The Delhi High Court ruled that order in Section 143(1) of the Income Tax Act, 1961 is not an assessment.
The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora 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.
A Writ Petition has been filed challenging the Order passed under Section 148A(d) of the Income Tax Act, 1961 for Assessment Year 2018-19.
Senior Advocate S.Ganesh, appearing for the Petitioner stated that the Show Cause Notice sought to re-open the petitioner’s assessment on the ground that the petitioner’s return of income did not offer to tax receipts of professional service charges from S.R. Batliboi & Associates LLP.
He submitted that an order under Section 148 A (d) of the Act was passed by Respondent on the erroneous footing that the Petitioner had not filed a reply to the Show Cause Notice and further stated that the Petitioner had not objected to the re-opening of its assessment.
Senior Standing Advocate Puneet Rai, appearing for the Respondent Revenue, who appeared on advance notice, contended that if the benefit of Article 15 of DTAA is satisfied in a particular assessment year does not mean that the said benefit would be available to the assessee in all subsequent years.
He submitted that 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.
The court said that the Supreme Court and this court have repeatedly held that when the original proceeding has been completed under Section 143(1), there is no need for fresh tangible material for reopening the assessment and the doctrine of change of opinion does not arise since under Section 143(1) an intimation is issued and no opinion is formed by way of the said order.
“The order passed under Section 143(1) of the Act is not an assessment for the purposes of Section 147 of the Act. Further, it is not 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,” the court added.
The further stated that if petitioner is able to satisfy the Assessing Officer that the services rendered in the present assessment were similar/identical to the services rendered in the assessment year 2019-20, the re-assessment proceedings would be closed.
The court found no infirmity in the impugned order passed by the Assessing Officer.
Case title: Ernst and Young U.S. LLP v/s Assistant Commissioner of Income Tax, Circle International Taxation 1(2)(2), Delhi & Anr.
Citation: W.P.(C) 11862/2022 & CM APPL.35429/2022