Firstly, the petitioners had lodged their refund claims at the relevant time itself way back in the year 1991 when the question of classification was decided in their favour by the Commissioner. Secondly, the Department did not release the refund for a considerable period of time since such order of the Commissioner (Appeals) was challenged before the Tribunal. Thirdly, the Commissioner (Appeals) disposed of the petitioners’ case on 11-10-2002 with respect to the refund and not with respect to the original claim of classification.
Considering all the facts and circumstances and taking into account all the contentions raised by the affidavits and reply affidavits, considering the decisions of other High Courts, Supreme Court and the Division Bench of this High Court on the issues raised by the Regional Director and the submissions during the course of hearing, I am satisfied that the observations made by the Regional Director, Ministry of Corporate Affairs, do not survive. I have come to the conclusion that the present scheme of arrangement is in the interest of its shareholders and creditors as well as in the public interest and the same deserves to be sanctioned.
From the material documents allowed to be produced, the assessee could satisfy the Commissioner (Appeals) that the place of effective management of its enterprises was situated at Netherlands and thus, the requirement of condition in Article 8A of DTA agreement was met with. The Tribunal has rightly confirmed the decision of the Appellate Commissioner holding the assessee to be eligible for benefits of DTAA.
As is more than apparent, assessment was completed on scrutiny. In post assessment period, audit party raised the objection and Assessing Officer had strongly objected to such objections by communicating internally as mentioned hereinabove. In such background, reasons for reopening if are noted, they are almost identically worded as that of audit report. No material worth the name emerges to indicate any independent application of mind. Facts are quite glaring on the contrary & they clearly establish absence of subjective satisfaction of Assessing Officer. Thus, the ground raised by the petitioner that such notice of reopening is invalid for the Assessing Officer having not formed his independent belief requires to be sustained.
In this case Assessing Officer proposed to reopen the assessment beyond a period of four years from the end of relevant assessment year, while there was full and true disclosure on part of the petitioner during original assessment. With respect to the first issue of discount/commission, the Assessing Officer called for the details of such payments in excess of Rs. 50 lakhs. Such details were promptly provided. No further questions arose from the Assessing Officer in this regard. Like-wise, during the assessment, the Assessing Officer also called upon the petitioner to supply full details of the roaming charges paid to various telecom operators. Such details were also made available.
In brief, the issue is whether the time limits specified in Section 115VP(2) of the Income Tax Act, 1961 is mandatory? Briefly stated facts are that Section 115VP was introduced for regulating method and time of opting for tonnage tax scheme. Such provision was in relation to Chapter XII-G pertaining to special provisions relating to income of shipping companies. Clause (m) of Section 115V defines “tonnage tax scheme” as to scheme for computation of profits and gains of business of operating qualifying ships under the provisions of that Chapter.
Assessing Officer having examined the nature of receipts and the corresponding expenditure in the original assessment, now cannot be permitted to change his view with respect to the nature of treatment such receipts must receive.
During the course of assessment proceedings the Income Tax Officer has raised certain queries with regard to deductions, which were replied by the assessee and the in the assessment order in paragraph no.4.1 the Assessing Officer has dealt with the question of grant of deduction and has allowed deductions. In our opinion, the reasons given for reopening the assessment and the notice issued under section 148 of the Act is nothing, but a change of opinion. It is not the case of escape assessment as nothing was concealed by the assessee nor he has failed to furnish the material relevant to the assessment year before the Assessing Officer. For the aforesaid reasons, notice issued under section 148 of the Act deserves to be quashed.
From the documents on record, it can be seen that part of the penalty was confirmed by the CIT(Appeals). However, with respect to the rest, the same was deleted. The Tribunal concurred with such view of CIT (Appeals). Several additions were struck down in the assessment proceeding itself and were sent for reconsideration. With respect to disallowance of deduction under section 80IA of the Act, the authorities held that the claim cannot be stated to be a wrong claim. Relying on the decision in the case of CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158, such penalty was deleted.
Tribunal observed that no penalty can be imposed merely because account books of assessee were rejected and that profit was estimated on the basis of fair gross profit ratio. With respect to retention of the portion of the sales tax, the Tribunal stated that no evidence was brought by the Revenue to suggest that assessee had retained a portion of sales tax with it. Assessee filed its explanation which could not be termed as not bona fide. In absence of any corroborative evidence to prove the charge that the portion of sales tax bill was retained by the assessee, penalty could not be imposed.
