HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. NO.390 OF 2014 DATED:25.06.2014 Between:
Commissioner of Income Tax-III, IT Towers, AC Guards, Masab Tank, Hyderabad.
… Appellant And LGE & C-NCC (Joint Venture) Hyderabad … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No.390 OF 2014 JUDGMENT: (per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be preferred and admitted against the judgment and order dated 23.08.2013 of the learned Tribunal in relation to the assessment years 2003-2004 and 2004-2005 on the following suggested questions of law:
i. In the facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is correct in law in allowing the appeal of the respondent-assessee and quashing the subject assessment order, without considering the facts and merits of the said assessment order which was upheld by the learned Commissioner of Income Tax (Appeals) only on the sole ground that the Transfer Pricing Officer (TPO) is not empowered to hold the international transactions of the respondent-assessee as sham transactions?
ii. In facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is correct in law in holding that the Assessing Officer is not justified in initiating the proceedings under Section 147 of the Income Tax Act 1961 as the international transaction which was identified as sham is the basis for reopening and this information was available consequent to the Transfer Pricing Officer’s order?
It appears that the Assessing Officer wanted to reopen the assessment in relation to the aforesaid assessment years under Section 147 read with Section 148 of the Income Tax Act, 1961 (for short ‘the Act’). Admittedly, the aforesaid attempt to reopen the assessment was made beyond the ordinary period of four years from the end of relevant assessment year. In case of assessment in relation to the present assessment year 2003-2004, it should be by the end of financial year 2008, while for the year 2004-2005, it should be by the end of financial year 2009. Before us, copies of such notices have not been produced. However, the learned Tribunal on fact found that the notice was issued beyond four years, but there has been no factual basis as required under the aforesaid provision to reopen the assessment beyond four years and within six years, meaning thereby pre-conditions for issuance of notice after four years and within six years, namely, the allegation of escapement of assessment on account of failure on the part of the assessee to make a return under Section 139 or in response to notice issued under sub-section (1) of Section 147 or Section 148 or to disclose fully and truly all material facts necessary for its assessment for that assessment year have not been fulfilled. When pre-conditions are not found in the notices, initiation of proceedings is bad. We cannot re-appreciate this finding in the absence of the allegation of perversity. We, therefore, do not find any element of law to decide.
Hence, the appeal is dismissed. There will be no order as to costs.
Consequently, the miscellaneous petitions, if any, pending in this appeal shall stand dismissed.
K.J. SENGUPTA, CJ SANJAY KUMAR, J 25.6.2014 cbs/es