M/s. Sandvik Information Technology AB., Pune V. Deputy Director of Income-tax,

ITA 465/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9406 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-01-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 15-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KOTRU
• Keywords: Reopening of assessment; Transfer pricing; Double taxation relief; International transaction; Permanent establishment; Tangible material; Difference of opinion; Tax effect; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 201(1); 148; 10; 11; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 436 /P U N/20 1 5 / ASSESSMENT YEAR : 2006 - 07 THE DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION - II, PUNE . / APPELLANT / V/S SANDVIK INFORMATION TECHNOLOGY AB, C/O - SANDVIK ASIA PVT. LTD. 459 - 469, MUMBAI PUNE ROAD, DAPODI, PUNE - 411 012 . / RESPONDENT PAN: AADCA5375J . /CO NO. 03 /P U N/201 7 / ASSESSMENT YEAR : 2006 - 07 (O UT OF ITA NO. 436 /PUN/2015 ) SANDVIK INFORMATION TECHNOLOGY AB, C/O - SANDVIK ASIA PVT. LTD. 459 - 469, MUMBAI PUNE ROAD, DAPODI, PUNE - 411 012 . / CROSS OBJECT OR PAN: AADCA5375J / V/S THE DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION - II, PUNE . / RESPONDENT . / ITA NO. 499 /P U N/20 16 / ASSESSMENT YEAR : 2007 - 08 THE DEPUTY DIRECTOR OF INCOME TAX, (INTERNATIONAL TAXATION), CIRCLE - 2, PUNE . / APPELLANT / V/S ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 2 SANDVIK INFORMATION TECHNOLOGY AB, NOW KNOWN AS S ANDVIK IT SERVICES AB, C/O - SANDVIK ASIA PVT. LTD. 459 - 469, MUMBAI PUNE ROAD, DAPODI, PUNE - 411 012 . / RESPONDENT PAN: AADCA5375J . /CO NO. 123 /PUN/2017 / ASSESSMENT YEAR : 200 7 - 0 8 (OUT OF ITA NO.499/PUN/2016 ) SANDVIK INFORMATION TECHNOLOGY AB, NOW KNOWN AS SANDVIK IT SERVICES AB C/O - SANDVIK ASIA PVT. LTD. 459 - 469, MUMBAI PUNE ROAD, DAPODI, PUNE - 411 012 . / CROSS OBJECT OR PAN: AADCA5375J / V/S THE DEPUTY COMMISSIONER OF INCOME TAX, ( INTERNATIONAL TAXATION ) CIRCLE - II, PUNE . / RESPONDENT . / ITA NO. 465 /P U N/20 15 / ASSESSMENT YEAR : 2008 - 09 SANDVIK INFORMATION TECHNOLOGY AB, C/O - SANDVIK ASIA PVT. LTD. 45 9 - 469, MUMBAI PUNE ROAD, DAPODI, PUNE - 411 012 . / APPELLANT PAN: AADCA5375J / V/S THE DEPUTY DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION - II, PUNE . / RESPONDENT ASSESSEE BY : S HRI D HA NESH BAFNA REVENUE BY : SMT. NIRUPAMA KOTRU, CIT / DATE OF HEARING : 16.01.2018 / DATE OF PRONOUNCEMENT: 2 3 .01.2018 ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 3 / ORDER PER SUSHMA CHOWLA, J M : OUT OF THIS BUNCH OF APPEALS, TWO APPEALS FILED BY THE REVENUE ARE AGAINST SEPARAT E ORDER S OF D C IT (IT ) - II , PUNE , DATED 26.02.2015 AND DCIT (IT) , CIRCLE - 2, PUNE DATED 27.01.2016 RELATING TO ASSESSMENT YEAR S 200 6 - 0 7 & 200 7 - 0 8 PASSED UNDER SECTION 144C(13) / 144C(13) R.W.S. 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . THE ASSESSEE FILED CROSS OBJECTIONS AGAINST THE APPEAL S OF REVENUE RELATING TO ASSESSMENT YEARS 200 6 - 0 7 & 200 7 - 0 8 . FURTHER, THE ASSESSEE ALSO FILED AN APPEAL AGAINST THE ORDER OF DCIT (IT) - II, PUNE, DATED 26.02.2015 RELATING TO ASSESSMENT YEAR 2008 - 09 PASSED UNDER SECTION 143(3) R.W.S. 147 R.W.S. 144C(13) OF THE ACT. 2 . TH E ISSUE ARISING IN THE PRESENT BUNCH OF APPEALS IS SIMILAR. ACCORDINGLY, WE PROCEED TO DECIDE THE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONV ENIENCE. HOWEVER, IN ORDER T O ADJUDICATE THE ISSUES, WE MAKE REFERENCE TO THE FACTS AND ISSUES IN ITA NO.436/PUN/2015 AND CO NO.03/PUN/2017. 