TaxTMI 
TaxTMI 
2025 (8) TMI 1510
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....stead of 10.5575%. He ought not to have done so. 3. The learned CIT(A) erred confirming the levy of interest under section 234B and section 234C of the Income tax Act, 1961 for Rs. 4,77,18,318/- and Rs. 56,43,456/- respectively. He ought not to have done so. 3. Of course vide letter dated 17.09.2024, the assessee has raised an additional ground as under: 1. On the facts and in the circumstnaces of the case, the IT Recharge of Rs. 3,82,28,189/- is not chargeable to tax as it is not in nature of fees for technical services in view of Article 13 of the DTAA between India and UK. 4. Be that as it may, at the outset, we propose to deal with ground no. 1, which raises a legal issue, challenging the validity of the reopening of assessment u/s. 147 of the Act. 5. Briefly stated the facts are, the assessee is a non-resident corporate entity and is a resident of United Kingdom (UK). For the assessment year under dispute, the assessee filed its return of income on 13.10.2010, declaring income of Rs. 20,05,15,906/-. The return so filed by the assessee was processed u/s. 143(1) of the Act on 10.02.2011. No assessment u/s. 143(3) of the Act was made. Subsequently, base....
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....ddition stands deleted by learned First Appellate Authority, the reopening of the assessment u/s. 147 of the Act would be invalid, as, in absence of the addition which is subject matter of reopening, no other addition can survive. In support of such contention, the ld. Counsel relied upon the following decisions: * CIT vs. B. P. Poddar Foundation For Education 2023] 148 taxmann.com 125 (Calcutta) * Shri Sureshkumar Jethanand Rawlani vs. ITO (in ITA Nos. 1053 & 1054/Mum/2024 vide order dated 24.07.2024) * Mahesh Kumar vs. ITO (in ITA No. 2650/Del/2024 vide order dated 22.07.2025)(TM) 9. Proceeding further, ld. Counsel submitted the very foundation of reopening of assessment to bring to tax the management charges is similar addition made by the A.O. in assessee's case in A.Y. 2009-10. He submitted, while deciding the appeal for A.Y. 2009- 10, learned First Appellate Authority has deleted similar addition and the department is not in appeal against such decision of learned First Appellate Authority. Therefore, the very basis of reopening stands obliterated. That being the case, the reopening of assessment u/s. 147 of the Act, should be declared invalid. ....
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....FTS under Article 13 of India-UK DTAA, but has escaped assessment. In fact, the A.O. has made addition of the amount while making the assessment. However, it is equally true that while deciding the issue on merits, learned First Appellate Authority has deleted the addition. The short issue arising for consideration is if the addition which is subject matter of reopening gets deleted in appellate proceeding, whether it would affect the validity of reopening of assessment. We find, identical question was posed before Hon'ble Calcutta High Court in case of B. P. Poddar Foundation For Education (supra) and ultimately Hon'ble High Court affirmed the view of the Tribunal in holding the reopening of assessment as bad-in-law, since the addition which was the subject matter of reopening was deleted by the appellate authority. Identical view was expressed by the coordinate benches in the decisions cited supra. In case of Mahesh Kumar (supra) learned Third Member following the ratio laid down in case of CIT vs. Jet Airways (I) Limited 331 ITR 236 (Bom) and Ranbaxy Laboratories Ltd. 336 ITR 136 (Del), has held as under: 9. The facts, apart from being matters of record, are not in ....
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....61 read with section 147, the Assessing Officer does not assess or, as the case may be reassess the income which he has reason to believe had escaped assessment and which formed the basis of a notice under section 148, is it open to the Assessing Officer to assess or reassess independently any other income, which does not form the subject-matter of the notice?" 12. The Bombay High Court in the context of Explanation 3 to Section 147 of the Act added by the Finance (No. 2) Act, 2009 held as under :- "Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance or core nugatory. Section 147 has this effect that the Assessing Officer has to assess or reassess the income ("such income") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which comes to his notice during the course of the proceedings. However, if after issuing a notice und....
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....boratories Ltd. (supra) "is not acceptable" because no such proposition was laid down in these decisions. The following observations in para 5.8 of his order are relevant :- "5.8 However, as discussed above, in the present case, the AO had made addition in respect of the issue on which the assessment was reopened and also in respect of two other issues which came to his notice during the assessment proceedings on the basis of materials available on record. In the present case, it is not the case that the AO did not make the addition on the issue on which the assessment was reopened u/s 148 of the Act but the said addition was deleted by the Ld. CIT(A). Therefore, the reliance placed by the Kolkata Tribunal on the decisions of Hon'ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd. (supra) and of Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT (supra) to hold that if the addition on the basis of which the reassessment was made was deleted in appeal, then the AO could not make addition in respect of other issues which came to his notice during the reassessment proceedings, unless the AO has issued a separate notice u/s 148 of the....