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TMI Blog2021 (6) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... nal assessment is entirely different. Thus, in the event of re-opening of assessment and during re-assessment, the authorities competent necessarily have to cull out more details and informations from the authorities concerned for the purpose of ascertaining the truth regarding the tax escaped assessment - the purpose of Section 147 for reopening of assessment cannot be restricted nor the power of reassessment of the Assessing officer for collecting the evidences or materials or informations from the authorities concerned cannot be crippled down by wrongly interpreting the other provisions of the Income Tax Act. Constructive interpretation is imminent in such circumstances in order to ensure that the purpose and object of the Act is met with in its letter and spirit. The impugned order is not a suo-motu proceedings initiated by the Transfer Pricing Officer under Sub-Section 2B of Section 92CA of the Act and therefore, Sub-Section 2C of Section 92CA of the Act would not be applicable. The circumstances contemplated under Sub-Section 2B of Section 92 CA is not applicable in the present case, in view of the fact that the petitioner admittedly submitted the Audit Report under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o various oil majors for off shore exploration and production of hydrocarbons in India and abroad. The petitioner is a regular assessee in terms of the provisions of the Indian Income Tax Act, 1961. The petitioner filed a return of income accompanied by all required documentation in connection with the International transactions entered into by the petitioner for the relevant financial year, being 2006-07. When the Return was taken up for completion under scrutiny, a reference was made in terms of Section 92 CA(1) of the Act by the Assessing Officer to the respondent to arrive at the Arms Length Price in regard to the International transactions undertaken by the petitioner. Pursuant to the reference under Section 92CA (1), the determination of Arms Length Price was taken up by the respondent, who after a detailed hearing and consideration of all materials furnished by the petitioner, passed an order dated 29.10.2010, proposing an upward adjustment to the Arms Length Price as determined by the respondent. The order of the Transfer Pricing Officer dated 29.10.2010 was duly forwarded to the Assessing Officer for incorporation in the order of assessment in terms of Section 94 CA(4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, which was duly forwarded to the Assessing Officer for incorporation in the order of assessment and the Assessing Officer also passed final order of assessment on 25.02.2011, making various additions/disallowances to the returned income as well as incorporating the upward adjustment determined by the Transfer Pricing Officer. Therefore, under Sub Section 2C of Section 92CA, the issuance of impugned order with reference to the crucial date i.e., 1 st day of July 2012 is unsustainable. The provision makes it clear that 'Nothing contained in Sub-Section (2B) shall empower the Assessing Officer either to assess or reassess under Section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under Section 154, for any assessment year, proceedings for which have been completed before the 1 st day of July, 2012.' Thus, the very letter dated 02.04.2013 from the Transfer Pricing Officer as well as the order dated 29.01.2014, which is impugned in this writ petition are beyond the limitation prescribed under Sub-Section 2C of Section 92 CA and therefore, the impugned proceedings are liable to be se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 2B of Section 92 CA of the Act. The limitation contemplated under Sub-Section 2C would be applicable only in cases, where the suo-motu action is initiated under Sub- Section 2B, where, in respect of international transactions, the assessee has not furnished the report under Section 92-E and such transactions comes to the notice of the Transfer Pricing Officer during the course of the proceedings before him. Thus, only in the event of not furnishing the report under Section 92CA of the Act and during the course of the proceedings, if any such transaction comes to the notice of the Transfer Pricing Officer, then he is empowered to initiate suo-motu proceedings by invoking Sub-Sections 2B and 2C of Section 92CA. Only for such suo-motu initiation, the time limit of 1 st day of July 2012 is contemplated with reference to the final orders to be passed by the Transfer Pricing Officer. However, in the present case, the Transfer Pricing Officer passed an order on 29.10.2010 itself. It was forwarded to the Assessing authority for incorporation in the order of assessment and the process was completed, the Assessing authority also passed the final order of assessment on 25.02.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability of the assessee under Section 154 for the Assessment Year proceedings for which have been completed before the 1 st day of July 2012. Thus, Sub-Section 2C of Section 92CA is related to Sub-Section 2B of Section 92CA. In other words, if the assessee has not furnished the Audit report under Section 92-E in respect of an international transaction, if any such international transaction comes to the notice of the Transfer Pricing Officer, during the course of the proceedings, then he can initiate Suo-motu proceedings to pass final orders in the Transfer Pricing. 