2023 (1) TMI 68 - HC - Income Tax

Reopening of assessment u/s 147 - petitioner s return of income did not offer to tax receipts of professional service charges from S.R. Batliboi Associates LLP - HELD THAT - The order passed under Section 143(1) of the Act is not an assessment for the purposes of Section 147 - Further, it is not necessary in such a case for the Assessing Officer to come across some fresh tangible material to form a belief that income has escaped assessment. The scrutiny assessment for assessment year 2019-20 also offers no assistance to the petitioner, as the petitioner did not place on record any documents such as Contract Agreement under which such transactions were carried out, copy of original invoices (not just invoice breakup) to show that the services rendered by the petitioner during assessment year 2018-19 were identical/similar to the services rendered to M/s Batliboi Associates LLP in the assessment year 2019-20. Needless to state that if petitioner is able to satisfy the AO that the services rendered in the present assessment were similar/identical to the services rendered in the assessment year 2019-20, the re-assessment proceedings would be closed.

Summary

Issues:
Challenge to Order under Section 148A(d) of the Income Tax Act, 1961 for Assessment Year 2018-19.

Analysis:
The petitioner challenged the order seeking to re-open the assessment based on professional service charges not offered for taxation. The petitioner argued that the income was not taxable in India under the Double Taxation Avoidance Agreement (DTAA) and that the respondent erred in assuming no reply was filed. The court previously set aside the order and directed a fresh reasoned order. The respondent, in the subsequent order, found the transaction taxable unless the petitioner proved the nature and place of services rendered.

The petitioner contended that the respondent previously accepted the professional charges in the current assessment year, making the re-assessment unnecessary without fresh material. The petitioner emphasized that an order under Section 143(1) constitutes an assessment. The respondent argued that the benefit of DTAA in one year does not automatically extend to subsequent years if services differ. The court noted that under Section 143(1), no fresh tangible material is required for re-opening assessments.

The court cited precedents emphasizing the distinction between intimation and assessment under Sections 143(1) and 143(3) of the Act. It clarified that the intimation under Section 143(1) is not an assessment, and no fresh material is needed for re-assessment. The court highlighted the petitioner's failure to provide evidence of identical services rendered in different assessment years, which could have closed the re-assessment proceedings.

In conclusion, the court found no issue with the respondent's order, dismissing the writ petition and application. The judgment underscores the importance of satisfying the Assessing Officer regarding identical services to prevent re-assessment.