The Division Bench of the Delhi High Court in the case of Ernst and Young U.S. LLP vs Assistant Commissioner of Income Tax, Circle International Taxation 1(2)(2), Delhi & Anr. consisting of Justices Manmohan and Manmeet Pritam Singh Arora opined that an order passed u/s 143(1) is not an assessment for the purposes of Section 147 of the Income Tax Act, 1961.
Facts
This writ petition was filed challenging the order passed u/s 148A(d) of the Income Tax Act, 1961 (‘the Act’) for Assessment Year 2018-19.
Contentions Made
Petitioner: Respondent completely failed to appreciate that it had itself accepted the Petitioner’s claim regarding professional charges received from S.R. Batliboi & Associates LLP in the present assessment year by making an assessment u/s 143(1) of the Act. It was also contended that Revenue in assessee’s own case in Assessment Year 2019-20 had accepted Petitioner’s claim under Article 15 of DTAA in a scrutiny assessment and, therefore, in the present proceedings relating to the assessment year 2018-19, it would have been lawful and permissible for the Respondent to depart from the order passed and view taken in assessment year 2019-20, only if the Respondent had some concrete material which clearly indicated that, for the purpose of Article 15 of DTAA, the factual position in the Petitioner’s case in assessment year 2018- 19 is different from that in assessment year 2019-20.
Respondent: It was contended that for getting the benefit of Article 15 of DTAA in a particular assessment year, the petitioner would have to satisfy that the services rendered in the said assessment year were similar/identical to the services rendered in the assessment year in which the petitioner was given the benefit of Article 15 of DTAA – which the petitioner had failed to satisfy.
Observations of the Court
The Bench observed that:
“When the original proceeding has been completed under section 143(1), there is no need for fresh tangible material for reopening the assessment since there is a distinction between ‘intimation’ and ‘assessment’ under sections 143(1) and 143(3) of the Act.”
Relying on Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers Private Limited, it was noted that there is a distinction between ‘intimation’ and ‘assessment’ u/s 143(1) and 143(3) of the Act.
It was further observed that the order passed u/s 143(1) of the Act is not an assessment for the purposes of Section 147 of the Act. Further, it was not considered necessary in such a case for the Assessing Officer to come across some fresh tangible material to form a belief that income has escaped assessment.
It was also observed that:
“The scrutiny assessment for assessment year 2019-20 also offers no assistance to the petitioner, as the petitioner did not place on record any documents such as Contract Agreement under which such transactions were carried out, copy of original invoices (not just invoice breakup) to show that the services rendered by the petitioner during assessment year 2018-19 were identical/similar to the services rendered to M/s Batliboi & Associates LLP in the assessment year 2019-20.”
Judgment
Finding no infirmity in the impugned order passed by the Assessing Officer, the Bench dismissed the present writ petition and application.
Case: Ernst and Young U.S. LLP vs Assistant Commissioner of Income Tax, Circle International Taxation 1(2)(2), Delhi & Anr.
Citation: W.P.(C) 11862/2022 & CM APPL.35429/2022
Bench: Justice Manmohan, Justice Manmeet Pritam Singh Arora
Decided on: 22nd August 2022
Read Judgment @LAtestlaws.com
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