2013 (5) TMI 327 - HC - Income Tax

Reopening of assessment Reasons for reopening firstly, that no TDS was deducted on the discount paid by the petitioner on prepaid SIM- card and recharge vouchers to various dealers which was in the nature of commission. Second ground was that no tax at source was deducted on roaming charges paid by the petitioner to other telecom service providers. As per appellant both these issues were at large before the AO in the original assessment. No disallowance was made in the assessment so framed. Reopening of the assessment therefore, was not permissible that too beyond a period of four years from the end of relevant assessment year. Revenue opposed the petition contending that after recording proper reasons, the AO had issued the notice. The petitioner had though supplied the details of those dealers who received the commission in excess of Rs. 50 lakhs, the details regarding other dealers who may have received such payments below Rs.50 lakhs was not supplied. There would be the failure on part of the petitioner to disclose true and full facts. Held that - After going through the details of communications made by the assessee to AO we are convinced that there was no failure on part of the assessee to disclose truly and fully all material facts. Though an attempt on behalf of the Revenue was made before us to contend that by supplying the list of only those dealers who received commission in excess of Rs. 50 lakh, the petitioner failed to discharge such onus of disclosing true and full facts, we are afraid such a contention cannot be accepted for variety of reasons. Firstly, this issue is nowhere borne out from the reasons recorded. Secondly, the petitioner replied to a query of the AO and supplied such details in this regard which were called for. Thirdly, with respect to liability to deduct tax at the source, there is no distinction even suggested by the AO on the basis whether such payment was in excess of Rs. 50 lakhs or below. In the result, petition is allowed. Impugned notice dated 7.3.2012 is quashed.

Summary

Issues Involved:
1. Reopening of assessment beyond four years.
2. Non-deduction of TDS on prepaid mobile SIM cards and recharge vouchers.
3. Non-deduction of TDS on roaming charges.

Detailed Analysis:
1. Reopening of Assessment Beyond Four Years:
The petitioner challenged the notice dated 7.3.2012 for reopening the assessment for the year 2005-2006, which was previously scrutinized and framed by the Assessing Officer. The notice was issued beyond the four-year period from the end of the relevant assessment year. The petitioner contended that they had made full and true disclosures during the original assessment, and reopening beyond four years was not permissible. The court noted that the reopening notice was based on two reasons: non-deduction of TDS on discounts given to dealers on prepaid SIM cards and recharge vouchers, and non-deduction of TDS on roaming charges paid to other telecom service providers. The court emphasized that both issues were already examined during the original assessment, and the petitioner had provided all necessary details.

2. Non-deduction of TDS on Prepaid Mobile SIM Cards and Recharge Vouchers:
The Assessing Officer argued that the petitioner was required to deduct TDS on the discounts given to dealers on prepaid SIM cards and recharge vouchers, treating these discounts as commission under Section 194H of the Income Tax Act. The petitioner had disclosed details of commissions paid to dealers in excess of Rs. 50 lakhs during the original assessment. The court found that the petitioner had provided all necessary details and there was no failure to disclose material facts. The court also noted that the Assessing Officer did not raise any further questions or express any opinion on the matter during the original assessment.

3. Non-deduction of TDS on Roaming Charges:
The Assessing Officer also argued that the petitioner was required to deduct TDS on roaming charges paid to other telecom operators, similar to interconnectivity charges. The petitioner had provided detailed information on roaming charges paid to various telecom operators during the original assessment. The court observed that the Assessing Officer had the opportunity to express an opinion or seek further details during the original assessment but did not do so. The court concluded that there was no failure on the part of the petitioner to disclose true and full material facts regarding roaming charges.

Conclusion:
The court held that the petitioner had made full and true disclosures during the original assessment, and there was no failure to disclose material facts. Consequently, the reopening of the assessment beyond the four-year period was not permissible. The court quashed the impugned notice dated 7.3.2012, allowing the petition and disposing of the case accordingly.