Indian Kanoon - Search engine for Indian Law

9.In this context, the attention of this Court is drawn with reference to the order passed by the Transfer Pricing Officer wherein the Transfer Pricing Officer fixed the Arm's length price of international transactions. Additions were made and the proceedings of the Transfer Pricing Officer was communicated to the Assessing Officer and based on the said report of the TPO, the Assessing Officer passed the draft assessment order on 30.12.2016 under section 143(3) r/w. Section 92CA of the Act. It is contended that beyond the report of the Transfer Pricing Officer, the Assessing Authority considered the disallowance under section 40(a)(ia) and made additions and thereafter the Assessing Officer considered the claim of the assessee regarding the expenditure and other aspects of the matter. In paragraph 6 of the draft assessment order, total taxable income is computed. Relying on the said draft assessment order, the petitioner states _________ https://www.mhc.tn.gov.in/judis/ that once the draft assessment order is passed by the Assessing Officer then under section 144C, he has to pass the final assessment order within a period of 30 days from the end of the month. Section 144C stipulates reference to Dispute Resolution Panel. Sub-clause (4) enumerates “the Assessing Officer shall notwithstanding anything contained in section 153 or section 153B pass the assessment order under sub-section (3) within one month from the end of the month in which; (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires. Relying on the said provisions, it is contended that the petitioner assessee had not raised any objections. Therefore, under sub-clause (4) to section 144C the Assessing Officer is mandated to pass an assessment order. Admittedly in the present case no final order of assessment was passed. However, the respondent has chosen to invoke the powers under section 147 of the Act and issued a notice under Section 148 of the Act for reopening of assessment. Admittedly the procedures are followed as directed by the Apex Court of India in the case of GKN Driveshafts (India) Ltd., vs. Income Tax Officer [(2002) 125 Taxman 963(SC)]. However, the reopening of proceedings under section 147 of the Act on completion of _________ https://www.mhc.tn.gov.in/judis/ draft assessment order issued pursuant to the report of the TPO is impermissible and beyond the jurisdiction of the Assessing Authority.

16.The learned standing counsel referred section 149 of the Act which stipulates time limit for notice. Relying on sub-clause (1)(b) which states that “if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year”. In the present case admittedly the reopening of assessment is made within four year, therefore, there is no irregularity or infirmity as such. The Assessing officer has not passed any final assessment _________ https://www.mhc.tn.gov.in/judis/ order under section 144C(4) of the Act, therefore, he is well within his power to invoke section 147 and issue notice under section 148 which states that such notice can be issued before making any assessment, re-assessment or re-computation. Therefore, the circumstances as narrated would establish that the notice under section 148 was issued by following the procedures as contemplated under sections 147 and 148 of the Act and thus, there is no perversity and the writ petition is to be rejected.

22.There is no other condition stipulated under Section 147 of the Act with reference to the procedures contemplated under Section 92CA or under Section 144C of the Income Tax Act. Contrarily section 144C(4) states that the Assessing Officer shall notwithstanding anything contained in section 153 or section 153B pass an assessment order. Therefore there is a scope for reopening of assessment even in cases where no assessment order is passed under sub-clause (4) to section 144C of the Act. Undoubtedly, in the present case, the petitioner assessee had not raised any objection. Therefore, under sub-clause (4) the Assessing Officer is empowered to pass an order of assessment, however, he has not passed any orders and has chosen to reopen the assessment by invoking the powers conferred under _________ https://www.mhc.tn.gov.in/judis/ section 147 of the Act. Section 147 of the Act provides power to assess or re-assess. The section did not contemplate the stages under which such assessment or re-assessment can be made. For this purpose, Chapter XIV of the Act is to be read cogently to form an opinion that the assessment or re- assessment shall be made at any point unless there is a specific prohibition contemplated under any of the clauses under Chapter XIV of the Act. When there is no embargo under Section 147 of the Act with reference to the stages under which reopening can be made there is no impediment for the Assessing Officer to invoke powers under Section 147 of the Act and in the present case, no assessment order has been passed and therefore, the Assessing Officer is empowered to invoke section 147 and issue notice under section 148 of the Act.

_________ https://www.mhc.tn.gov.in/judis/

34.As far as the other contentions raised that once the draft assessment order is passed and the assessee has not raised any objections with reference to the draft assessment order, the Assessing Officer has to necessarily pass the final assessment order. Undoubtedly, in the present case the assessee has not raised any objection, however, the same would not preclude the Assessing Authority as there is a scope for reopening of assessment if he has reason to believe that the income chargeable to tax escaped assessment. Therefore, in cases, where no assessment orders are passed under sub-clause (4) to section 144C, the Assessing Officer is empowered to invoke section 147 of the Act if he has reason to believe that the income chargeable to tax escaped assessment.