3. THE REVENUE IN ITA NO.436 /PUN/2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE DRP WA S NOT CORRECT IN DISMISSING THE RE - OPENING OF THE ASSESSMENT AS NOT BEING IN ACCORDANCE WITH THE PROVISIONS OF THE LAW AND TERMING THE SAME TO BE INVALID. 2. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE DRP WAS NOT CORRECT IN HOLDING THAT THE REOPENI NG WAS NOT BASED ON THE FACT THAT THERE WAS A REASON TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT SINCE NO ASSESSMENT U/S. 143(3) WAS COMPLETED IN THE ASSESSMENT YEAR UNDER CONSIDERATION. 3. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE DRP WAS N OT CORRECT IN OBSERVING THAT THERE WAS NO MATERIAL ON THE BASIS OF WHICH THE BELIEF IS FORMED SINCE THE MATERIAL FOR FORMATION OF BELIEF WAS DEFINITE AND NOT VAGUE AND FANCIFUL. THE RE - OPENING OF THE ASSESSMENT WAS WELL WITHIN THE SCOPE OF PROVISIONS OF IN COME - TAX ACT AND THE REASONS RECORDED BY THE ASSESSING OFFICER BEFORE ISSUING NOTICE U/S. 148 ARE EXPLICIT AND GOOD ENOUGH TO MAKE OUT A FIT CASE FOR RE - OPENING OF THE ASSESSMENT. ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 4 4. THE APPELLANT CRAVES LEAVE TO ADD TO OR MODIF Y ANY OF THE GROUNDS OF AP PEAL. 4. THE ASSESSEE IN CO NO.03 /PUN/2017 HAS RAISED THE FOLLOWING GROUNDS OF OBJECTIONS: - 1. WITHOUT PREJUDICE TO THE RELIEF GRANTED BY THE HON'BLE DISPUTE RESOLUTION PANEL [THE DRP] IN RELATION TO REOPENING OF THE ASSESSMENT PROCEEDINGS BEYOND FOUR Y EARS, THE LEARNED DRP ERRED IN NOT ADJUDICATING UPON OBJECTION NO.2 AND OBJECTION NO. 3 BEING TAXABILITY OF RECEIPTS FOR IT SUPPORT SERVICES AMOUNTING TO INR 2,75,19,685 AS FEES FOR TECHNICAL SERVICES AND ROYALTY AS PER ARTICLE 12 OF THE TAX TREATY BETWEEN INDIA AND SWEDEN. IT IS FURTHER PRAYED THAT THE HON'BLE APPELLATE AUTHORITY IS ENTITLED TO CONSIDER THE CLAIM AND HAS THE POWER TO ADJUDICATE THE SAME IN ACCORDANCE WITH LAW. THE CROSS OBJECTION CRAVES LEAVE TO ADD, TO ALTER AND/ OR AMEND ALL OR ANY OF THE FOREGOING GROUND OF MEMORANDUM OF CROSS OBJECTIONS. 5 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT BUNCH OF APPEALS IS FIRST AGAINST REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT, WHEREIN THE PLEA OF ASSESSEE IS THAT WHERE THE ASSESSEE HAD FULLY DISCLOSED ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENT, THEN IN THE ABSENCE OF ANY TANGIBLE MATERIAL , THE REOPENING OF ASSESSMENT BEYOND PERIOD OF FOUR YEARS IS NOT SUSTAINA BLE. HE FURTHER POINTED OUT THAT SIMILAR ISSUE HAS ARISEN BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE, WHEREIN THE TRIBUNAL IN ITA O.128/PUN/2014, RELATING TO ASSESSMENT YEAR 2005 - 06 ALONG WITH CO NO.10/PUN/2015, VIDE ORDER DATED 28.12.2016 HAD ALLOWED THE SAID ISSUE IN FAVOUR OF ASSESSEE AND THE REVENUES APPEAL WAS DISMISSED AND THE CROSS OBJECTIONS RAISED BY THE ASSESSEE ON MERITS WERE HELD TO BE ACADEMIC. HE FURTHER POINTED OUT THAT REASONS RECORDED FOR REOPENING THE ASSESSMENT FOR ASSESSMENT YEAR 2005 - 06 , COPY OF WHICH IS PLACED AT PAGES 76 & 77 OF THE PAPER BOOK WE RE SAME AS RECORDED FOR THE YEARS UNDER APPEAL I.E. ASSESSMENT YEARS 2006 - 07 TO 2008 - 09. HE REFERRED TO THE COPY OF REASONS RECORDED IN THIS REGARD, WHICH ARE PLACED IN PAPER BOOK - I AND THE REASONS ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 5 RECORDED FOR ASSESSMENT YEAR 2005 - 06, WHICH ARE