TaxTMI 
TaxTMI 
2012 (12) TMI 1008
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..../4/2007. The assessment was completed by an order under section 143(3) rws 148 of the Act on 29/12/2008 in which the assessee's taxable income was determined at Rs. 7,47,22,046/- on account of the Assessing Officer's finding hat the income from software supplied by the assessee would be chargeable to tax as Royalty. 2.2 Aggrieved by the order of assessment for the assessment year 2004-05 dated 29/12/2008, the assessee went in appeal before the CIT(A)-IV, Bangalore. The learned CIT(A) disposed off the appeal dismissing it except to the extent of adoption of rate of tax of 10% as against 15% adopted by the Assessing Officer. 3.0 Aggrieved by the order of the learned CIT(A)-IV, Bangalore dated 25/2/2011 for the assessment year 2005-06, the assessee is now before the Tribunal, In the ground raised, the assessee has submitted as under:- 1. Assessment bad in law and on facts * The learned CIT(A) erred in not holding that the order of the Deputy Director of Income-tax (International Taxation), Circle-1(1), Bangalore ('DDIT' or 'Assessing Officer') is bad in law and on facts. * The CIT(A) erred in concluding that the reassessment proceedings initiated upon the appellant were valid. Th....
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....AT-Delhi); * Velankani Mauritius Ltd. v DDIT (2010) 132 TTJ 124 (ITAT Bang.); * Dassault Systems K K (2010) 188 Taxman 223 (AAR); * DDIT v M/s TII Team Telecom International Ltd. (ITA No.309/Mum/2007) (Mum ITAT); * DDIT v Alcatel USA International Marketing Inc (Mum) (2010-TII-123-ITAT-MUM-INTL); * DDIT (International Taxation) v M/s Reliance Industries Ltd. (ITA No.116/Mum/2008) (ITAT Mum); * Hewelett-Packard (India) (P) Ltd. v ITO (2006) 5 SOT 660 (ITAT-Bangalore); * M/s Kansai Nerolac Paints Ltd. v Addl. DIT (2010) ITA No.568/Mum//2009 (ITAT Mum.); and * Addl. Director of Income-tax (Int. Taxation) v M/s Tata Communications Ltd. (2010) ITA No.1473/Mum/2009 (ITAT Mumbai). 3.9 The CIT(A) erred in relying upon the decision of the Karnataka High Court in the case of Commissioner of Income Tax and others v Samsung Electronics Co. Ltd. And Others (2009) 227 CTR 335. 3.10 The CIT(A) ought to have followed the principles laid down by the Supreme Court in Union of India v Kamalakshmi Finance Corporation Limited (1991) ELT 433 (SC) and ought to have set aside the order of the DDIT. 4. Interest levied under section 234B of the Act The DDIT/CIT(A) erred in levying interest under ....
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.... the part of the Assessing Officer to communicate the same to the assessee; but which was not done. This, it was submitted, was in violation of the decisions of the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. v ITO (259 ITR 19) (SC) and of the Hon'ble Bombay High Court in the case of Allana Cold Storage Ltd. v ITO (287 ITR 1) (Bom.) which mandated that the Assessing Officer was bound to furnish the reasons sought within a reasonable time, which he did not do. In support of the proposition that failure on the part of the Assessing Officer to furnish the reasons for initiation of proceedings under section 147/148 of the Act during the pendency of assessment proceedings would render the resultant order of assessment bad in law, void ab-initio and liable to be quashed, the assessee also relied on the following decisions:- (i) ACIT v K V Venkataswamy Reddy of the ITAT, Bangalore in ITA Nos.797, 807, 798 & 808/Bang/2009 dated 21/5/2010 - wherein the Tribunal, following the decision of the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. v ITO (supra) and of the Hon'ble Bombay High Court in the case of Allana Cold Storage Ltd. v ITO (287 ITR 1) (Bom.), he....
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.... clear from a perusal of paras 3.2 and 3.3 of the learned CIT(A)'s order that reasons recorded by the Assessing Officer for initiation of proceedings under section 147/148 of the Act were never provided to the assessee by the Assessing Officer during the pendency of assessment proceedings which culminated in the order of assessment on 29/12/2008, almost one year and eight months after the request for the same was made by the assessee on 16/4/2007. In para 3.2 of his order, the learned CIT(A) states that the reasons recorded for initiation were given to the assessee on 28/1/2010 only. This establishes the fact that the assessee was never given the reasons for initiation of proceedings under section 147/148 of the Act by the Assessing Officer during the pendency of assessment proceedings but only during appellate proceedings almost 33 months after the assessee made the request for the same by letter dated 16/4/2007. 4.1.3 As held by the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. v ITO (259 ITR 19) (2003) that on being requested by the assessee, the Assessing Officer is bound to furnish the reasons recorded for initiation of proceedings under section 147 of the Ac....
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....t/invalidity with which the initiation of proceedings under section 147/148 of the act is tainted. Similar view has been held by coordinate benches of the ITAT in the case of (i) ACIT v K V Venkataswamy Reddy of the ITAT, Bangalore in ITA Nos.797, 807, 798 & 808/Bang/2009 dated 21/5/2010 and (ii) Tata International Limited v DCIT by the ITAT, Mumbai in ITA Nos.3359 to 3361/Mum/2009 dated 29/6/2012. 4.1.5 From the discussion in paras 4.1.1 to 4.1.4 of this order (supra), it is clear that the settled proposition of law, as laid down by the Hon'ble Apex Court, Hon'ble High Court of Mumbai and as followed by the two decisions of the coordinate benches of the Tribunal (all cited supra), is that the reasons as recorded by the Assessing Officer are required to be furnished to the assessee within reasonable time of their being recorded and certainly prior to the completion of assessment. In the instant case, the undisputable facts on record establish beyond doubt that the reasons recorded for initiation of proceedings under section 147/148 of the Act were never furnished to the assessee by the Assessing Officer before completion of the assessment proceedings on 29/12/2008, 33 months after....