TaxTMI 
TaxTMI 
TaxTMI 
2025 (4) TMI 1669
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.... no time was given to appellant to furnish objections to the draft assessment order. Reopening of Assessment 2.1 On the facts and in the circumstances of the case and in law, the CIT(A) failed to appreciate that, AO reopened the assessment after a period of 4 years from the end of the assessment year even when there was no failure on the part of appellant to fully and truly disclose all information required for completion of assessment. 2.2 On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in upholding the reopening proceedings even when no new tangible material was found, and the reopening was based on materials already on record. 2.3 On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in upholding the reopening proceedings even when the reopening was only based on a change of opinion. Exclusion of foreign income in computing Income under Normal Provisions and under MAT 3.1 On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in upholding the order of AO in not excluding the income of foreign branches in Dubai and Antwerp with whom India has entered into a Double Tax Avoidance....
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.... tried to upload its objections on 29.03.2022 the provision for filing the same or for seeking a virtual hearing was closed and assessee could not respond to the draft assessment order. The assessment u/s 147 was passed on 30.03.2022 by finalizing the assessment based on the draft assessment order and the addition was confirmed amount to Rs. 65,03,12,137/- related income of foreign branches of the assessee in Dubai and Antwerp. The allegation of the assessee is that Ld. AO passed the order u/s. 147 without granting proper and meaningful opportunity to the petitioner to respond to the show cause notice. The assessee was not given any time to respond to the draft assessment order before the passing of the impugned assessment order dated 30.03.2022. The final order passed without giving any time to the assessee to respond cannot be said to be an opportunity given to assessee. The further grievance of the assessee is that the Ld. AO passed an order u/s 147 r.w.s 144B even when there was no new tangible material and by disposing off the objections raised by the assessee in a mechanical manner. The Ld. AO added to income of foreign branches with whom India had entered into a Double Tax A....
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....geable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year." 5. The Ld.AR argued that Section 147 provides that the Ld. AO can re-open an assessment made u/s. 143(3) of the Act if there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the year under consideration. But in this case the claim in respect of exclusion of income of foreign branches was claimed in the return of income and the same was separately disclosed in the computation of income. Further during the scrutiny assessment proceedings u/s 143(3) the Ld. AO vide notice u/s 142(1) dated 14.03.2018 in para 19 which is annexed in APB pages 22-25, required the following on exclusion of foreign income. "19) In computation of income profit of Dubai branch excluded from total Income as per Article 7 of DTAA is Rs. 13,00,96,542/ -. You are required to explain why the above income sho....
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....l material facts necessary for assessment ...." is only a bald statement used to get out of the restrictions imposed in section 147 of the Act. 7. Mr. Pinto relied upon a judgment of this Court in Crompton Greaves Ltd. v. Asstt. CIT [2015] 55 taxmann.com 59/229 Taxman 545 to submit that even if the reason for reopening does not specifically state that there was any failure on the part of petitioner to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year, it will not be fatal to the assumption of jurisdiction under sections 147 and 148 of the Act. We would certainly agree with Mr. Pinto but as held in Crompton Greaves Ltd (supra), this is subject to the rider that there must be cogent and clear indication in the reasons supplied, that in fact there was failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment. If the factum of failure to disclose can be culled from the reasons in support of the notice seeking to reopen assessment, that will certainly not be fatal to the assumption of jurisdiction under sections 147 and 148 of the Act. The Court held "However, if from the ....
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....is 'Allow relief u/s 90/91 of the Act after verification. In such a case it will be an imperative to calculate the total income, after considering the tax credit availed, if any, by the appellant." 10. The appeal was subsequently scheduled for clarification following the submission made by the Ld. DR. Both parties were afforded a reasonable opportunity to be heard. During the hearing, the Ld. AR rebutted the submissions of the DR and presented the following arguments which are reproduced as below :- "Observations of the Ld DR (1) The reassessment was necessitated on the issue of 'Exclusion of Income of foreign branches located in Dubai and Antwerp', which was not deliberated in the assessment order passed under section 143(3) dated 27/03/2018. It can be further seen that the question regarding the issue was asked in a routine/casual manner vide 142(1) notices dated 14/03/2018. Observation of the Appellant. The issue of granting DTA relief was very much examined by the AO as can be seen from the Notice issued u/s 142 (1) and also as stated by the Ld DR. In the reply to Notice dated 14/03/20, in item No 19 the Appellant had clarified to the query raised by the AO....
