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TMI Blog2021 (4) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... should speak by itself and duly express the clear mind of the ld AO which enabled him to frame an opinion that income of the assessee had escaped assessment within the meaning of section 147. As relying on HINDUSTAN LEVER LTD. [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] we have no hesitation in holding that the reopening of assessment made for the Asst Year 2007-08 is to be declared void abinitio and is hereby quashed. - Decided in favour of assessee. - ITA No.5832/Mum/2017, ITA No.6035/Mum/2017 - - - Dated:- 30-3-2021 - Shri M. Balaganesh, Accountant Member And Shri Amarjit Singh, Judicial Member For the Assessee : Shri Ajit Jain Shri Siddhesh Chaugule For the Revenue : Dr. R.M. Madhuri ORDER PER M. BALAGANESH (A.M): Commissioner of Income Tax (Appeals)-24, Mumbai in appeal No.CIT(A)-24/DCIT-15(3)(1)/IT- 193/2015-16 dated 09/06/2017 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 27/03/2015 by the ld. Dy. Commissioner of Income Tax-15(3)(1), Mumbai (hereinafter referred to as ld. AO). 2. The first preliminary issue raised by the assessee is with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the software to its AE is in the nature of royalty within the meaning of section 9(1)(vi) of the Act. Therefore payments made by RHIPL to its AE, Red Hat Asia Singapore Pte. Ltd., should be treated as royalty within the meaning of section 9(l)(vi) of the Act, on which no tax is deducted at source by RHIPL. Accordingly, the expenditure incurred for the purchase of the subscription service for reselling is liable to be disallowed u/s.40(a)(i) of the Act. In view of the above, the entire unearned revenue is treated as revenue not offered for tax and should be taxed as income in the Assessment Year 2007-08. Therefore, I have reasons to believe that there is an escapement of income u/s 147 of the Act, 1961 and issue notice-u/s 148 of the I, T. Act, 1961. 4. Admittedly, the reopening in this case had been made beyond 4 years from the end of the relevant assessment year. Hence the applicability of proviso to section 147 of the Act would come into operation. For the sake of convenience, the said proviso is reproduced hereunder:- Income escaping assessment Section 147 - .. Provided that where an assessment under sub-section (3) of section 143 or this se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er-assessee has failed to disclose fully and truly all material facts necessary for the assessment for that assessment year as such the Assessing Officer has no jurisdiction to reopen the concluded assessment after expiry of four years from the last day of the relevant assessment year. He, therefore, submits that the notice under section 148 cannot be held to be within limitation. 13. 14. .. 15. 16. Mr. Desai, with respect to the contention that the notice under section 148 is barred by limitation and that the Assessing Officer has no jurisdiction to issue such notice, contends that even if the words failure to disclose fully and truly all material facts relevant for assessment for assessment year are absent in the reasons recorded, still such reasons can be inferred on the text of the reasons recorded. He, therefore, submits that the notice under challenge is well within the scope of section 147 as such this petition is liable to be dismissed being without any substance. Consideration : 17. Having heard the parties at length, we are of the opinion that the petitioner can be disposed of on the first contention raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on materia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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