9911796707
TMI Blog2013 (7) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner filed its return of income for the assessment year 2006-07 declaring a loss of Rs. 60,89.533. The said return was filed on October 26, 2006. Respondent No. 1 passed an assessment order under section 143(3) of the Act on August 29, 2008, and issued a demand notice under section 156 of the Act raising nil demand for the assessment year 2006-07. According to the petitioners, respondent No. 1 issued a notice under section 148 of the Act on January 6, 2010, for the assessment year 2006 07. Indeed, pursuant to the said notice issued under section 148 of the Act, the petitioner sent a communication to respondent No. 1 enclosing the acknowledged copy of the income-tax returns filed on October 26, 2006, and also the order passed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y contends that a perusal of annexure L does not disclose that respondent No. 1 has applied his mind and has recorded the reasons to him to believe that the proceedings are required to be initiated under section 148 of the Act on the premise that certain transactions have escaped his attention notwithstanding the fact they are reflected in the returns filed by the petitioner. He submits that this cannot be termed as reason to believe to reopen the assessment, which has attained finality pursuant to initiation of proceedings under section 148 of the Act. In support of his contention he would press into service decisions of the apex court. Mr. M. V. Seshachala, the learned counsel appearing for the Revenue, submits that the concept of reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer Pricing Officer passed an order for the assessment year 2005-06, which is once again the subject matter before the Dispute Resolution Panel. The grievance of the petitioner appears to be that there is no independent application of mind for reopening the assessment for the year 2006-07 inasmuch as respondent No. 1 has imported the pricing order passed by respondent No. 2 for the assessment year 2005-06 in reopening the assessment for the year 2006-07. In fact escaping the assessment is referable to section 147 of the Act. Section 147 of the Act would speak about the fact that the Assessing Officer has a reason to believe that any income chargeable to tax has escaped assessment for any assessment year such a reopening is subject to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have jurisdiction to initiate proceedings under section 34(1)(a) of the Act The fulfilment of this condition is not a mere formality but it is mandatory. It is one of the essential pre-condition before proceedings are initiated under section 147 of the Act." The apex court, while considering as to the concept of "reason to believe", has observed thus : "There can be no manner of doubt with the words 'reason to believe' that the words 'reason to believe' suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income-tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income-tax Officer would be acting without jurisdiction if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the year 2006-07. "A perusal of Form 3CEB reports reveal that for the assessment year 2005-06, the assessee had arm's length transactions with companies like Pharma Systems Inc., Pharamapps LLC and Aris Global LLC to the extent of Rs. 9,77 crores and the adjustment suggested to arm's length price is Rs. 5.13 crores which is 52 per cent. of the such turnover. For the assessment year 2006-07 also, the assessee-company had transactions with the same companies to the extent of Rs.6.99 crores. The adjustment to arm's length price for the assessment year 2005-06 clearly indicates that the parties with whom the transactions is made, remaining the same, there shall be adjustment to the arm's length price in similar proportion in the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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