Reopening based on Judicial pronouncement when all info were already available is not valid

CA Sandeep Kanoi

The facts on this issue are that the original assessment was completed by the ACIT, Circle-1, Dehradun u/s 143(3) of the Act. Thereafter a notice u/s 148 of the Act was issued on 31.03.2010. The reasons recorded by the Id. AO (copy has been placed on record) show that the reopening has taken place due to the contention that the appellant’s income is taxable as Fees for Technical Services considering the judgement in the case of CIT vs. ONGC (as agent for Foramer France) reported in 299 ITR 438 (UK) and the insertion of proviso to section 44DA(1) of the Act through the Finance Act, 2010. While the case laws cited by the Id. AR may have some bearing on the issue at hand, it is seen that the recent judgement in the case of B.J.Services (supra) is squarely applicable on the facts of this case. The head notes of this case law are reproduced as under:-

“Section 147, read with section 9, 44BB and 44DA, of the Income-tax Act, 1 961 -Income escaping assessment – Non­disclosure of primary facts – Assessment year 2003-04 – Whether reassessment can be initiated on a mere change of opinion to merely re-examine an issue on basis of information or material which was already available to Assessing Officer at time of completion of original assessment – Held, no – Whether subsequent pronouncement by a Court or a Superior Court entitle Assessing Officer to reopen assessment proceedings on ground that Assessing Officer has reasons to believe that income has escaped assessment or that assessee has not fully and truly disclosed all material facts -Held, no – Assessee, a British company, was engaged in business of providing services and facilities in connection with exploration and extraction as well as production of mineral oil – For relevant assessment year, it offered its gross revenue to be taxed under section 44BB – Assessing Officer, after examining return of income and other documents and replies filed by assessee and after applying its mind, issued an assessment order under section 143 (3) – After a lapse of more than four years. Assessing Officer issued notice under section 148 proposing to reassess assessee ‘s income on grounds that assessee’s income was liable to be taxed as a fee for technical services in view of decision of Uttaranchal High Cowl in case of CIT v. O.N. G. C. [2008] 299 ITR 438 ; and that in view of Explanatory Note to Finance Bill, 2010, combined effect of provisions of sections 44BB, 44DA and 11 5A is that if income of a non-resident is in nature of fee for technical services, it is taxable under provision of section 44DA or section 11 5A irrespective of business to which it relates – Whether when under existing provisions contained in sections 44BB. 44D, 11 5A and Explanation II of section 9(1)(vii). it was open to Assessing Officer to tax assessee either under section 44BB or 44D or under section 9(1)(vii) on basis of material produced before him and Assessing Officer, after due enquiry and verification and after applying mind to facts of case, came to conclusion that assessee was liable to be taxed under section 44BB, reopening of assessment on basis of subsequent decision of High Court was unjustified – Held, yes.

Section 44BB of the Income-tax Act. 1961 – Mineral oil, special provisions for computation in case of business exploration – Whether amendments to sections 44BB and 44DA by Finance Act, 2010 would take effect from 1-4-2011 and would apply in relation to assessment year 2011-12 and subsequent years – Held, yes [in favour of assessee]”

3.3. Since the above mentioned case of the jurisdictional High Court is squarely applicable on the facts of this case, the proceedings emanating through issue of notice u/s 148 of the Act are hereby quashed. Since the first ground has been accepted there is no adjudication on the merits of this case and the rest of the grounds are not decided.”

Aggrieved by this, the Revenue is in appeal before the Tribunal. Before us, the Ld. AR apart from relying upon the judgement of the Single judge of the Hon’ble Uttarakhand High Court dated 20.08.2011 in the case of B.J. Services Company Middle East Ltd. & Others has placed on record a later judgement of the Hon’ble Uttarakhand High Court dated 07.07.20 14 in Al Mansoori Specialized Engineer and other batch of appeals where the Hon’ble Court in the absence of any contrary decision was pleased to follow the decision in the case of B.J.Services Company Middle East Ltd.(cited supra). Apart from that order of the Co-ordinate Bench dated 11.09.2013 in the case of ADIT vs Hampson Russel Ltd. Partnership (cited supra) has been relied taking a similar. In the absence of any contrary fact, circumstance or argument, we find no infirmity in the finding of the Ld.CIT(A). Accordingly for the reasons given herein above the departmental appeal is dismissed.