Lionbridge Technologies P. Ltd. Vs ACIT (ITAT Mumbai)
The issue under consideration is whether the re-opening of assessment u/s 147 initiated by AO is justified in law?
In the present case, ITAT state that, it is evident from the records that the re-assessment was made on the basis of the internal audit objection much after the elapse of four years from the end of relevant A.Y. 2008-09 i.e. from 31.03.2009. More so, a plain reading of the reasons for re-opening of assessment under section 148 of the Income Tax Act, 1961 has not pointed out as to how the assessee failed to disclose fully and truly all material facts necessary for his assessment, for that assessment year particularly in view of the following “proviso” of Sec. 147 of the Act. Furthermore, as per the observation it was noted that the fact was not brought to light earlier is not correct since the same has only taken from the return. All the statutory obligation has already been fulfilled by the assessee by submitting all the relevant materials before the authority below. Therefore, there is no failure and/or lapse on the part of the assessee as visualized by proviso under section 147 of the Act. On this score alone the assessment is bad and thus liable to be set-aside.
In the result, the appeal filed by the assessee is allowed.
FULL TEXT OF THE ITAT JUDGEMENT
The appeal at the instance of the assessee is directed against the order dated 06.11.2017 passed by the Commissioner of Income Tax (Appeals) – 24, Mumbai arising out of the order dated 29.03.2016 passed by the ACIT-15(2)(1), Mumbai under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2008-09.
2. The assessee mainly challenged the following grounds:-
“1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) (CIT(A)’) erred in upholding the reassessment proceedings u/s. 147 of the Income-tax Act, 1961 (‘Act’) initiated by the learned Assessing Officer (‘AO’);
2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the disallowance u/s. 40(a)(ia) of the Act made by the learned AO;
3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the learned AO in denying deduction u/s. 10A of the Act on the disallowance made u/s. 40(a)(ia) of the Act;
The Appellant prays that the order of the learned CIT(A) and the learned AO be quashed and consequential relief be granted.”
3. The brief facts leading to the case is this that the assessee company engaged in the business activities of designing, developing and exporting of computer software and software services, filed its return of income originally on 30.09.2008 declaring total income at Rs. 26,83,740/- for the A.Y. 2008-09 which was completed under section 143(3) r.w.s. 144C (13) of the Act on 21.11.2012 upon assessing income at Rs. 18,54,75,020/-. Subsequently the said assessment was reopened under section 147 by and under the issuance of notice under section 148 of the Act dated 18.03.2015 under the signature of the erstwhile DCIT-15(2)(1), Mumbai. In response to the notice under section 148 of the Act the assessee requested the Revenue to consider the original return of income filed for A.Y. 2008-09 and by and under a letter dated 21.04.2015 requested to provide the reasons for reopening for the said assessment. Upon receiving the reasons the assessee by and under a letter 18.11.2015 objected to such reopening which was disposed off on 29.01.2016. Ultimately the assessment was completed on 29.03.2016 upon determining the total income at Rs. 20,64,97,606/- as against the returned income at Rs. 26,83,740/- upon making disallowance under section 40(a)(ia) of the Act to the tune of Rs. 20,38,13,871/- which was, in turn, confirmed by the First Appellate Authority. Hence, the instant appeal before us.
4. Heard the parties, we have also perused the relevant materials available on record.
The reason recorded for reopening of assessment under section 147 of the Act issued under the signature of the DCIT 15(2)(1), Mumbai as appearing at Page 112 of the Paper Book on record before us is as follows:-
“ANNEXURE
Reasons for Reopening of Assessment U/s. 148 of the I.T. Act, 1961 M/s. Lionbridge Technologies Pvt. Ltd. A.Y. 2008-09
In this case the assessee filed the return of income on 30.09.2008 declaring total income at Rs. 26,83,735/-. Scrutiny assessment proceedings were completed on 21.11.2012 assessing total income at Rs. 18,54,75,020/-.
On perusal of the records further on, it is seen that disallowance u/s 40(a)(ia) of Income-tax Act, 1961 amounting to Rs.20,38,13,871/- was not, made on account of non deduction of tax at source u/s. 195 of I.T. Act, 1961 on payments made to foreign companies. It is noted that this fact was not brought to light earlier.
In view of the above facts, I have reasons to believe that an income amounting to Rs. 20,38,13,871/- has escaped assessment which needs to be assessed by reopening of the assessment proceedings of the assessee company for A.Y. 2008-09.
Notice u/s 148 of the Income Tax Act. 1961 is issued.
Sd/-
(Swapan Kumar Bepari)
Dy. Commissioner of Income- Tax,
15(2)(1),Mumbai.”
5. It is evident from the records that the re-assessment was made on the basis of the internal audit objection on 04.03.2015, much after the elapse of four years from the end of relevant A.Y. 2008-09 i.e. from 31.03.2009.
