TaxTMI 
TaxTMI 
TaxTMI 
2021 (8) TMI 725
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....ection 10A and 10AA of the Act. Certain SEZ Units of the petitioner had incurred losses, which were set-off against other taxable income of the petitioner. 3. The petitioner had filed its return of income for the Assessment Year 2011-12 on 30.11.2011, which was subsequently revised on 28.03.2013. The return of income was processed under Section 143(1) of the Act on 06.07.2012. The case of the petitioner was selected for scrutiny under Section 143(2) of the Act on 02.08.2012 and details were called for by the respondents under Section 142(1) of the Act on 24.09.2014 and 08.01.2015. Detailed submissions were made by the petitioner before the Assessing Officer from time to time. The case of the petitioner was referred to the Transfer Pricing Officer for necessary verification under Section 92CA of the Act, as the petitioner had international transactions with its group companies abroad. The Transfer Pricing Officer accepted the arm's length price of the international transactions entered into by the petitioner company for the subject year. Consequently, no Transfer Pricing adjustments were made by the second respondent. The second respondent thereafter took up the case of the pet....
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....I and SEZ units of Cognizant Technology Solutions India Private Limited. When the details are called for in respect of the disallowances and lossess in connection with STPI and SEZ units of the petitioner and the petitioner has submitted details as well as the relevant documents and the Assessing Officer had taken note of all the details during the scrutiny proceedings and passed the final assessment order on merits and in accordance with law on 26.03.2015. While so, the very same material as well as the questions raised is relied on for the purpose of reopening of assessment under Section 147/148 of the Act and therefore, the very initiation amounts to change of opinion. It is contended that the assessment order also speaks about all these details and further, out of 10 units, except 1 Unit at Pune, all other units had incurred loss. Therefore, for the Unit at Pune, Section 10A is to be considered and in respect of other units incurred losses, Section 10AA is to be taken into consideration for disallowance of loss for the computation of total income. 8. The learned counsel for the petitioner relied on the assessment order originally passed and the issues decided by the Assessing ....
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....word would have the consequence of conferring arbitrary powers on the assessing officer who may even initiate such reassessment proceedings merely on his change of opinion on the basis of same facts and circumstances which has already been considered by him during the original assessment proceedings. Such could not be the intention of the legislature. The said provision was incorporated in the scheme of the IT Act so as to empower the assessing authorities to reassess any income on the ground which was not brought on record during the original proceedings and escaped his knowledge; and the said fact would have material bearing on the outcome of the relevant assessment order. 15. Section 147 of the IT Act does not allow the reassessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to reassess and not the power to review. 16. To check whether it is a case of change of opinion or not one....
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....at they do not accept the audit objection whether the respondent could proceed to initiate re-opening proceedings." (c) In the case of Principal Commissioner of Income Tax Vs. K.R.Jayaram, reported in 2020 SCC Online Mad 1511, the Hon'ble High Court of Madras made the following observations: "26. It would be worthwhile to remind ourselves about the decision of the Hon'ble Supreme Court in the case of Calcutta Discount Co., Ltd., vs. ITO [1961] 41 ITR 191 (SC), wherein the Hon'ble Supreme Court held that the duty of the assessee is to make full and true disclosure of all primary facts and once it is done, it is for the Assessing Authority to decide what inference of fact or law could be drawn there from. The law does not require the assessee to state the conclusion that could reasonably be drawn from the primary facts and if there were, in fact, some reasonable grounds for thinking that there had been any non-disclosure as regards any primary facts, which could have a material bearing on the question of "under assessment", that would be sufficient to give jurisdiction to the ITO to issue notices under Section 34 (1922 Act) and whether these grounds are adequate or not....
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....that the case of the petitioner is a regular case, where the authority has 'reason to believe' for reopening of assessment and by following the procedures, the reopening proceedings are progressed. Thus, there is no irregularity or illegality in reopening the assessment proceedings and the grounds raised by the petitioners in their objections are considered by the authority competent and reasons are also furnished. 13. The learned Senior Standing counsel contended that, if the Assessing Officer has 'reason to believe' that the income chargeable to tax has escaped assessment, such reason would be sufficient for the purpose of initiation of proceedings under Section 147/148 of the Act. In the present case, the reasons furnished are independent and cannot be construed as verbatim of the audit objections. The Assessing Officer could able to trace out certain reasons for reopening of assessment and such reasons are formulated independently by considering the informations and materials made available. The audit objections undoubtedly may be a source for reopening of assessment. However, the requirement would be that the Assessing Officer must have 'reason to believe&....
