2022 (3) TMI 1235 - AT - Income Tax

Reassessment proceedings u/s. 147/148 - assessee company has not disclosed its income fully and truly and proceeded by issuing notice - Reopening beyond beyond four years - HELD THAT - We are of the considered opinion that the reassessment notice has been issued after four years and, therefore, the 1st proviso to section 147 squarely applies on the facts of the case. A perusal of the factual matrix considered during the original assessment proceedings shows that there was no failure on the part of the assessee to disclose fully and truly all material facts. In our considered opinion, no new facts or information has come in the possession of the AO, which could have led to the formation of the belief that any income chargeable to tax has escaped assessment. Assessment order for Assessment Year 2009-10 framed u/s.143(3) wherein the assessee has offered income from GBN whereas the notice issued u/s. 148 of the Act is dated 20.02.2012 which means that the assessment order for AY 2009-10 was very much available with the AO before assuming jurisdiction u/s 148 - It is clear that reassessment proceedings are initiated on same set of facts as existed in the course of original assessment and reasons so recorded clearly show that it is re-application of mind on same set of facts. A perusal of the reasons recorded for reopening assessment shows that the entire exercise has been done by the Assessing Officer on the basis of assessment of GBN for AY 2007-08 wherein an amount on account of royalty paid to the assessee was found. The amount accrued by the payer in its books has no relevance as it is a trite law that payment may be treated differently in the books of payer and the payee. We have no hesitation in holding that assumption of jurisdiction u/s.147 of the Act by issuing of notice u/s.148 of the Act is bad in law and assessment order so framed is liable to be quashed. We, accordingly, quash the assessment order. - Decided in favour of assessee.

Issues:
1. Validity of reassessment order under Section 148 read with Section 143(3) and Section 144C of the Income-tax Act, 1961 for A.Y. 2007-08.
2. Reopening of assessment proceedings under Section 147/148 of the Act.
3. Taxability of royalty from Global Broadcast News Private Limited (GBN).
4. Allowance of credit for taxes deducted at source on royalty.
5. Disallowance of complete credit of taxes deducted at source.
6. Levying of interest under Section 234B of the Act.
7. Initiation of penalty proceedings under Section 271(1)(c) of the Act.

Analysis:
1. The primary challenge was the validity of the reassessment order, contending it was wrong, bad in law, and void ab initio. The Tribunal noted that during the original assessment, the assessee fully disclosed all material facts related to the agreement with GBN. The reassessment notice was issued after four years, and no new facts emerged to justify income escapement. The Tribunal held that the reassessment was not in line with Section 147, quashing the assessment order.

2. The issue of reopening assessment proceedings under Section 147/148 was raised. The Assessing Officer initiated reassessment based on the alleged escapement of income, which the assessee disputed. The Tribunal found that the reassessment was solely based on the same facts as the original assessment, indicating a re-application of mind on existing information. Citing legal precedents, the Tribunal concluded that the reassessment was unjustified and ordered the assessment to be quashed.

3. The taxability of royalty from GBN was contested, with discrepancies in the amount offered to tax by the assessee and assessed by the authorities. The Tribunal observed that the original assessment considered all relevant details, including the agreement with GBN, and no new information warranted reassessment. Consequently, the Tribunal held that the reassessment proceedings were unwarranted and invalidated the assessment order.

4. The Tribunal addressed the allowance of credit for taxes deducted at source on royalty, emphasizing that the reassessment was not justified due to the absence of new material facts. The Tribunal reiterated that the reassessment notice was issued after the prescribed time limit, rendering it invalid under Section 147. As a result, the Tribunal quashed the assessment order, thereby resolving the issue of credit for taxes deducted at source on royalty.

5. The Tribunal also examined the disallowance of complete credit of taxes deducted at source without any reason. Given the lack of justification for reassessment and the absence of new information, the Tribunal deemed the reassessment proceedings as flawed. Consequently, the Tribunal invalidated the assessment order, addressing the issue of disallowance of complete credit for taxes deducted at source.

6. The Tribunal considered the levying of interest under Section 234B and the initiation of penalty proceedings under Section 271(1)(c) of the Act. However, since the reassessment order was deemed invalid and quashed for various reasons, including lack of new material facts and exceeding the time limit for reassessment, the Tribunal did not delve into the merits of these issues. Ultimately, the Tribunal allowed the appeal of the assessee, highlighting the flaws in the reassessment process and ordering the quashing of the assessment order.

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