PLACED IN PAPER BOOK - 2. HE FURTHER POINTED OUT THAT SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN THE CASE OF SISTER CONCERN IN RESPECT OF REOPENING OF ASSESSMENT IN THE FOLLOWING CASES: - A) DDIT (IT) VS. SANDVIK AUSTRALIA PVT. LTD. IN ITA NOS.250 & 251/PUN/2015 ALONG WITH CO NOS.48 & 49/PUN/2016, ORDER DATED 18.08.2017 B) M/S. SANDVIK SYSTEM DEVELOPMENT AB VS. DDIT IN ITA NO.464/PUN/2015, RELATING TO ASSESSMENT YEAR 2008 - 09, ORDER DATED 10.11.2017 C) M/S. SANDVIK TOOLING SVERIGE AB VS. DDIT IN ITA NO.466/PUN/2015, RELATING TO ASSESSMENT YEAR 2008 - 09 AND IN ITA NOS.487 & 488/PUN/2016, ORDER DATED 21.12.2017 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE O N THE ORDER OF ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. FIRST, WE ARE TAKING UP THE APPEAL OF REVENUE IN ASSESSMENT YEAR 2006 - 07 AND CROSS OBJECTIONS FILED BY THE ASSESSEE. THE REVENUE IS IN APPEAL AGAINST THE OR DER OF DRP IN QUASHING RE - ASSESSMENT PROCEEDINGS ON THE BASIS THAT THERE WAS NO TANGIBLE MATERIAL AND HENCE, NO REASON TO BELIEVE FOR ESCAPEMENT OF INCOME AND HENCE, RE - ASSESSMENT PROCEEDINGS WERE BAD IN LAW. THE CO FILED BY THE ASSESSEE IN ASSESSMENT YEA R 2006 - 07 IS AGAINST MERITS OF THE ADDITIONS. THE REASONS RECORDED FOR REOPENING OF ASSESSMENT BY THE ASSESSING OFFICER WERE IN RESPECT OF IT SERVICE CHARGES RECEIVED FROM SANDVIK ASIA LTD. THE REASONS WHICH HAVE BEEN RECORDED IN ASSESSMENT YEAR 2006 - 07 ARE SIMILAR TO THE REASONS RECORDED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2005 - 06. WE FIND THAT THE TRIBUNAL IN M/S. SANDVIK TOOLING SVERIGE AB VS. DDIT (SUPRA) HAD TAKEN NOTE OF EARLIER DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEE BEFORE US IN ITA NO.128/PUN/2014 AND CO NO.10/PUN/2015, RELATING TO ASSESSMENT YEAR 2005 - 06, ORDER DATED 28.12.2016 AND DECIDED THE ISSUE. WE HAVE ALREADY ADJUDICATED THIS ISSUE OF REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 6 IN SERIES OF CASES. HOWEVER, REFE RENCE IS BEING MADE TO THE LATEST DECISION IN M/S. SANDVIK TOOLING SVERIGE AB VS. DDIT , ORDER DATED 21.12.2017 (SUPRA), WHEREIN THE TRIBUNAL HELD AS UNDER: - 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRES ENT APPEAL IS AGAINST APPLICABILITY OF PROVISIONS OF SECTION 147 OF THE ACT. THE SAID SECTION LAYS DOWN THE PROPOSITION THAT IN CASE WHERE THERE IS ANY ESCAPEMENT OF INCOME, WHICH COMES TO THE KNOWLEDGE OF THE ASSESSING OFFICER ON THE BASIS OF SOME TANGIB LE MATERIAL, THEN THE SAID PROCEEDINGS COULD BE REOPENED IN ORDER TO ASSESS THE ESCAPEMENT OF INCOME IN THE HANDS OF ASSESSEE. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD FURNISHED THE RETURN OF INCOME IN TIME DECLARING TOTAL INCOME AT NIL. THE ASS ESSING OFFICER UNDER THE PROVISIONS OF SECTION 147 OF THE ACT, RECORDED REASONS FOR REOPENING ASSESSMENT ON THE GROUND THAT IT WAS NOTICED FROM FORM NO.3CEB OF SANDVIK ASIA LTD. FOR ASSESSMENT YEAR 2008 - 09 THAT THE ASSESSEE HAD RECEIVED RS.80,72,286/ - AS I T SUPPORT SERVICES AND THE SAME WAS NOT OFFERED TO TAX. THE ASSESSING OFFICER FURTHER HELD THAT THE SAID RECEIPTS PAID TO THE ASSESSEE WERE IN THE NATURE OF ROYALTY AND FEES FOR TECHNICAL SERVICES AND TAXABLE IN INDIA AS PER ARTICLE 12 OF DTAA OF INDIA AN D SWEDEN AS WELL AS SECTION 9(1)(VI) AND 9(1)(VII) OF THE ACT. REFERENCE WAS MADE TO SEVERAL DECISIONS IN THIS REGARD BY THE ASSESSING OFFICER AND IN VIEW THEREOF, IT WAS RECORDED BY THE ASSESSING OFFICER THAT HE WAS SATISFIED THAT INCOME FOR THE ASSESSME NT YEAR UNDER CONSIDERATION HAD ESCAPED ASSESSMENT WITHIN MEANING OF PROVISIONS OF SECTION 147 OF THE ACT. THEREAFTER, PROCEEDINGS WERE REOPENED BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. THE SAID REASONS WERE RECORDED BY THE ASSESSING OFFICER ON 2 6.07.2013. SIMILAR REASONS FOR REOPENING ASSESSMENT WERE RECORDED FOR ASSESSMENT YEARS 2006 - 07, 2007 - 08, 2008 - 09 AND 2009 - 10, ALL DATED 26.07.2013. 