TaxTMI 
TaxTMI 
2025 (11) TMI 1404
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.... of proviso to section 251 (1)(a) inserted by Finance (No. 2) Act, 2024 w.e.f 01-10-2024. 3. That on facts and in law the CIT(A) has erred in upholding the validity of assumption of jurisdiction by the AO u/s 147 of the Act. 3.1 That on facts and in law the CIT(A) has erred in upholding jurisdiction to re-assesses u/s 147 not appreciating that: (i) Notice u/s 148 was not served upon the appellant (ii) Copy of reasons recorded us 148(2) of the Act have not been provided by the AO. (iii) As per provisions of section 115A(5) of the Income Tax Act appellant was not required to file a Return of Income in India and hence there is no escapement of income. (iv) AO has failed to dispose off objections raised by the appellant challenging his assumption of jurisdiction as per law. 4. That on facts and in law the CIT(A) has erred in not objectively considering the written submissions / pleadings uploaded by the appellant. 4.1 That on facts and in law (in para 5.1 of the impugned order) the CIT(A) has erroneously recorded pleadings made by the appellant, as if (a) main grievance of the assessee is regarding lack of....
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....ssessee preferred an appeal before the ld. CIT(A) and filed detailed submissions and evidences. After considering the detailed submissions of the assessee, ld. CIT(A) disposed off the appeal by observing as under: "5.1 I have carefully considered the facts and circumstances of the case and the submissions of the appellant. At the outset, the appellant has questioned the validity of proceedings u/s 148. On perusal of the assessment order, it is, however, noted by the undersigned that the procedure followed meets all the requirements laid down in the Act. The main grievance of the assessee is regarding lack of opportunity of being heard. The appellant could not plead the case before the Assessing Officer properly. lt is noted that the appellant could not file explanations with supporting documents at the time of assessment proceedings which resulted in passing of assessment order u/s 147 r.w.s. 144 of the Act. The AO accordingly assessed total income of the appellant, at Rs. 8,49,50,002/- in the impugned assessment order dated 23.12.2019. The appellant has now submitted certain documents during the appeal proceedings. 5.2 It is noted that ....
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....rovisions of Article 11 of India-UAE DTAA, interest income was taxable in India @ 12.5%. As such, TDS under section 195 of the Act was deducted by IFFCO on remittances made to assessee and total TDS deducted was Rs. 53,09,375/-. We observe that the AO however has subjected to tax interest income of Rs. 8,49,50,002/- i.e., exactly twice the amount of actual income derived and shown in Form 26AS. We further observe that no material has been brought on record by the AO to show that actual income earned is Rs. 8,49,50,002/- and not Rs 4,24,75,001/-. We observe that assessee is a foreign company and a tax resident of UAE and the only source of income derived by it from India was interest income received by it from IFFCO on which withholding tax @ 12.5% has been deducted. In this regard, we reproduce sub-section (5) of section 115A as under: "Section 115A(5) It shall not be necessary for an assessee referred to in sub-section (1) to furnish under sub-section (1) of section 139 a return of his or its income if- (a) his or its total income in respect of which he or it is assessable under this Act during the previous year consisted only of income referred to in clause (a) ....
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....ed a notice under Section 147 of the Act. Even assuming that at the time notice was issued the Respondent was perhaps not fully aware of all the relevant facts, once the Petitioner submitted its objections drawing his attention to the specific legal position, it was obligatory for the Respondent to have applied his mind to those points. The order passed by the Respondent rejecting the objections on 23rd October, 2018 shows that there is no reference whatsoever to the specific objections of the Petitioner. Even a cursory examination of those objections would have dissuaded the Respondent from persisting with the proceedings consequent upon the impugned notice dated 26th March, 2018. .... .... 20. The above provisions have to be read together with the CBDT Instruction No.14 of 2013 which sets down the SOP for cases under the NMS. Para 5 of the said instruction reads as under: 'If no return is required to be filed in the case (non-resident etc.), the Assessing Officer should mark "No return is required" and mention reason for the same in NMS which needs to be confirmed by Range head.' .... .... 22. The above deeming fiction is a reb....
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....hered to by the field officers in all cases where this issue is involved. This may also be brought to the notice of the ITAT, DRPs and CIT (Appeals)." 25. Therefore, the fundamental premise of the Respondent that the above investment by the Petitioner in the shares of its subsidiary amounted to 'income' which had escaped assessment was flawed. The question of such a transaction forming a live link for reasons to believe that income had escaped assessment is entirely without basis and is rejected as such. 26. For the aforementioned reasons, this Court sets aside the impugned notice dated 26th March, 2018 and the impugned order dated 23rd October, 2018. The writ petition is allowed in the above terms, but in the circumstances, there is no order as to costs. The application is disposed of." 9. We further observe that Hon'ble Jurisdictional High Court in case of M/s Tsys Card Tech Services Limited (supra) has also dealt with the similar issue wherein it is held as under: "4. The case of the petitioner is that the petitioner is a company incorporated under the laws of Cyprus. It is engaged in the business of provision of information technology enabl....
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....32,622/- during the Financial Year 2011-12 relevant to the Assessment Year 2012-13. The impugned order, however, does not at all advert to the petitioner's submission premised upon Section 115A (5) of the Act. 10. Learned counsel for the respondent had produced before this Court a print-out of the Form AS 26 details, as per which the total receipts of the petitioner during the Financial Year 2011-12 are to the tune of Rs. 53,32,622/-. Learned counsel for the petitioner points out that in the said tabulation, there is duplication of six entries, which are mentioned in the Form 26 AS generated by the respondents and filed with the petition at page 51. 11. Firstly, the Assessing Officer - while passing the order, should have applied his mind to determine as to what has caused the discrepancy in the two Form 26 AS, i.e. the one relied upon by the petitioner, and the other relied upon by him. He has not adverted to the said discrepancy. Pertinently, both these forms have been generated by the system of the respondent Department itself. Secondly, there is not a whisper in the impugned order about the petitioner's submission that it was not obliged to file the in....
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....gapore residents, and its place of effective management is also in Singapore. Section 90(2) of the Act mandates that a DTAA "shall prevail" over domestic law unless POEM or Section 6 of the Act override treaty concessions. In the given case, no such findings were recorded by the AO before initiating the reassessment proceedings, which is relevant to get the jurisdiction to initiate the reassessment proceedings. Further, we observed that the Hon'ble Supreme Court and Hon'ble Delhi High Court in the case of Calcutta Discount Co. Ltd (supra) and in the case of Sabh Infrastructure Ltd (supra) have placed jurisdictional safeguards to ensure the extraordinary power of reopening is exercised when the AO has tangible materials in his possession and recorded proper satisfaction which is clear, specific before initiation of proceedings and even before the issue of notice. Further, as held in the case of Lakhmani Mewal Das (supra), the AO must hold a Bonafide reason to believe that it is based on a live causal nexus between the tangible material in possession and alleged escapement of income. In the present case, the AO is aware of the fact that the assessee is non-resident company and the fu....