TaxTMI 
TaxTMI 
2022 (6) TMI 1407
X X X X Extracts X X X X
X X X X Extracts X X X X
.... both the sides were heard at length, the case records carefully perused and with the assistance of the ld. Counsel, we have considered the documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules. Judicial decisions relied upon by both the sides were duly considered. 4. Briefly stated, the facts of the case are that the assessee company e-filed its return of income on 30.11.2015 declaring NIL income. Return was selected for scrutiny under CASS and, accordingly, statutory notices were issued and served upon the assessee. A detailed questionnaire alongwith notice u/s 142(1) of the Act was issued and, thereafter, the case was referred to the Transfer Pricing Officer. 5. A perusal of the assessment order shows that simultaneous proceedings were undertaken, one by the Assessing Officer and the other by the TPO. Notes to Indian Income tax return for Assessment Year 2015-16 reads as under: "1. Headstrong Consulting (Singapore) Pte. Limited {'HCS' or 'the Company') is a company incorporated under the laws of Singapore arid has its effective place of management in Singapore. 2. During the Year 2015, it wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and information, as necessary, to support its Income-tax return and the computations made therein," 6. It can be seen from the above that in the notes to accounts, the assessee has explained the transactions relating to the transfer of shares and consideration received thereon. It can also be seen that the assessee has explained as to why the said transfer of shares does not result into any capital gains tax liability and why the income is exempt. 7. The first notice issued by the Assessing Officer during the course of scrutiny assessment proceedings is dated 16.08.2017 wherein the Assessing Officer had asked the assessee to submit copies of acknowledgement of filing return of income alongwith Income tax return form and notes to return and also Form No. 3CEB for the year ending on 31.03.2015. 8. On 18.10.2018, the Assessing Officer again issued a notice which reads as under: NOTICE UNDER SECTION 142(1) OF THE INCOME - TAX ACT, 1961 OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE 2(1 X ROOM NO. 310, 3RD FLOOR, E-2 BLOCK, CIVIC CENTRE. MINTO ROAD, NEW DELHI - 110011 PAN : AADCH4943D Dated : 18/10/2018....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rehouses and construction or other business sites in India. 4. Please furnish copy of the tax residency certificate for the relevant Assessment year. 5. Please furnish copies of all contracts and agreements operative during the year in respect of your activities in India. Copy of agreement/Contracts entered into with Indian customers/clients or any other party in India from whom any payment is received during the year "or has accrued or arisen during the year may also be provided. 6. Please confirm whether you have maintained books of accounts for your Indian operation as required u/s44AA of the Act. If yes, please confirm whether they have been audited as required u/s 44AB of the Act, and furnish the same. If not, give your explanation for not complying with provisions u/s 44AA and u/s 44AB of the Act. 7. Please furnish computation of income. 8. Please furnish copy of order of Advance Ruling obtained in your case, if any. 9 Please explain the Large international transaction(s). Please send your reply through email and also furnish the hard copy of your reply in this office by 25/10/2018," (Arindam Misra) Assistan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rovide us with an opportunity to personally represent this case before finally concluding the present proceedings. Thank you Yours faithfully, Authorised Signatory End; As Above 12. And then on 06.11.2018, the following reply was filed: "November 6, 2018 Assistant Commissioner of Income Tax, Circle- 2(1){1), (International Taxation) New Delhi. Respected Sir Re: Headstrong Consulting (Singapore) Pte. ltd. [now known as 'Genpact Consulting (Singapore) Pte. Ltd.'] ['the Company' or 'the assessee'] PAN: AADCH4943D A.Y. 2015-16 Sub : Notice dated October 13. 2018 under Section 142(1) of the-income-tax Act. 1961 - Response, thereto In response to the captioned notice dated October 18, 2018 issued by your goodself's office (copy of the notices are collectively enclosed herewith as Annexure I) and in continuation to our earlier submission dated August 16, 2017, we respectfully submit the following information: 1. Note on the Business of the Company The Company was incorporated as a pri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ormation / documentation on hearing from yaur gondself's office We request your office you provide us with an opportunity to personally represent this case before finally concluding the present proceedings, Thank you Yours faithfully, Authorized Signatory Encl: : As Above." 