8. WE FIND THAT THE ASSESSEE HAD MADE A DECLARATION IN THE COMPUTATION OF INCOME FILED ALONG WITH RETURN OF INCOME, COPY OF WHICH IS PLACED AT PAGE 13 OF COMPILATION NO.1, WHEREIN IT WAS REPORTED AS UNDER: - 3. FURTHER, STSA HAS ALSO RECEIVED LICENSE FEES AGGREGATING TO RS.8,072,285 FROM SAL. THESE BEING PAYMENTS RECEIVED FOR USE OF A COPYRIGHTED ARTICLE, DO NOT FALL WITHIN THE AMBIT OF ROYALTY UNDER ARTICLE 12 OF THE TAX TREATY. THIS IS A LIMITED USER RIGHT GRANTED BY STSA AND DOESNT INVOLVE EXPLOITATION OF THE RIGHTS EMBEDDED IN THE COPYRIGHT. ACCORDINGLY, IN THE ABSENCE OF PERMANENT ESTABLISHMENT OF S TSA IN INDIA, SUCH PAYMENTS ARE NOT CONSIDERED AS TAXABLE IN INDIA. 9. THE AUDITOR IN THE AUDIT REPORT IN FORM NO.3CEB HAD ALSO REPORTED IN RESPECT OF SAID RECEIPTS WHICH IS PLACED AT PAGE 14 OF COMPILATION NO.I, WHICH READ AS UNDER: - SR. NO. NAME AND ADDRESS OF THE ASSOCIATED ENTERPRISE WITH WHOM THE INTERNATIONAL TRANSACTION HAS BEEN ENTERED INTO DESCRIPTION OF SUCH MUTUAL AGREEMENT OR ARRANGEMENT AMOUNT PAID/RECEIVED OR PAYABLE / RECEIVABLE IN THE TRANSACTION - METHOD USED FOR DETERMINING THE ARM'S L ENGTH PRICE (SEE SECTION 92C(1) AS PER BOOKS OF ACCOUNT AS COMPUTED BY THE ASSESSEE HAVING REGARD TO THE ARM'S LENGTH PRICE ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 7 (RS) (RS) CLAUSE 12(A) CLAUSE 12(B) CLAUSE 12(C) CLAUSE 12(D) 1 SANDVIK ASIA LIMITED MUMBAI PUNE ROAD , DAPODI, PUNE - 411012 RECEIPT FOR IT SUPPORT SERVICES 8,072,286 8,072,286 REFER NOTE 6 TO APPENDIX D 10. THE NOTES TO THIS EFFECT WAS ALSO GIVEN IN FORM NO.3CEB. THE ORIGINAL ASSESSMENT IN THE CASE WAS COMPLETED BY ISSUE OF INTIMATION UNDER SECTION 1 43(1) OF THE ACT. THE GRIEVANCE OF THE DEPARTMENT IN THIS REGARD IS THAT IN THE ABSENCE OF ANY ASSESSMENT BEING COMPLETED UNDER SECTION 143(3) OF THE ACT, SINCE NO ENQUIRY WAS MADE BY THE ASSESSING OFFICER AND THE INCOME HAD ESCAPED ASSESSMENT, HENCE RE - A SSESSMENT PROCEEDINGS WERE CORRECTLY INITIATED IN THE HANDS OF ASSESSEE. HOWEVER, ON THE OTHER HAND, THE CASE OF ASSESSEE BEFORE US IS THAT IN THE ABSENCE OF ANY TANGIBLE MATERIAL WHICH HAD COME TO THE KNOWLEDGE OF THE ASSESSING OFFICER FOR RECORDING REAS ONS FOR REOPENING ASSESSMENT OF ESCAPEMENT OF INCOME, THEN IN SUCH CIRCUMSTANCES, RE - ASSESSMENT PROCEEDINGS WERE NOT APPROPRIATE. 11. WE FIND THAT SIMILAR ISSUE OF REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT ON THE BASIS OF SIMILAR REASONS RECORD ED FOR REOPENING ASSESSMENT ALL DATED 26.07.2013 FOR DIFFERENT YEARS AROSE BEFORE THE TRIBUNAL IN THE CASE OF SANDVIK SYSTEMS DEVELOPMENT AB FOR ASSESSMENT YEAR 2008 - 09 AND ALSO IN THE CASE OF SANDVIK INFORMATION TECHNOLOGY AB, RELATING TO ASSESSMENT YEAR 2005 - 06 AND FURTHER IN THE CASE OF SANDVIK AUSTRALIA PTY LTD., RELATING TO ASSESSMENT YEAR 2008 - 09. THE TRIBUNAL IN THE CASE OF SANDVIK SYSTEM DEVELOPMENT AB, IN ITA NO.464/PUN/2015, RELATING TO ASSESSMENT YEAR 2008 - 09, VIDE ORDER DATED 10.11.2017 HAD HEL D AS UNDER: - 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT