COMM VAULT SYSTEMS (INDIA) PRIVATE LIMITED,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), HYDERABAD

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ITA 380/HYD/2019Status: DisposedITAT Hyderabad04 March 2022AY 2010-114 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were invalid as the Assessing Officer had already examined the issues during the original assessment and there was no fresh tangible material. The reopening was based on a mere change of opinion.

What were the facts?

The assessee company filed its return of income, which was processed and subsequently a regular assessment under section 143(3) was framed. Later, the Assessing Officer initiated reassessment proceedings under section 147, believing income had escaped assessment.

What were the issues?

The key issues were the validity of reassessment proceedings initiated on a change of opinion and whether the reopening was barred by limitation.

Which sections of the Income-tax Act were involved?

Section 147,Section 148

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(4)Show list

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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad

Before: Shri S.S. Godara & Shri Inturi Rama Rao

Hearing: 28/02/2022Pronounced: 04/03/2022

This assessee’s appeal for the A.Y 2010-11 arise against the CIT(A)-1, Hyderabad’s order dated 27.12.2018 passed in case No.0259/2017-18/DCIT, Circle 1(2)/CIT(A)-1/Hyd/2018- 19. Heard both the parties. Case file perused.

2.

The assessee has pleaded the following substantive ground in the instant appeal: “1. The learned CIT(A) erred in upholding the initiation of re-assessment proceedings on mere change of opinion and had no reasons to believe hat any income chargeable to tax for year under appeal has escaped assessment in the original assessment. 2. The learned CIT (A) erred in upholding the initiation of re-assessment proceedings u/s 147 of the Income Tax Act, 1961 and issuing notice u/s 148 of the Act which is barred by limitation of time i.e. beyond the period of four years from the end of relevant assessment year.

3.

The learned CIT (A) erred in upholding the initiation of re-assessment proceedings based on audit objection 4. The learned CIT (A) erred in upholding the re- assessment proceedings without considering that the learned Assessing Officer had failed to pass speaking order disposing the objections of the Appellant before passing the final assessment order.

5. The Assessing Officer/learned CIT (A) erred in not considering the RBI Master Circular No.09/2009 by taking only the exports pertaining to section 10A unit as the total export turnover for calculation of 10% value of the export proceeds.

6. The learned Assessing Officer/CIT(A) erred in denying the set off of loss of Rs.8,49,451 pertaining to A.Y 2008-09 in A.Y 2010-11. The appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves to leave to add, alter, delete or modify all or any of the above grounds of appeal”.

3. We first of all advert to assessee’s legal ground challenging validity of the impugned reopening. There is hardly any dispute that this assessee is a company carrying out software development services as well as distribution of its parent company products. It had filed its return on 17.9.2010 admitting total income of Rs.11,87,766 under normal provisions followed by section 115JB MAT computation of Rs.3,43,13,431/-. The same stood processed u/s 143(1) of the Act. This followed section 143(3) regular assessment framed in its case on 23.02.2015 in light of the TPO section 92CA(3) order dated 24.9.2013 proposing arm’s length price adjustment of Rs.48,67,785/-, draft assessment order in tune thereto dated 29.3.2014 as partly affirmed in the DRP’s direction dated 24.12.2014; respectively.

4. The Assessing Officer thereafter formed his reasons to believe that the assessee’s taxable income liable to be assessed Page 2 of 4 had escaped assessment. He therefore issued section 148 notice dated 30.03.2017 on two counts i.e. section 10A deduction of Rs.3,43,89,111/- involving two export sale invoices of Rs.2,61,04,567/- which allegedly had not been realized before 12 months so as to be covered under the RBI Circular 9/09-10 as well as set off of brought forward losses of Rs.8,49,451/- pertaining to 2008-09; respectively. All this followed Assessing Officer’s re-assessment dated 30.12.2007 disallowing/adding foregoing twin sums under as many heads which stand upheld in the CIT (A)’s order.

5.

We have heard both the parties and find merit in the assessee’s stand challenging legality of the impugned reopening. This is for the basic reason that the instant case admittedly involves the Assessing Officer’s first round section 143(3) assessment. The same forms part of the case file before us (paper book pages 92 to 95). A perusal thereof suggests that the Assessing Officer had very well examined the issue of the assessee’s export turnover in light of the relevant figures whilst determining the latters section 10A deduction as Rs.3,84,27,068/-. Coupled with this, we make it clear that there is no fresh tangible material having come to the Assessing Officer’s notice which could ever remotely allege that the assessee had not itself disclosed the relevant provisions “fully” and “truly” in the first round in light of section 147 1st first proviso. We thus rely on the assessee’s case law CIT & Anr. Vs. Foramer France (2003) 264 ITR 566 (S.C), Supreme Treves (P) Ltd v. Dy.CIT & Ors (2009)323 ITR 323 (Bom HC), CIT v. Arvind Remedies Ltd (2015) 93 CCH 121 (Mad H.C), CIT v.

Schwing Stetter India P Ltd (2015)93 CCH 112 (Mad H.C), Gemeni Leather Stores (1975) 100 ITR 1 (S.C), Calcutta Discount Co Ltd (1961) 41 ITR 191 (S.C), Garden Silk Mills Ltd v. Dy.CIT (1997) 092 Taxman 022, Lokendra Singh v. Income Tax Officer (1981) 5 Taxman 74 (M.P), CIT vs. Madanlal Sohanlal (1981) 7 Taxman 303 (Cal.), Aayojan Developers v. Income Tax Officer (2011) 10 Taxmann.com 226 (Guj).to quash the impugned reopening for the foregoing precise reasons. The assessee succeeds in its first and foremost legal ground leaving all other aspects on merits to have been rendered academic.

6.

This assessee’s appeal is allowed in above terms.

Order pronounced in the Open Court on 4th March,2022.

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