13. It can be seen from the above at Point No. 9 that the assessee has given details of International Taxation as per Form No. 3CEB. On 27.11.2018, the Assessing Officer again issued a notice u/s 142(1) of the Act to which the assessee replied on 03.12.2018 explaining the transaction relating to transfer of shares as under: December 3, 2018 Assistant Commissioner of Income Tax, Circle- 2(i)( 1), (International Taxation) New Delhi. Respected Sir, Re: Headstrong Consulting (Singapore) Pte. Ltd. [now known as 'Genpact Consulting (Singapore) Pte. Ltd,') ['the Company' or 'the assessee'] PAN: AADCH4943D Assessment Year: 2015-16 Sub: Notice dated Novembe r27, 2018 under Section 142(1) of the Income-tax Act, 1961 - Response thereto In response to the captioned notice dated Nove....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eby respectfully submitted as Annexure Z. 4. Copy of the valuation report for the valuation of the shares of Genpact India is enclosed herewith as Annexure 3. We request your office to take the above information on record. In addition to above, the Company would be obliged to furnish further information / documentation on hearing from your goodself's office. We request your office to provide us with an opportunity to personally represent this case before finally concluding the present proceed Thank you Yours faithfully Authorised signatory 14. On 27.11.2018, alongwith notice u/s 142(1) of the Act, the following was annexed by the Assessing Officer: 1. The details of the share transactions undertaken. 2. Detailed calculation of income. 3. Capital gains offered to tax if any. If not reasons for the same. 4. The valuation report of the shares sold or purchased. As many notices sent earlier have not been complied, with it is requested that the compliance for the above questions be made on time to avoid the initiation and levy of penalty u/s 271(l)(b) of the Income Tax Act. 15. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee in so far as receipt of share application money is concerned, whereas in the case in hand, after receiving information relating to share transfer proper enquiries were made which is also evident from the office note exhibited elsewhere. 22. Another decision relied upon by the ld. DR is the case of Surya Financials Services Ltd ITA No. 2158/DEL/2017 where the Assessing Officer failed to carry out adequate enquiry about the alleged accommodation entries and the co-ordinate bench upheld the order of the PCIT framed u/s 263 of the Act. 23. As mentioned elsewhere, in the case in hand, the Assessing Officer had not only made sufficient enquiries, but after satisfying himself, assessment was framed u/s 143(3). 24. The ld. DR also referred to the decision of the Hon'ble Delhi High Court in the case of Ashok Logani 347 ITR 22 wherein the Hon'ble Delhi High Court held that where the Assessing Officer has left many loose ends, that too in a case where huge cash was found during search, most of which was surrendered by giving statement at the time of search, it was necessary for the Assessing Officer to properly adjudicate upon that issue [surrender] and assessment order ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fixing the amount of valuation of the property. Similarly, "erroneous judgment" means "one rendered according to course and practice of court, but contrary to law, upon mistaken view of law; or upon erroneous application of legal principles". 12. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the court it would be open to the courts to examine whether the relevant objective factors were available from the records called for and examined by such authority. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Incometax Officer cannot be held to be "erroneous" simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the donor. Once the Assessing Officer was satisfied with regard to the same, there was no further requirement on the part of the Assessing Officer to disclose his satisfaction in the Assessment Order passed thereon. Thus, this objection on the part of the Revenue cannot be accepted." 29. We find that the Hon'ble Delhi High Court in the case of CIT Vs Sunbeam Auto reported in 332 ITR 167 has held as held as under: "12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the CIT under s. 263 of the IT Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the AO did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the AO had not applied his mind on the issue. There are judgments galore layin....