavily relied upon the decision of this Court in the case of Niko Resources Ltd. Versus Assistant Director of Income Tax, reported in (2014) 51 Taxman.com 568 (Gujarat) in support of his above submissions and request to quash and set aside the impugned reassessment proceedings. 3.04. Mr.B.S. Soparkar, learned advocate appearing on behalf of the petitioner - assessee has also heavily relied upon the decision of the Division Bench of this Court in the Case of Gujarat Lease Financing Limited Versus Deputy Commissioner of Income Tax, Circle-IV, Ahmedabad dated 24/6/2013 passed in Special Civil Application No. 3048 in support of his submissions that the initiation o....
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....petitioner has been reopened, as the income chargeable to tax has escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. 4.05. Mr.M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that mere production of Balancesheet and P&L Account Books will not amount to disclosure within the meaning of proviso to section 147 of the Income Tax Act. It is submitted that opinion can only be formed on the issues which are disclosed and thereafter considered. It is submitted that in the present case, payment in nature of royalty was not disclosed by the assessee. It is submitted that though foreign remittance was in nature of royalty, on which tax was to be deducted at source, the assessee failed to do so. 4.06. Mr.M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that in the present case deduction of TDS under section 195 of the Income Tax Act on foreign remittance on "Software License Fees" was not scrutinized during the assessment proceedings under section 143(3) of the Income Tax Act. It is submitted that the Assessing Officer in t....
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....truly and fully all material facts for the assessment, the Assessing Officer is not authorized to make reassessment even in the event of his having reasonable belief that any income chargeable to tax has escaped assessment for any assessment year. As per the first proviso to section 147, assessment can be reopened under section 147 after expiry of 4 years only if (1) assessee failed to make a return under section 139 or in response to the notice under section 142(1) or under section 148 and he failed to disclose truly and fully all material facts necessary for the assessment. Once the case of the assessee is not covered by the first proviso to section 147, reassessment proceedings beyond the period of four years from the end of the relevant assessment year would be without jurisdiction and bad in law. If all material facts are furnished by the assessee and there remained no omission or failure on the part of the assessee to disclose truly and fully all material facts, initiation of reassessment proceedings beyond the period of 4 years is not permission and shall be wholly without jurisdiction. 5.02. Now, in the backdrop of the above legal provisions, challenge to the impugned re....
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....y the assessee company and even its appeal was dismissed by the CIT(A). Accordingly, I have reason to believe that income to the tune of Rs,85,96,923/- chargeable to tax has been under assessed in the case of the assessee M/s. E-Infochips Ltd. for the. Assessment Year 2007-08 and is required to be reassessed as there was failure on the part of the assessee to disclose fully and truly all material facts necessary for Assessment Year 2007-08. In view of above, I have reason to believe that income to the tune of respondents. Rs. 85,96,923/ - has escaped assessment ..." 5.04. Thus, from the aforesaid it appears that the assessment for the A.Y. 2007-2008 is sought to be reopened on the ground that the "Software License Fees" paid to the foreign companies was in nature of "Royalty" and thus, "Capital Expenditure" and therefore, it attracts section 195 of the Income Tax Act and therefore, TDS was required to be deducted. However, it is required to be noted that in the original assessment, full particulars with respect to "Software License Fees" by the assessee to the foreign companies was disclosed. Not only that the assessee claimed the same as revenue expenditure. The notice wa....
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.... material facts. Under the circumstances, the condition precedent for invoking powers under section 147 of the Income Tax Act to initiate reassessment proceedings beyond the period of 4 years are not at all satisfied. 5.07. Identical question came to be considered by the Division Bench of this Court in the case of Niko Resources Ltd. (supra) and while considering the scope and ambit of powers to be exercised under section 147 of the Income Tax Act by the Assessing Officer, while reopening the assessment beyond the period of 4 years, the Division Bench of this Court while considering its decisions in the case of Gujarat Lease Financing Limited (supra), has observed and held in paragraph Nos.16, 17 and 27 as under :- "16. The Assessing Officer is authorized to make reassessment in the event of his having reasonable belief that any income chargeable to tax has escaped assessment for any assessment year. As per the 1st proviso to section 147 of the Act, assessment can be reopened under section I47 of the Act after expiry of 4 years only if (1) the assessee failed to make a return under section I39 of the Act or in response to notice issued under section 142(1) or under section 14....