APPEAL IS APPLICABILITY OF PROVISIONS OF SECTION 147 OF THE ACT. THE SAID SECTION PROVIDES THAT IN CASES WHERE THERE IS ANY ESCAPEMENT OF INCOME , WHICH COMES TO THE KNOWLEDGE OF THE ASSESSING OFFICER, ON THE BASIS OF SOME TANGIBLE MATERIAL, THEN THE SAID PROCEEDINGS CAN BE REOPENED IN ORDER TO ASSESS THE ESCAPEMENT OF INCOME IN THE HANDS OF ASSESSEE. THE ASSESSEE HAD FURNISHED THE RETURN OF INCOM E IN TIME DECLARING TOTAL INCOME AT NIL. THE ASSESSING OFFICER RECORDED HIS REASONS FOR REOPENING THE ASSESSMENT ON THE GROUND THAT IT WAS NOTICED FROM THE SUBMISSIONS MADE DURING THE ASSESSMENT FOR ASSESSMENT YEAR 2005 - 06 THAT THE ASSESSEE HAD RECEIVED I T SUPPORT FEES OF RS.1.94 CRORES AND LICENCE FEES OF RS.3,10,396/ - FROM SANDVIK ASIA PVT. LTD. IN ASSESSMENT YEAR 2008 - 09, BUT THE SAME WERE NOT OFFERED FOR TAX. THE REASONS MENTIONED THAT FOR ASSESSMENT YEAR 2005 - 06, THE ASSESSING OFFICER HAD CONCLUDED T HAT RECEIPTS UNDER THE HEAD IT SUPPORT FEES RECEIVED BY THE ASSESSEE FROM SANDVIK ASIA PVT. LTD., WERE IN THE NATURE OF ROYALTY AND FEES FOR TECHNICAL SERVICES AND TAXABLE AS PER ARTICLE 12 OF DTAA OF INDIA AND SWEDEN AS WELL AS SECTION 9(1)(VI) & 9(1)(V II) OF THE ACT. THE ASSESSING OFFICER FURTHER HOLDS THAT ON EXAMINATION OF NATURE OF PAYMENTS MADE TO THE ASSESSEE AS PER AGREEMENT DATED 01.04.2002, IT COULD BE CONCLUDED THAT THE PAYMENTS RECEIVED BY THE ASSESSEE CONSTITUTE ROYALTY AND FEES FOR TECHNICA L SERVICES, AS PER SECTIONS OF THE ACT AS WELL AS ARTICLE 12 OF THE DTAA BETWEEN INDIA AND SWEDEN. REFERENCE WAS MADE TO SEVERAL DECISIONS IN THIS REGARD AND ALSO TO THE ORDER UNDER SECTION 201(1) AND 201(1A) OF THE ACT IN THE CASE OF SANDVIK ASIA PVT. LT D. FOR ASSESSMENT YEAR 2008 - 09, WHEREIN THE ASSESSING OFFICER HELD THAT THE PAYMENTS RECEIVED CONSTITUTE ROYALTY AND FEES FOR TECHNICAL SERVICES. AFTER RECORDING AFORESAID REASONS FOR REOPENING THE ASSESSMENT, THE ASSESSING OFFICER ISSUED NOTICE UNDER SEC TION 148 OF THE ACT. THE ASSESSEE FILED LETTER STATING THAT EARLIER RETURN ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 8 OF INCOME MAY BE TREATED AS FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT. THEREAFTER, THE ASSESSEE SOUGHT REASONS FOR REOPENING THE ASSESSMENT AND FILED OBJECTIONS . THE OBJECTIONS FILED BY THE ASSESSEE WERE REJECTED BY THE ASSESSING OFFICER AS THERE WAS NO ASSESSMENT UNDER SECTION 143(3)/147 OF THE ACT AND THE ASSESSING OFFICER WAS SATISFIED THAT THERE WAS ESCAPEMENT OF INCOME ON THE BASIS OF TANGIBLE MATERIAL BEFO RE HIM, THEN IT WAS FIT CASE FOR REOPENING THE ASSESSMENT. THE DRP ALSO UPHELD THE ACTION OF ASSESSING OFFICER, IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (SUPRA). 10. THE ASSESSEE IS IN APPEAL AGAINST THE SAID EXERCISE OF JURISDICTION BY THE ASSESSING OFFICER UNDER SECTION 147 OF THE ACT. THE FIRST PLEA WHICH HAS BEEN RAISED BY THE ASSESSEE IS THAT IN THE ABSENCE OF ANY TANGIBLE MATERIAL FOR REASON TO BELIEVE THAT THERE IS ESCAPEMENT OF INCOME, THE ACTION ADOPTED BY THE ASSESSING OFFICER WAS WITHOUT ANY BASIS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN ASSESSMENT YEAR 2005 - 06 SAME TANGIBLE MATERIAL WAS AVAILABLE WITH THE ASSESSING OFFICER AND THE RE - ASS ESSMENT PROCEEDINGS WERE REOPENED. HOWEVER, THE DRP HELD THAT THERE WAS NO MATERIAL BROUGHT IN THE REASONS RECORDED ON THE BASIS OF WHICH VALID REASONS TO BELIEVE COULD BE FORMED. THE DRP HELD THAT IT WAS CASE OF RE - APPRAISAL