Itta/390/2014 Of Commissioner Of Income Tax-Iii v. Lge And C-Ncc (Joint Venture)

HIGH COURT OF JUDICATURE AT HYDERABADFOR THE STATE OF TELANGANA AND THE STATE OF ANDHRAPRADESH PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. NO.390 OF 2014 DATED:25.06.2014 Between: Commissioner of Income Tax-III,IT Towers, AC Guards,Masab Tank, Hyderabad. … Appellant And LGE & C-NCC (Joint Venture)Hyderabad … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA ANDTHE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No.390 OF 2014 JUDGMENT:(per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be preferred and admitted against thejudgment and order dated 23.08.2013 of the learned Tribunal inrelation to the assessment years 2003-2004 and 2004-2005 on thefollowing suggested questions of law: i.In the facts and circumstances of the case, whether the Hon’bleTribunal (ITAT) is correct in law in allowing the appeal of therespondent-assessee and quashing the subject assessment order,without considering the facts and merits of the said assessmentorder which was upheld by the learned Commissioner of Income Tax(Appeals) only on the sole ground that the Transfer Pricing Officer(TPO) is not empowered to hold the international transactions of therespondent-assessee as sham transactions?Tribunal (ITAT) is correct in law in allowing the appeal of therespondent-assessee and quashing the subject assessment order,without considering the facts and merits of the said assessmentorder which was upheld by the learned Commissioner of Income Tax(Appeals) only on the sole ground that the Transfer Pricing Officer(TPO) is not empowered to hold the international transactions of therespondent-assessee as sham transactions? ii. In facts and circumstances of the case, whether the Hon’ble Tribunal(ITAT) is correct in law in holding that the Assessing Officer is notjustified in initiating the proceedings under Section 147 of the IncomeTax Act 1961 as the international transaction which was identified assham is the basis for reopening and this information was availableconsequent to the Transfer Pricing Officer’s order?(ITAT) is correct in law in holding that the Assessing Officer is notjustified in initiating the proceedings under Section 147 of the IncomeTax Act 1961 as the international transaction which was identified assham is the basis for reopening and this information was availableconsequent to the Transfer Pricing Officer’s order? It appears that the Assessing Officer wanted to reopen theassessment in relation to the aforesaid assessment years underSection 147 read with Section 148 of the Income Tax Act, 1961 (forshort ‘the Act’). Admittedly, the aforesaid attempt to reopen theassessment was made beyond the ordinary period of four years fromthe end of relevant assessment year. In case of assessment in relation to the present assessment year 2003-2004, it should be by the end offinancial year 2008, while for the year 2004-2005, it should be by theend of financial year 2009. Before us, copies of such notices have notbeen produced. However, the learned Tribunal on fact found that thenotice was issued beyond four years, but there has been no factualbasis as required under the aforesaid provision to reopen theassessment beyond four years and within six years, meaning therebypre-conditions for issuance of notice after four years and within sixyears, namely, the allegation of escapement of assessment on accountof failure on the part of the assessee to make a return under Section139 or in response to notice issued under sub-section (1) of Section147 or Section 148 or to disclose fully and truly all material factsnecessary for its assessment for that assessment year have not beenfulfilled. When pre-conditions are not found in the notices, initiation ofproceedings is bad. We cannot re-appreciate this finding in the absence of the allegation of perversity. We, therefore, do not find any element of law to decide. re-appreciate this finding in the absence of the allegation of perversity. We, therefore, do not find any element of law to decide. Hence, the appeal is dismissed. There will be no order as tocosts. Consequently, the miscellaneous petitions, if any, pending in thisappeal shall stand dismissed. _______________ K.J. SENGUPTA, CJ _______________ SANJAY KUMAR, J 25.6.2014