AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 811
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....hat the notice issued U/s 148 is illegal, bad in law and without jurisdiction and the reassessment order passed is also illegal, bad in law, without jurisdiction and liable to be quashed. 2. There is no escapement of income as the earlier assessment was completed U/s 143(3) after considering all relevant material and facts. The notice issued U/s 148 is illegal, bad in law has been issued without any application of mind. 3. The notice U/s 148 has been issued on the basis of change of opinion and such notice is illegal, bad in law and without jurisdiction. 4. That no Notice U/s 143(2) has been issued within 12 months from the end of the month in which the return is filed, hence the reassessment framed is illegal, bad in law and without jurisdiction and no addition could have been made by the AO. The notice issued U/s 143(2) on 23.3.2009 is much before the service of notice U/s 148 and the same is illegal and bad in law and do not conform with the legal requirements. 5. That the directions issued by Dispute Resolution Panel U/s 144C are incorrect, bad in law and have been passed without properly and judicially considering the submission of the appel....
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....ble to tax had escaped assessment as per clause (i) and (ii) of Explanation 2 to Section 147 of the Act. Accordingly, the AO recorded the reasons on 17.03.2009 and notice u/s 148 of the Act was issued on 23.03.2009. The assessee filed the return of income u/s 148 of the Act on 19.11.2009 declaring an income of Rs. 97,66,700/- and also filed the objections to the reopening of the assessment. The said objections were disposed off by the AO on 26.11.2009. The AO passed the draft assessment order dated 11.12.2009 u/s 144C(1) of the Act on the basis of assessment order earlier passed u/s 143(3) of the Act wherein gross receipts of Fees for Technical Services (FTS) for certain projects, the agreements for which were entered into before 1st day of April 2003, were taxed u/s 44D r.w.s. 115A of the Act. The AO held that the assessee was providing the services through project offices, therefore, it was having a Permanent Establishment (PE) in India. It was also held that the special provision for computing the income by law etc. in case of foreign companies/non-residents is provided in Section 44D of the Act which applies in case where the agreement made by the foreign company with the Gover....
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....e initiated by the AO on the basis of the notice issued u/s 143(2) of the Act much before the service of notice u/s 148 of the Act. It was further submitted that the notice was issued u/s 143(2) of the Act on 08.09.2009 while the return was filed by the assessee in response to the notice issued u/s 148 of the Act on 19.11.2009. Therefore, the reassessment framed was invalid. The reliance was placed on the following case laws: • Somlata Ghalaut Vs ITO in ITA No. 413/Del/2013 order dated 23.04.2018 • Halcrow Group Ltd. Vs ADIT in ITA Nos. 5161 & 5162/Del/2010 order dated 20.05.2011 • CIT Vs Batra Bhatta Company (2010) 321 ITR 526 (Del.) • Bakulbhai Ramanlal Patel Vs ITO (2011) 56 DTR 212 (Guj.) • CIT Vs Orient Craft Ltd. in SLP CC No. 1589/2013 (SC) • CIT Vs Orient Craft Ltd. (2013) 354 ITR 536 (Del.) • CIT Vs Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) • Hindustan Lever Ltd. Vs R.B. Wadkar (2004) 268 ITR 332 (Bom.) • Mohan Gupta (HUF) Vs CIT (2014) 366 ITR 115 (Del.) • Ranbaxy Laboratories Vs DCIT (2013) 351 ITR 023 (Del.) • Atma Ram Pro....
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.....05.2002). In the assessment order, receipts from all the projects have been taxed @ 41% on net profit as business income except receipts of West Bengal State Highways Project Receipts from West Bengal State Highways Project have been correctly taxed as per Section 44D r.w.s. 115A. As the receipts from other projects were also of the nature of FTS and effectively connected to the PE (i.e. Project Offices) of the assessee, the provisions of Section 44D r.w.s.115A should have been applied upon those receipts. In the case of the assessee, an assessment order for A.Y. 2006-07 has recently been passed on 18.12.2008. During the assessment proceedings, it was noticed that the assessee has wrongly been computing Its tax liability since beginning, being lesser of tax payable @ 41.82% or 42% on net profit of the PE or tax @ 20.91% on gross amount of FTS. As an undisputed fact, the consideration received by the assessee is determined in the said assessment order of the nature of fee for technical services as per Explanation 2 to Section 9(1)(vii) of the Act. Since the assessee provides the services through various project- offices, therefore, the FTS arised to the assessee are effect....
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....also noticed that the AO issued the notice u/s 143(2) of the Act on 08.09.2009, copy of which is placed at page no. 41 of the assessee's paper book which read as under: "Sir/Madam, There are certain points in connection with the return of income submitted by you for the Assessment Year 2004-05, on which I would like some further information. 2. You are hereby required to attend my office on 24.09.2009 at 3.15 PM either in person or by a representative duly authorized in writing in this behalf or produce or cause there to be produced at the said time any documents, accounts and any other evidence on which you may rely in support of the return filed by you. Yours faithfully, Sd/- (Sudhir K. Sharma) Dy. Director of Income Tax Circle-1(2), International Taxation, New Delhi. 14. In response to the aforesaid notice u/s 143(2) of the Act, the assessee submitted a letter dated 24.09.2009 to the AO stating therein as under: "Dear Sir, Kindly refer to your notice above mentioned dated 08/09/2009 for assessment year 2004-2005. As per our records, we have filed our return of income fo....
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....tion 143(2) was served upon the authorized representative of the assessee by hand when the authorized representative of the assessee came and filed return and that the date of the notice was mistakenly mentioned as March 23,2000. Even if it was true, the notice was served on the authorized representative simultaneously on his filing the return which clearly indicated that the notice was ready even prior to the filing of the return. The provisions of section 143(2) make it clear that the notice could only be served after the Assessing Officer had examined the return filed by the assessee. Thus, even if the statement of the Assessing Officer was taken at face value, it would amount to gross violation of the scheme of section 143(2) of the Act." 11. Similarly, the Hon'ble Jurisdictional High Court in the case of Pr. CIT Vs Shri Jai Shiv Shankar Traders Pvt. Ltd. (2016) 383 ITR 448 (supra) held as under: "Pursuant to a scrutiny of the return filed by the assessee, the Assessing Officer issued notice under section 148 of the Income-tax Act, 1961 and another notice under section 143(2) requiring further information and fixing a date for the assessee to appear. The notic....
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....ection 292BB was inserted in the Income-tax Act, with effect from April 1, 2008. It talks of the drawing of a presumption of service of notice on an assessee and is basically a rule of evidence. It introduces a fiction that once the assessee appears in any proceeding or has cooperated in any enquiry relating to assessment or reassessment it shall be deemed that any notice under any provision of the Act that is required to be served has been duly served upon him in accordance with the provisions of the Act and the assessee in those circumstances would be precluded from objecting that a notice that was required to be served upon him under the Act was not served upon him or not served in time or was served in an improper manner. The failure of the Assessing Officer, in reassessment proceedings, to issue notice under section 143(2) of the Act, prior to finalizing the reassessment order, cannot be condoned by referring to section 292BB of the Act." 13. We, therefore, by keeping in view the ratio laid down by the Hon'ble Jurisdictional High Court in the aforesaid referred to cases, are of the confirmed view that the reassessment framed by the AO u/s 143(3)/147 of the Act, in the....