OF EXISTING FACTS. IT WAS F URTHER HELD BY THE DRP THAT REOPENING OF ASSESSMENT WITHOUT NEW MATERIAL WAS NOT PERMISSIBLE EVEN IF THE ORIGINAL ASSESSMENT WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND ORDER WAS NOT PASSED UNDER SECTION 143(3) OF THE ACT. RELIANCE OF THE ASSESSING OFFICER ON ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (SUPRA) WAS FOUND TO BE MISPLACED, WHERE THE CASE OF THE ASSESSING OFFICER WAS THAT THE HONBLE SUPREME COURT HAD DECIDED THAT IN CASE THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT, THE ASSESSING OFFICER IS EMPOWERED TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF DELHI IN ORIENT CRAFT LTD. VS. CIT (SUPRA), HENCE REOPENING IN THE CASE OF THREE SISTER CON CERNS WAS HELD TO BE INVALID. THE REVENUE DID FILE AN APPEAL BEFORE THE TRIBUNAL IN THIS REGARD AND THE APPEAL WAS DISMISSED FOR LOW TAX EFFECT. SIMILARLY, IN ASSESSMENT YEAR 2006 - 07, SAME ISSUE WAS RAISED AND THE DRP DECIDED THE ISSUE IN FAVOUR OF ASSES SEE IN THE ABSENCE OF ANY FRESH MATERIAL AND THE APPEAL OF REVENUE WAS DISMISSED FOR LOW TAX EFFECT. IN ASSESSMENT YEAR 2007 - 08, THOUGH THE ISSUE OF REOPENING UNDER SECTION 148 OF THE ACT WAS DECIDED AGAINST THE ASSESSEE, BUT SINCE THE ISSUE ON MERITS WAS DECIDED IN FAVOUR OF ASSESSEE, NO APPEAL WAS FILED BY THE ASSESSEE OR THE REVENUE. 11. NOW, COMING TO THE APPEAL IN ASSESSMENT YEAR 2008 - 09. THE ASSESSING OFFICER RECORDED REASONS FOR REOPENING ASSESSMENT ON THE BASIS OF REASONS RECORDED IN ASSESSMENT Y EAR 2005 - 06. THE ASSESSING OFFICER VERY CATEGORICALLY STATES THAT INFORMATION CAME TO HIS KNOWLEDGE DURING PROCEEDINGS IN ASSESSMENT YEAR 2005 - 06 THAT THE ASSESSEE HAD RECEIVED IT SUPPORT FEES AND LICENCE FEES, WHICH HAS NOT BEEN OFFERED TO TAX. THE QUES TION WHICH ARISES BEFORE US IS WHETHER ANY TANGIBLE MATERIAL IS AVAILABLE WITH THE ASSESSING OFFICER TO COME TO FINDING OF ESCAPEMENT OF INCOME. THE SECOND ASPECT OF THE ISSUE IS IN CASE NO ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT, WH ERE THERE IS ESCAPEMENT OF INCOME, PROCEEDINGS CAN BE REOPENED UNDER SECTION 147/148 OF THE ACT KEEPING THE SPIRIT OF PROVISIONS WHICH ARE APPLIED IN THE PRESENT CASE. THE FIRST AND FOREMOST FOR INVOKING THE SAID PROVISIONS IS THE REASON TO BELIEVE OF E SCAPEMENT OF INCOME AND SUCH REASON TO BELIEVE HAS TO BE BASED ON TANGIBLE MATERIAL OR OTHERWISE THERE HAS TO BE LIVE LINK BETWEEN THE REASON TO BELIEVE AND ESCAPEMENT OF INCOME THEN ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 9 ONLY THE PROCEEDINGS UNDER SECTION 147 OF THE ACT CAN BE INITIATED. THE PROVISO UNDER SECTION 147 OF THE ACT PROVIDES THAT WHERE ASSESSMENT UNDER SECTION 143(3) OF THE ACT HAS BEEN MADE, THEN NO ACTION UNDER THE MAIN SECTION WOULD BE TAKEN AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, UNLESS ESCAPEMENT OF INCOME IS BY REASON OF FAILURE ON THE PART OF ASSESSEE TO MAKE RETURN UNDER SECTION 139 OF THE ACT OR IN RESPONSE TO NOTICE UNDER SECTION 142(1) OF THE ACT OR 148 OF THE ACT TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THA T ASSESSMENT YEAR. UNDOUBTEDLY, PROVISO IS APPLICABLE IN CASE OF NON - FULFILMENT OF CERTAIN CONDITIONS LAID DOWN BUT BEFORE APPLYING THE PROVISIONS PROVIDED IN THE PROVISO TO THE SECTION, THE PROVISIONS OF MAIN SECTION HAVE TO BE SEEN, WHICH CLEARLY PROVID ES THAT THERE HAS TO BE REASON TO BELIEVE OF ESCAPEMENT OF INCOME AND THEN ONLY PROVISIONS OF SECTION 147 OF THE ACT CAN BE TRIGGERED. THERE IS NO MERIT IN THE REASONING OF THE REVENUE THAT WHERE NO ASSESSMENT UNDER SECTION 143(3) OF THE ACT HAS BEEN COMP LETED AND THE ASSESSMENT IS ONLY COMPLETED UNDER SECTION 143(1) OF THE ACT AND SINCE THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, THEN ACTION UNDER SECTION 147 OF THE ACT CAN BE TAKEN. WE FIND NO MERIT I N THE PLEA OF THE REVENUE. 