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TMI Blog2019 (2) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... into account various contentions such as whether the order of Commissioner (Appeals) has achieved finality and whether after notionally adding the expenditure referred to in the reasons recorded, the Petitioner-Company would still continue to be governed by the MAT provisions. We do not accept the third and forth contentions of the Counsel for the Petitioner. Firstly, admittedly, the present issue was not examined by the Assessing Officer during original scrutiny assessment and, therefore, he had not formed any opinion at this stage. Secondly, the communication of reasons contained in paragraph 7 refers to the sanction order of the Principal Commissioner which was granted on 9th March, 2018. This communication is dated 16th March, 2018 which does not mean that the reasons were recorded on 16th March, 2018. - Decided in favour of assessee. - WRIT PETITION NO. 7699 OF 2018 - - - Dated:- 14-2-2019 - AKIL KURESHI M.S. SANKLECHA, JJ. Mr. Nitesh Joshi i/b. Mr. A. K. Jasani, for the Petitioner. Mr. Charanjeet Chanderpal with Ms. Pragya Chandra, for the Respondents. P.C: Petition taken up for final disposal at this stage. 2. Petitioner has challenged a notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013-14, it was concluded that tax should have been deducted at source against the payments of IT Domain cost u/s. 195 r.w.s. 90 of the Act and Article 13 of the DTAA as the same was either in the nature of Fees for Technical Services or Royalty. After examination of the facts in the case and after duly considering the contentions/ submissions of the assessee company, expenses claimed on account of IT Domain cost paid to the parent company was disallowed u/s. 40(a)(i) of the Act by the undersigned after making elaborate discussions in the assessment order passed in the case of assessee company for A.Y. 2013-14. It is further noted that the above action of the Assessing Officer has duly ratified by the Ld. Commissioner of Appeals while deciding the appeal filed before him by the assessee company on said issue. 3. It is gathered that during assessment year 2011-12, the assessee company had made payments under the nomenclature at IT Domain Cost to HSBC Holdings Plc., UK to the tune of ₹ 65,67,13,183/on which tax was not deducted at source. Therefore, in view of the facts stated above, expenses claimed on account of IT Domain Cost amounting to ₹ 65,67,13,183/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report and audited P L A/c and balance sheet or other evidence as mentioned above, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the Assessing Officer and could have been discovered with due diligence, accordingly attracting provisions of Explanation 1 of Section 147 of the Act. 6. It is evident from the above discussions that in this case, the issue under consideration was never examined by the Assessing Officer during the course of regular assessment. This fact is corroborated from the contents of notices issued by the Assessing Officer u/s. 143(2)/142(1) of the Act on various dates during the course of regular assessment proceedings for A.Y. 2011-12. It is important to highlight here that material facts relevant for the assessment on the issue under consideration were not filed during the course of regular assessment proceedings and the same may be embedded in annual report, audited P L A/c. balance sheet and books of account in such a manner that it would require due diligence by the Assessing Officer to extract these information. For aforestated reasons, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve on the assessee's tax liability, cannot be foreseen at this stage. He pointed out that copy of reasons produced and annexed at Exh.N conveys the reasons recorded and it also records in para 7 thereof the factum of sanction obtained from competent authority. This would not mean that the reasons were recorded on 16th March, 2018 as contended. More importantly, Counsel contended that mere production before the Assessing Officer all books of accounts or other evidence from which material evidenced for due diligence, have been discarded by the Assessing Officer, will not amount to full and true disclosure within the meaning of first proviso to Section 147 of the Act. He, of course, relied on Explanation 1 to Section 147 of Act. 6. Having heard the learned Counsel for the parties and having perused the facts and documents on record, we may analyze the reasons recorded by the Assessing Officer. Paragraphs 2 and 3 of the reasons recorded form foundation of the belief of the Assessing Officer that, income chargeable to tax, has escaped assessment. In these paragraphs, the Assessing Officer pointed out that, assesses during the period relevant to Assessment Year, had made payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich, the expenditure in question was duly reflected. In fact, as pointed out by the Counsel for the Petitioner, such expenditure also came up for scrutiny during the enquiry in relation to the transfer pricing. 11. In absence of lack of full and true disclosure on the part of the assessee, the Assessing Officer could not have reopened the assessment by issuing impugned notice, which was done after four years from the end of the relevant Assessment Year. 12. In view of this conclusion, it is not necessary to examine the Petitioner's second contention of no income chargeable to tax, having escaped assessment, which would require us to take into account various contentions such as whether the order of Commissioner (Appeals) has achieved finality and whether after notionally adding the expenditure referred to in the reasons recorded, the PetitionerCompany would still continue to be governed by the MAT provisions. 13. However, we do not accept the third and forth contentions of the Counsel for the Petitioner. Firstly, admittedly, the present issue was not examined by the Assessing Officer during original scrutiny assessment and, therefore, he had not formed any opinion at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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