Case Law Details
Precilion Holdings Limited Vs DCIT (Bombay High Court)
Conclusion: AO was not permitted to reopen assessment merely because in the later year, he took a different view on the basis of similar material available at the time of original scrutiny assessment as there was no failure on the part of assessee to disclose truly and fully all material facts.
Held: Assessee was a company incorporated in Cyprus and engaged in the activity of an investment holding company. During the year, assessee had received interest on compulsory convertible debentures from associated enterprises of assessee. Arm’s length price of the international transaction as reported by assessee had been accepted by TPO and the details furnished by assessee had been verified and discussed. The total income of assessee was assessed accordingly under Section 143(3) r.w.s. 92CA(3). It could thus be seen that the entire financial activity of assessee during the relevant period came up for scrutiny before AO during the original scrutiny assessment. AO had inquired about the nature of activities of assessee and the nature of source of income. Even if, it was believed that the question of taxing such interest income at the concessional rate as per DTAA was not in the mind of AO when such queries were raised and the order of assessment was passed, one thing that could not be denied was that there was no failure on the part of assessee to disclose truly and fully all material facts necessary for assessment. Nowhere in the reasons, AO contended that in the process of such scrutiny also, there was any failure on the part of the assessee to disclose truly and fully all material facts. Merely because in the later year, AO took a different view on the basis of similar material, which might have been collected during such process, would not permit him to reopen the assessment. AO’s reference to further exercise undertaken while carrying out scrutiny assessment for the assessment year 2014-15 during which he decided to tax assessee at higher rate would not enable AO in the present case to reopen the assessment beyond four years.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
1. The petitioner has challenged a notice of reopening of assessment dated 3.4.2018.
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