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TMI Blog2021 (2) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the assessee to disclose fully and truly all material facts necessary for his assessment. Hon ble Apex Court in the case of New Delhi Television v. DCIT [ 2020 (4) TMI 133 - SUPREME COURT ] had held that reopening of the assessment beyond four years is bad in law when the tax payer has disclosed the facts at the time of original assessment proceedings and the A.O. did not draw any adverse inference regarding the same. Hon ble Supreme Court in the case of L T Limited. [ 2020 (1) TMI 518 - SUPREME COURT ] observed that there was no element of lack of true and full disclosure on the part of the assessee, which resulted into any income chargeable to tax escaping assessment. The reasons clearly reveal that the Assessing Officer was proceeding on the material which was already on record. In the absence of the statutory requirement of income chargeable to tax have been escaped assessment due to the failure on the part of the assessee to disclose truly and fully all material facts been satisfied, the Tribunal correctly held that the notice of reopening of assessment was invalid . Hon ble Karnataka High Court in the case of CIT v. Karnataka Bank [ 2015 (7) TMI 535 - KARNATAKA HIGH C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expiry of 4 years from the end of the assessment year without mentioning that there is failure on the part of the assessee to disclose truly and correctly all material facts necessary for assessment. The learned AR stated that the assessee has submitted all the details relating to reimbursement of expenses before the A.O/TPO during the course of assessment proceedings and the same has been accepted to be at arms length. However, the A.O. has reopened the assessment on change of opinion only on account of a subsequent decision rendered by the Tribunal in assessee s case for assessment years 2005-2006 and 2006-2007. It was contended that the subsequent order of a court cannot be taken into consideration to come to the conclusion that there was failure on the part of the assessee to disclose all material facts necessary for assessment. In this context, the learned AR relied on the judgment of the Hon ble Bombay High Court in the case of Sesagoa Ltd. Vs JCIT(2008) 294 ITR 101. The Ld. A.R. further submitted that it is imperative on the part of the A.O. to mention in the reasons for reopening that there was failure on the part of the assessee to disclose truly and fully all material fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2005-06 2006-07. The learned DR submitted that the TPO has held the reimbursement of expenses to be at arm s length in the original assessment proceedings based on the explanations given by the assessee that these expenses are related to the business of the assessee. However, in assessment years 2005-06 2006-07, the TPO had noticed that these expenses are not related to the business activities of the assessee. The view of the TPO was upheld by the Tribunal by holding that the nature of these expenses is such that they cannot be attributed to have been solely and exclusively incurred for the distribution business of the assessee. The learned DR submitted that the order so passed by the TPO/ITAT has brought fresh facts, which were not earlier considered in the original assessment proceedings. These fresh facts have led to the AO to believe that there was escapement of assessment. Accordingly, the learned DR submitted that the reopening is valid. 7. We have heard rival submissions and perused the material on record. For the relevant assessment year, viz., 2008-2009 notice u/s 148 of the I.T. Act was issued on 27.03.2015 and served on the assessee on 30.03.2015 for initiati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment years 2005-2006 and 2006-2007. The reasons recorded for reopening the assessment for the relevant assessment year is placed at page 52 to 53 of the paper book filed by the assessee. On perusal of the same, it is clear that the reopening of assessment has been initiated only on the basis of the earlier Tribunal order in assessee s own case for assessment years 2005-2006 and 2006-2007. Therefore, it cannot be alleged that there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. 7.2 The Hon ble Apex Court in the case of New Delhi Television v. DCIT [(2020) 116 taxmann.com 151 (SC)] had held that reopening of the assessment beyond four years is bad in law when the tax payer has disclosed the facts at the time of original assessment proceedings and the A.O. did not draw any adverse inference regarding the same. 7.3 The Hon ble Supreme Court in the case of L T Limited [(2020) 113 taxmann.com 48 (SC)] observed that there was no element of lack of true and full disclosure on the part of the assessee, which resulted into any income chargeable to tax escaping assessment. The reasons clearly reveal that the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Tribunal in the assessee s own case for assessment years 2005-06 2006- 07, wherein the Tribunal has upheld the transfer pricing adjustment made in respect of reimbursement of expenses. It is a fact that during the year under consideration, the TPO had held in the original assessment proceedings that the reimbursement of expenses is related to the business activities of the assessee and hence are at arm s length. Be that as it may, the undisputed fact is that reopening has been done after expiry of 4 years from the end of the assessment year, in which case the conditions prescribed in proviso to section 147 of the Act has to be satisfied by the AO before reopening of assessment. The proviso to section 147 reads as under: Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X
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