12. NOW, COMING TO THE FACTS OF THE PRESENT CASE, WHEREIN THERE IS FINDING IN THE CASE OF ASSESSEE ITSELF THOUGH BY THE DRP THAT NO TANGIBLE MATERIAL WAS BROUGHT IN THE REASONS RECORDED ON THE BASIS OF WHICH VALID REASON TO BE LIEVE COULD BE FORMED. IT MAY BE REITERATED HEREIN ITSELF THAT REASONS RECORDED FOR ASSESSMENT YEARS 2005 - 06 AND 2008 - 09 ARE SAME. THOUGH THE APPEAL OF ASSESSEE BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2005 - 06 WAS DISMISSED FOR LOW TAX EFFECT ALONG WITH AP PEAL OF ANOTHER SISTER CONCERN, WHICH WAS ALSO REOPENED BY THE ASSESSING OFFICER ON IDENTICAL REASONS TO BELIEVE HOWEVER, IN THE CASE OF THIRD ENTITY AGAINST WHICH PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE RECORDED, THE MATTER TRAVELLED TO THE TRIBUNA L AND THE TRIBUNAL IN DDIT (IT) VS. SANDVIK INFORMATION TECHNOLOGY AB, IN ITA NO.128/PUN/2014 ALONG WITH CO NO.10/PUN/2015, RELATING TO ASSESSMENT YEAR 2005 - 06, ORDER DATED 28.12.2016 HAD CONSIDERED THE RE - ASSESSMENT PROCEEDINGS ON THE BASIS OF DETAILS FUR NISHED BY SANDVIK ASIA PVT. LTD., ONE OF THE GROUP CONCERNS. AS PER INFORMATION, PAYMENTS WERE MADE ON ACCOUNT OF IT SUPPORT SERVICES WHICH INFORMATION WAS TREATED AS TANGIBLE MATERIAL BY THE ASSESSING OFFICER AND PROCEEDINGS WERE INITIATED UNDER SECTION 147/148 OF THE ACT. THE CASE OF REVENUE BEFORE THE TRIBUNAL WAS THAT THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME OF ASSESSEE HAD ESCAPED ASSESSMENT. THE CASE OF ASSESSEE WAS THAT THE SAID INFORMATION DERIVED FROM ALLEGED TANGIBLE MATERIAL FOR RE - ASSESSMENT PROCEEDINGS WERE ALREADY FURNISHED BY THE ASSESSEE IN FORM NO.3CEB FILED ALONG WITH RETURN OF INCOME. THE SAID INFORMATION IS REPRODUCED AT PAGE 9 OF THE ORDER OF TRIBUNAL DATED 28.12.2016. THE TRIBUNAL HELD THAT THE ASSESSING OFFICER CAN HAVE BELIEF FOR REOPENING ASSESSMENT IF THERE IS ANY TANGIBLE MATERIAL IN HIS POSSESSION. THE TRIBUNAL FURTHER HELD THAT IN THE SAID CASE, THE ASSESSING OFFICER HAD NO NEW INFORMATION OR TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMEN T OF INCOME. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER: - 16. IN SO FAR CONTENTIONS OF THE DEPARTMENT THAT THE ASSESSING OFFICER DID NOT GET OPPORTUNITY TO APPLY HIS MIND ON THE DOCUMENTS FURNISHED BY ASSESSEE AS THE ORIGINAL ASSESSMENT WAS COMP LETED U/S.143(1), WE DO NOT FIND ANY FORCE IN THE SAID CONTENTIONS. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ORIENT CRAFT LTD. (SUPRA) HAS HELD THAT EXPRESSION, REASON TO BELIEVE DOES NOT HAVE DIFFERENT MEANING, WHERE ASSESSMENTS ARE FRAMED ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 10 U/ S.143(1) AND WHERE ASSESSMENT IS COMPLETED U/S.143(3) OF THE ACT. THE RELEVANT EXTRACT OF THE FINDINGS OF THE HONBLE HIGH COURT ARE AS UNDER : 13. HAVING REGARD TO THE JUDICIAL INTERPRETATION PLACED UPON THE EXPRESSION REASON TO BELIEVE, AND THE CONT INUED USE OF THAT EXPRESSION RIGHT FROM 1948 TILL DATE, WE HAVE TO UNDERSTAND THE MEANING OF THE EXPRESSION IN EXACTLY THE SAME MANNER IN WHICH IT HAS BEEN UNDERSTOOD BY THE COURTS. THE ASSUMPTION OF THE REVENUE