13. Sub-Section 2C of Section 92 CA contemplates that Nothing contained in Sub-Section (2B) shall empower the Assessing Officer either to assess or reassess under Section 147. It is pertinent to note that the Assessing Officer in the present case has not invoked either Sub-Section 2B or Sub-Section 2C of Section 92 CA. The Assessing Officer re-opened the proceedings by invoking Section 147 and a notice was issued under Section 148 of the Act and thereafter, the Assessing Officer sought for certain informations from the Transfer Pricing Officer, who in turn, sent a letter to the petitioner / assessee on 02.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment, the Assessing Officer is of an opinion that further clarifications or informations are required from the Transfer Pricing Officer or from any other authority, he is empowered to seek any such clarifications, informations or details for the purpose of effective adjudication of re-opening proceedings initiated under Section 147 of the Act. Thus, the very spirit of Sub-Section 2C must be read along with Sub- Section 2B of Section 92 CA, which contemplates only in cases, where the assessee has not furnished Audit report under Section 92-E of the Act and if the Transfer Pricing Officer identified any transaction, he shall initiate suomotu proceedings for Transfer Pricing. Thus, the letter sent by the Assessing Officer, seeking informations and details would not fall under Sub-Section 2B. The Transfer Pricing Officer for the purpose of collecting informations and details, provided an opportunity to the writ petitioner, received reply, documents and thereafter, passed an order and communicated the same to the Assessing Officer. The said process undertook by the Assessing Officer on re-opening of assessment proceedings would not fall under Sub-Section 2B or Sub-Section 2C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmity or perversity as such in respect of the order impugned passed by the Transfer Pricing Officer with regard to the reference made by the Assessing Officer regarding certain international transactions or otherwise. 19. Thus, the petitioner has not established any acceptable ground for the purpose of considering the relief as such sought for in the present writ petition and consequently, the writ petition in W.P.No.7689 of 2014 is to be dismissed. W.P.No.7690 of 2014 20. The Writ Petition is filed, challenging the order dated 21.02.2014, disposing of the objections filed by the petitioner. 21. The return of income for the Assessment Year 2007-08 was filed by the petitioner on 31.07.2007. It was taken up for detailed scrutiny by the respondent. Reference under Section 92CA of the Act was issued to the Transfer Pricing Officer for determination of Arms Length Price with reference to various international transactions entered into by the petitioner with Associated Enterprises. Subsequently, upon assignment of the assessment by the Commissioner of Income Tax to the Additional Commissioner of Income Tax, notices were issued by the Additional Commissioner of Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Act. After passing such an elaborate order in proceedings dated 29.03.2012, notice under Section 148 of the Income Tax Act was issued. Thereafter, the petitioner requested for reasons. The reasons for re-opening of assessment was communicated to the petitioner in proceedings dated 26.12.2013. The petitioner filed objections and in the said objections, the petitioner has categorically stated that the reason for re-opening of assessment is based on change of opinion as the entire details and the issues were adjudicated by the Assessing Officer and the assessment order was passed and there is no tangible materials made available for the Assessing Officer for re-opening the assessment by invoking Section 147 of the Act. However, the respondents disposed of the objections in proceedings dated 21.02.2014 without assigning proper reasons. Thus, the petitioner is constrained to move the present writ petition. 25. The learned Senior Standing counsel raised an objection by stating that the procedures contemplated under Section 147 of the Act has been scrupulously followed by the respondents. The reasons furnished for reopening of the assessment is not based on change of opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the proceedings and the CBI has now sent a copy of the entire file. As such, the reasons recorded for reopening of assessment is extracted as under: The assessment for the AY 2007-08 has been completed u/s.143(3) r.w.s.144C on 25.02.2011. It is found from records that the assessee company has claimed credit for an amount of ₹ 2,10,90,680/- being withholding tax deducted by Singapore Tax authorities in respect of the interest income of ₹ 21,12,56,136/- earned by the assessee from M/s.Aban Holdings Pte Ltd, a Singapore registered company. In the order u/s.143(1) as well as 143(3), the amount of ₹ 2,10,90,680/- has been given credit as TDS. The claim of the assessee for credit for withholding tax paid in Singapore cannot be allowed as TDS. It is apparent that the amount lent to the Singapore company was actually borrowed by the assessee company and interest expenditure on money borrowed has also been claimed resulting in no real interest income on netting. Hence, in the absence of real interest income offered in India, relief u/s.90 of the I.T.Act, 1961 on the tax withheld at Singapore may also be not available. As such, I have reason to believe that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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