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....R (3) "Learned counsel has shown, in accepting the fact that even though the issue is covered in favour of the assessee by earlier decisions of the coordinate benches, these coordinate bench decisions cease to be binding judicial precedents inasmuch as reasoning adopted therein does not hold good any longer in the light of the decision in the case of Technimont (supra), admirable grace. respective treaty" Observation of the Appellant The Ld DR had reproduced extensively from the observation of Hon'ble ITAT in ITA No 1767 & 2048 in the case of Bank of India v ACIT to argue the issue on merits whereas the jurisdictional issue whether AO had assumed jurisdiction when there was no failure on its part is not covered by said decision. Only when there was omission to disclose material fact, the extended period of jurisdiction is available to the AO. This has been repeatedly been held by various decisions of Hon'ble Bombay High court including: Godrej & Boyce Manufacturing Co. Ltd V ACIT (140 taxmann.com 345) Imperial consultants and Securities Ltd V DCIT (169taxmann.com 587) Observations of the Ld DR (4) This clearly shows that the appellant and AR were quite aware of....
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....the Act. The Assessing Officer can only reassess the assessment wherever income escaped assessment, and not review the order passed by him. In view of the above discussion and respectfully following the decision of the Honble Bombay High Court in the case of HDFC Bank Ltd. (supra) ....... allowed. Observations of the Appellant The above decision of Hon'ble ITAT is in the context of jurisdiction of AO to reopen the issue in respect of Asst years 2016-17 and 2017-18 which has been decided in favour of the Appellant. An issue which has been decided on jurisdiction cannot be re-agitated on merits an exercise of power without authority of Law is illegal in administration of justice and needs to be struck down. Observations of the Ld DR (7) However, in the year under consideration before the Hon'ble Bench, there As were material facts/information available on record, in form of decisions passed in favour of revenue by the Hon'ble Jurisdictional Mumbai ITAT Bench, on the issue of inclusion of global income. Observations of the Appellant As stated before, the issue is whether when there is no failure on the part of assessee to disclose material facts, can the AO on ....
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....d by the resident Indian Bank. Such a view cannot be countenanced in view of quoted/attached judgements of Hon'ble Mumbai ITAT in the case/s of Technimont (P) Limited and Bank of India. Further, it is a fact that the Ld. JAO has not deliberated in any manner on this issue in the assessment order. There is not a whisper on the issue of inclusion or otherwise or the non-taxation of the stated global income. When can an issue of untaxed income, which is subject to reopening, would amount to change of opinion? Surely such a cursory mention of such an income of Rs.65.03 Crs(by no means a small amount) in the questionnaire and reply to be construed as "CHANGE OF OPINION"? As the issue has not been deliberated, no weightage can be granted qua such a non-scrutiny. The issue is further confounded in a sense that Ld.AR who has been aware of the issue and the litigation history, has not mentioned the same in the reply before the Ld. JAO. The issue as per chart provided by the AR of the appellant in the hearing Hon'ble ITAT Mumbai Bench, in the case of Bank of India ITA No.1767 and 2048/Mum/2019 dated 11.12.2020(Bank of India vs Assistant Commissioner of Income Tax, Circle 2(1)(1),....
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....s valid. Observations of the Ld DR (10) The above stand of the revenue has been endorsed in the case of Consolidated Photo &Finvest Ltd. vs. Assistant Commissioner of Income-tax (2006) 151 Taxman 41 (Delhi)/[2006) 281 ITR 394 (Delhi)/(2006) 200 CTR 433 Observations of the Appellant We rely on the following observation of the Delhi High Court in the case of KLM Royal Dutch Airlines vs Asst Director of Income Tax (2007] 159 Taxman 191 (Delhi) viz. "The Full Bench of the Delhi High Court in CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1/ 123 Taxman 433 had opined that the amendments introduced into section 147 with effect from 1-4-1989 have not altered the position that a mere change of opinion of the Assessing Officer was not sufficient ground for embarking on reassessment. The Full Bench further observed that an order of assessment must be presumed to have been passed by the Assessing Officer concerned after due and proper application of mind. In these circumstances the decision of the Division Bench Delhi High Court in Consolidated Photo & Finvest Ltd. v. Asstt. CIT[2006] 281 ITR 394/151 Taxman 41, in as much as it is irreconcilable with the views of the Full Bench, mus....
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.... of opinion." It is a well-settled position in law that reassessment proceedings cannot be initiated merely because the Assessing Officer intends to take a different view on the same set of facts that were already examined during the original assessment. The Hon'ble Delhi High Court, in CIT v. Kelvinator of India Ltd. [2002] 123 Taxman 433 (Del. FB), has categorically held that: "21. Another aspect of the matter also cannot be lost sight of. A statute conferring an arbitrary power may be held to be ultra vires article 14 of the Constitution of India. If two interpretations are possible, the interpretation which upholds constitutionality, it is trite, should be favoured. In the event it is held that by reason of section 147 if the ITO exercises its jurisdiction for initiating a proceeding for reassessment only upon mere change of opinion, the same may be held to be unconstitutional. We are, therefore, of the opinion that section 147 does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceeding upon his mere change of opinion. We, however, may hasten to add that if 'reason to believe' of the Assessing Officer is founded on an....