TaxTMI 
TaxTMI 
2019 (2) TMI 726
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.... 148 of the Income Tax Act, 1961 ("the Act" for short). 3. Brief facts are as under:- (a). The petitioner is a company registered under the Companies Act and is engaged in the business of rendering services relating to operations and maintenance of Single Point Mooring installations on the high seas. For the assessment year 2011-12, the petitioner had filed return of income on 30.9.2011 declaring total income of Rs. 4.32 crore (rounded off). The return was taken in scrutiny by the Assessing Officer. He passed the order of assessment under Section 143(3) of the Act on 31.12.2013. In such order, he determined the petitioner's total income after making disallowance of a sum of Rs. 4.42 crore (rounded off) which included the expenditure i....
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....aid hire charges during FY 2010-11 pertaining to AY 2011-12 to its AE Samson Maritime Ltd of Rs. 18,71,03,093/-. It is further observed from the Transfer Pricing Study report that SML is treated as a tested party and the OP / OC earned by SML on charter hire of vessel to USCL is bench marked to the OP / OC earned on the charter hire of vessel to Reliance Industries Ltd (RIL) being a not AE. However, it is further observed that the revenue business from RIL to SML is a small percentage of the total revenue generated by SML, therefore, the comparable and its margin is very small and inconsequential to consider for bench marking and is therefore not reliable comparable for the entire transaction. In addition to is, it is also seen tha....
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....ce, the petition. 4. Taking us to the reasons recorded by the Assessing Officer, learned counsel for the petitioner pointed out that the reasons cite two grounds for reopening the assessment. First is with respect to the Arm's Length Price of the transaction entered into by the petitioner with its Associated Enterprise ("AE" for short) namely one Samson Maritime Limited (hereinafter referred to as 'Samson') alleging that in the process, the assessee had indulged in shifting of its profits to said Samson as effective rate of tax is much lower in the hands of Samson. The second ground sought to be pressed in service by the Assessing Officer is of gift and sales promotion expenses amounting to Rs. 14.13 lacs (rounded off). 5. Learned cou....
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....hat in the reasons recorded, the Assessing Officer has stated that the return filed by the petitioner was accepted without scrutiny under Section 143(1) of the Act. It was on the basis of such reasons that the sanction for reopening of assessment was granted. The Assessing Officer as the authority recording the reasons and the Sanctioning Authority completely misdirected themselves recording the incorrect factual position namely that this was a case in which no scrutiny assessment had been undertaken. According to the learned counsel, this would demonstrate total non application of mind on the part of the Assessing Officer and the Sanctioning Authority. 8. On the other hand, learned counsel Mr. Chanderpal opposed the petition contenting ....
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....ent has been completed after scrutiny and the period of four years lapsed from the end of relevant assessment year, the Revenue could still open the assessment if it is shown that the Assessing Officer was in possession of new or additional material suggesting that the disclosures were not true or full and that this led to the assessee's income chargeable to tax escaping assessment. This is, however, not a case of that nature. In the reasons, there is a mere mention of search operation. There is no indication of any new material found during such search suggesting that disclosures of the assessee were false. In plain terms, the Assessing Officer could not have relied on this ground to reopen the assessment. 10. There is yet another re....
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....hould also validate the amounts of charter hire charges paid by the assessee to SML being the counterreflection of the acceptance of the validity of the very same charter hire charges earned by SML from the assessee in the context of the tonnage tax scheme." 11. It was after such scrutiny that the Assessing Officer passed the order of assessment in which he made no additions on this ground. In absence of any new or additional material available with him, any attempt on the part of the Assessing Officer to disturb such assessment would be based on mere change of opinion and clearly impermissible in law. 12. The second ground sought to be raised by the Assessing Officer in the reasons is possible of summary disposal. The record would sh....