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....herefore, in the present case, the petitioner has not established any valid ground for the purpose of assailing the reopening proceedings and thus, the writ petition is to be rejected. 16. The learned Senior Standing counsel relied on the very same judgments cited by the writ petitioner i.e., Techspan India Private Limited (Cited supra), wherein in paragraph 13, the Hon'ble Supreme Court made a finding is as follows: "13. To appreciate the present controversy between the parties, it would be appropriate to refer to Sections 147 and 148 of the IT Act. For ready reference, relevant portions of Sections 147 and 148 of the Act are reproduced below: "147. Income escaping assessment.- If the assessing officer, has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment ....
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....ve a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs." 19. Finally, in the case of Jayaram Paper Mills Limited Vs. Commissioner of Income Tax, Chennai, reported in [2010] 191 Taxman 38 (Madras), the following observations are made: "25. Thus it is clear that the scope o....
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....his Court is of the considered opinion that the case on hand is a case, wherein reopening proceedings are initiated within a period of four years. Therefore, the conditions stipulated in Proviso Clause to Section 147 are not applicable. Thus, it is sufficient if the Assessing Officer has 'reason to believe' that any income chargeable to tax has escaped assessment. However, whether the Assessing Officer has 'reason to believe' or the reasons furnished for reopening of assessment has no substance for the purpose of continuance of reopening of proceedings are the consideration to be shown in the present writ petition. 22. Let as now consider the reasons furnished for reopening of assessment in proceedings dated 14.07.2016 and the reasons are recorded as under: Reasons for Reopening "Perusal of the records revealed that as per sec.115JB(6), provisions of Sec.115JB will not apply to the income from business carried on by an entrepreneur in an SEZ. Claiming deduction u/s 10AA or opting out of benefit of sec.10AA is not a criterion to enforce this section. In line with the above subsection, while computing income u/w115JB, you have added back expenses related to some ....
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....3,06,30,230/- adding back of expenses incurred by these 9 units and reducing revenue from such units will result in income u/s.115JB going up by sum of 13,06,30,230/-. The effect and consequences, which resulted income chargeable to tax has escaped assessment is also recorded in the order, furnishing reasons. Thus, the three components are made available in the reasons furnished for reopening of assessment. Regarding the informations, an independent finding is recorded and thereafter, the effect and consequences of the income escaped assessment was also taken into consideration for the purpose of reopening of assessment. On these reasons, the Assessing Officer arrived a conclusion that he has 'reason to believe' that the income has escaped assessment and accordingly, issued notice under section 148 of the Act. 26. Regarding the objections submitted, no doubt the petitioner has raised the ground of change of opinion and the audit objections as well as the non-application of mind. The objections raised in this regard were also considered by the authority, while disposing of the objections. The disposal of the objections would reveal that the reason for reopening of assessmen....
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..... Further, in the case of M/s.Larsen & Toubro Limited Vs. State of Jharkhand and Ors (SC), in Civil Appeal No.5390 of 2007, the Hon'ble Supreme Court has held that: "...........The contention whether finding the information from the very facts that were already available on record amounts to information for the purpose of Section 19 of the State Act, it would be sufficient to refer to a judgment of this Court in Anandjiharidas & Co. vs. S.P. Kasture AIR 1968 SC 565 wherein it was held that a fact which was already there in records doesn't by its mere availability becomes an item of "information" till the time it has been brought to the notice of assessing authority. Hence, the audit objections were well within the parameters of being construed as 'information' for the purpose of section 19 of the State Act. (27) The expression 'information' means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or after bearing on the assessment. We are of the clear view that on the basis of information received and if the assessing officer is satisfied that reasonable ground exists to believe, then in that case the power of t....
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....ncome from business carried on by an entrepreneur in an SEZ. Claiming deduction u/s 10AA or opting out of benefit of sec.10AA is not a criterion to enforce this section. In line with the above subsection, while computing income u/w115JB, you have added back expenses related to some SEZ units and reduced the revenue from such units. However expenses and revenue in relation to the 9 SEZ units were not given similar treatment. Since loss incurred by these 9 units amount to Rs. 13,06,30,230, adding back of expenses incurred by these 9 units and reducing revenue from such units will result in income u/s.115JB going up by sum of 13,06,30,230. Therefore, I have a reason to believe that Income has escaped assessment within the meaning of Sec.147 of the IT Act, 1961. The reasons for reopening the assessment as per the records of this office were not provided verbatim to the assessee but the reasons communicated to the assessee vide letter dated 14.07.2016 didn't change the content or meaning of the reasons to believe formed by the erstwhile officer. Thus, as the notice was issued and the reasons for reopening were formed by the erstwhile officer there is no lack of 'reason to ....