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TMI Blog2024 (3) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessing officer had ignored the objections of the assessee and failed to apply his mind to the material presented by the assessee. Likewise, in Chhugamal Rajpal [ 1971 (1) TMI 9 - SUPREME COURT] the Supreme Court concluded that approval under Section 148 should be provided after examining the material on record and not in mechanical fashion. Both on account of the reasons for reopening being based on a grossly erroneous factual foundation and by also taking into account that the petitioner actually withheld and remitted taxes in respect of transactions with Fives France that formed the subject of the application before the AAR, the impugned order under Section 148A(d) of the I-T Act and the notice under Section 148 thereof are vitiated. All that remains is to briefly consider the other ground of challenge. Plea of limitation - By referring to the letter of approval with regard to AYs 2016- 2017 and 2017-2018 petitioner pointed out that such approval was granted by the Chief Commissioner of Income Tax. In clauses (i) and (ii) of Section 151 of the I-T Act, the specified authorities for purposes of issuing notice under Section 148 are prescribed. The rank of the specified aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently, the petitioner received a notice in respect of each Relevant AY alleging that the Assessing Officer had reason to believe that the petitioner's income had escaped assessment. Such notices were assailed successfully in proceedings before this Court by relying on the changed legal regime for reassessment. 4. Eventually, on the basis of the judgment of the Supreme Court in Union of India v. Ashish Agarwal, (2023) 1 SCC 617, the respondents issued a communication for each Relevant AY to treat the notice under Section 148 as a notice under Section 148A(b) and reply thereto. The petitioner replied thereto in June 2022 and asserted that the respective notices were based on gross factual errors inasmuch as the application before the AAR was only in respect of the Assistance and Service Agreement between the petitioner and Fives France, which was in operation until 31.12.2014. The petitioner also raised the plea of limitation. In those circumstances, the impugned order under Section 148 A(d) and notice under Section 148 thereof were issued in respect of each Relevant AY. After requesting for and obtaining copies of the purported sanction letters in respect of reassessment, thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied himself as to whether there were clear reasons to believe that income escaped assessment. (iii) CIT v. S. Goyanka Lime Chemicals Ltd., (2014) SCC OnLine MP 4550 , particularly paragraphs 3 7 thereof, where the MP High Court held that interference is warranted when notice is issued under Section 148 of the I-T Act in mechanical fashion without the officer concerned applying his mind to the materials on record. (iv) Central India Electricity Supply Co. Ltd. v. Income Tax Officer , (2011) 333 ITR 237 (Delhi), where the Delhi High Court held that two conditions should be satisfied before notice under Section 148 is issued, i.e. there must be a reason to believe that income chargeable to tax had escaped assessment and the Income Tax officer should also have reason to believe that such escapement of income from assessment is on account of the omission or failure of the assessee to fully and truly disclose the material facts necessary for assessment. 8. In the cases on hand, learned counsel submitted that the petitioner/assessee had deducted withholding tax while making payments to Fives France in respect of all transactions that formed the subject of the applications before the AAR. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecific transactions. The communication also states expressly that a reference was made by the petitioner to the AAR in respect of the above transactions. On receipt of this communication, by reply dated 07.06.2022, the petitioner explained that there was a gross factual error in the aforesaid communication. In particular, the petitioner pointed out that the application before the AAR was only in respect of services provided under the Assistance and Service Agreement between the assessee and Fives France, which was operated until 31.12.2024. The petitioner stated categorically that the transactions of Rs. 56,09,216/- between the assessee and Fives Solios SA and the three transactions cited therein of an aggregate value of Rs. 43,52,744/- with Fives France were not covered within the scope of the AAR application. In these circumstances, it was contended that the notice was issued on a completely erroneous factual basis. In spite of the issuance of this reply, the respondents proceeded to issue the impugned order under Section 148A(d) of the I-T Act. 12. The satisfaction of the assessing officer that there are reasons to believe that income has escaped assessment for the purpose of re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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