TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 855
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....a Non-Resident Indian. Under the Income Tax Act, 1961 ("Act" for short) for the Assessment Year 2005-06, the petitioner is entitled to the benefit of the Double Tax Avoidance Agreement (DTAA) between India and UAE. The respondent No.3 issued the impugned Notice under Section 148 of the said Act dated 28/3/2012. The petitioner challenged the validity of the said notice whereby the respondent No.3 has proposed to reopen the assessment of the petitioner for the Assessment Year 2005-06 as the respondent No.3 is of the belief that the petitioner's income chargeable to tax has escaped assessment. It is the contention of the petitioner that respondent No.3 has no jurisdiction to issue such notice and that it is well settled law that before proceeding to issue such notice under Section 148 of the said Act, certain conditions, including the condition of assuming proper jurisdiction has to be satisfied. It is further contention of the petitioner that as such, the petitioner is governed by the Authority located in Goa. The petitioner also contends that on 26/7/2005, the petitioner filed his return of income for the Assessment Year 2005-06 with the Asst. Commissioner of Income-tax, declari....
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....nt No.3 to furnish to him the reasons recorded by him prior to issuance of the notice dated 28/2/2013, so as to enable the petitioner to make proper submissions. But, however, the respondent No.3 called upon the petitioner to reply to the notices dated 8/2/2013 and 28/2/2013, failing which best judgment assessment would be carried out. A writ petition was thereafter filed raising objections to such exercise by the respondent No.3. But, however, on the date of filing of such petition, reasons were given to the petitioner. Objections were accordingly filed by the petitioner before the respondent No.3, challenging the legality of assumption of jurisdiction. The writ petition was disposed of by an order dated 16/9/2013, directing the respondent No.3 to dispose of the objections filed by the petitioner. Thereafter, by an order dated 27/09/2013, the objections filed by the petitioner were disposed of by the respondent No.3. Being aggrieved by the notices, as well as the impugned order, the petitioner has filed the present writ petitions. 4. The respondents have filed their reply, inter alia, contending that the petitions are premature as the petitioner has agitated all the issues during....
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....ior Counsel appearing for the petitioner, as well as the learned Counsel appearing for the respondents. The learned Senior Counsel appearing for the petitioner has raised different contentions, essentially submitting that the respondent No.3 had no jurisdiction to issue the impugned notices, as well as to pass the impugned order under Section 148 of the said Act. The learned Senior Counsel further points out that in terms of Section 153(2) of the said Act, the assessment ought to have been completed within one year from the end of the financial year in which the notice under Section 148 was served. It is further pointed out that the notice dated 28/3/2012 was served on the petitioner on 31.3.2012, which was the financial year 2011-12, which expired on 31.3.2012. It is further contended that the time limit to complete the assessment expired on 31.3.2013 and, in the present case as no assessment was carried out in the financial year 2011-12, which expired on 31.3.2012, the proceedings have become time-barred. It is further pointed out that the respondent No.3 has no jurisdiction over the petitioner, as he was governed by the jurisdiction of the Officers in the State of Goa at Margao ....
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....terial facts which are required for reopening the assessment. It is further pointed out that in terms of Article 1 of the DTAA, the concerned Government has to issue a formal document to the foreigners clarifying their identity, purpose and period of their stay which was also not disclosed by the petitioner. It is further pointed out the resident permit issued by the UAE becomes invalid if the bearer resides out of UAE for more than six months. It is further pointed out that as such, this itself would show that there was failure to disclose truthfully all the materials at the time of filing of the returns. The learned Counsel thereafter has taken us through the provisions of Section 147 of the said Act to point out that there was failure to disclose the material facts which entitle the respondents-Revenue to reopen the assessment. The learned Counsel has also pointed out that the contention that action is time barred is misconceived considering the notice which was served on the petitioner on the addresses available with the respondents. The learned Counsel has also disputed the contention of the petitioner on jurisdiction as, according to the respondents, the concerned Officer had....
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....ether the petitioner would meet the requirement as provided in the DTAA between India and UAE. 9. Apart from that, on perusal of the original Returns filed by the petitioner, it is seen that there is Note (1), which reads thus : "1) The assessee is a tax resident of the UAE and accordingly the DTAA between UAE & India is applicable. Tax on interest has been computed under Article 11 of the DTAA." 10. In the Assessment Order dated 24.12.2007 passed in the proceedings for scrutiny, Clause (1) and (3) read thus : "1. The assessee filed return of income (ROI) on 26/07/2005 declaring total income of Rs. 55,37,400/-. The assessee is Non-Resident and is governed by DTAA with UAE. 3. In response to the notices issued, assessee's authorized representative (A.R.) Mr. Suresh Pai attended from time to time and the case was discussed with him. The details called for have been furnished which are placed on record. From the passport submitted it is found that the assessee had stayed 185 days abroad and hence, he qualifies as a Non Resident." The said observations clearly reveal that the petitioner had disclosed that he was governed by the DTAA with UAE. It further discloses that details....
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.... were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing officer to reach the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. The reasons are the manifestation of the mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide the link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same bas....
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.... therefore, is well settled that the question as to whether there was reason to believe, within the meaning of section 147 that income has escaped assessment, must be determined with reference to the reasons recorded by the Assessing Officer. The reasons which are recorded cannot be supplemented by affidavits. The imposition of that requirement ensures against an arbitrary exercise of powers under section 148." (emphasis supplied) 24. In view of the aforesaid well settled legal position and there admittedly being not even an allegation in the reasons recorded that there was any failure on the part of the Petitioner to disclose truly and fully any material fact necessary for assessment, let alone the details thereof, the impugned notice dated 30th March, 2007 and the impugned order dated 5th December, 2007 are liable to be quashed and set aside on this ground alone. 25. In the facts of the present case, even otherwise from the record we find that the Petitioner had disclosed fully and truly all material facts relating to the dividend income received by it. This is clear firstly from the return of income filed by the Petitioner on 27th November, 2000 where in the computation annexe....