THAT SOMEHOW THE WORDS REASON TO BELIEVE H AVE TO BE UNDERSTOOD IN A LIBERAL MANNER WHERE THE FINALITY OF AN INTIMATION UNDER SECTION 143(1) IS SOUGHT TO BE DISTURBED IS ERRONEOUS AND MISCONCEIVED. AS POINTED OUT EARLIER, THERE IS NO WARRANT FOR SUCH AN ASSUMPTION BECAUSE OF THE LANGUAGE EMPLOYED I N SECTION 147; IT MAKES NO DISTINCTION BETWEEN AN ORDER PASSED UNDER SECTION 143(3) AND THE INTIMATION ISSUED UNDER SECTION 143(1). THEREFORE IT IS NOT PERMISSIBLE TO ADOPT DIFFERENT STANDARDS WHILE INTERPRETING THE WORDS REASON TO BELIEVE VIS - - VIS SECT ION 143(1) AND SECTION 143(3). WE ARE UNABLE TO APPRECIATE WHAT PERMITS THE REVENUE TO ASSUME THAT SOMEHOW THE SAME RIGOROUS STANDARDS WHICH ARE APPLICABLE IN THE INTERPRETATION OF THE EXPRESSION WHEN IT IS APPLIED TO THE REOPENING OF AN ASSESSMENT EARLIER MADE UNDER SECTION 143(3) CANNOT APPLY WHERE ONLY AN INTIMATION WAS ISSUED EARLIER UNDER SECTION 143(1). IT WOULD IN EFFECT PLACE AN ASSESSEE IN WHOSE CASE THE RETURN WAS PROCESSED UNDER SECTION 143(1) IN A MORE VULNERABLE POSITION THAN AN ASSESSEE IN WHO SE CASE THERE WAS A FULL - FLEDGED SCRUTINY ASSESSMENT MADE UNDER SECTION 143(3). WHETHER THE RETURN IS PUT TO SCRUTINY OR IS ACCEPTED WITHOUT DEMUR IS NOT A MATTER WHICH IS WITHIN THE CONTROL OF ASSESSEE; HE HAS NO CHOICE IN THE MATTER. THE OTHER CONSEQUENC E, WHICH IS SOMEWHAT GRAVER, WOULD BE THAT THE ENTIRE RIGOROUS PROCEDURE INVOLVED IN REOPENING AN ASSESSMENT AND THE BURDEN OF PROVING VALID REASONS TO BELIEVE COULD BE CIRCUMVENTED BY FIRST ACCEPTING THE RETURN UNDER SECTION 143(1) AND THEREAFTER ISSUE NO TICES TO REOPEN THE ASSESSMENT. AN INTERPRETATION WHICH MAKES A DISTINCTION BETWEEN THE MEANING AND CONTENT OF THE EXPRESSION REASON TO BELIEVE IN CASES WHERE ASSESSMENTS WERE FRAMED EARLIER UNDER SECTION 143(3) AND CASES WHERE MERE INTIMATIONS WERE ISSU ED EARLIER UNDER SECTION 143(1) MAY WELL LEAD TO SUCH AN UNINTENDED MISCHIEF. IT WOULD BE DISCRIMINATORY TOO. AN INTERPRETATION THAT LEADS TO ABSURD RESULTS OR MISCHIEF IS TO BE ESCHEWED. 13. THE TRIBUNAL ALSO TOOK NOTE OF THE CONTENTION OF THE DEPARTM ENT THAT WHERE THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(1) OF THE ACT, THEN THE ASSESSING OFFICER DOES NOT GET OPPORTUNITY TO APPLY THE MIND AND RELIED UPON THE HONBLE BOMBAY HIGH COURT IN KHUBCHANDANI HEALTHPARKS (P.) LTD. VS. ITO REPORTED IN 68 TAXMANN.COM 91 (BOM.), WHICH WAS ALSO IN RELATION TO ASSESSMENT BEING COMPLETED BY ISSUE OF INTIMATION UNDER SECTION 143(1) OF THE ACT AND THEREAFTER, ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. THE HONBLE BOMBAY HIGH COURT ALSO CONSIDERED THE R ATIO LAID DOWN BY THE APEX COURT IN ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (SUPRA). THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN THIS REGARD ARE AS UNDER: - ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 11 16. IN SO FAR CONTENTIONS OF THE DEPARTMENT THAT THE ASSESSING OFFICER DID NOT GET OPPOR TUNITY TO APPLY HIS MIND ON THE DOCUMENTS FURNISHED BY ASSESSEE AS THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(1), WE DO NOT FIND ANY FORCE IN THE SAID CONTENTIONS. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ORIENT CRAFT LTD. (SUPRA) HAS HELD TH AT EXPRESSION, REASON TO BELIEVE DOES NOT HAVE DIFFERENT MEANING, WHERE ASSESSMENTS ARE FRAMED U/S.143(1) ANDWHERE ASSESSMENT IS COMPLETED U/S.143(3) OF THE ACT. THE RELEVANT EXTRACT OF THE FINDINGS OF THE HONBLE HIGH COURT ARE AS UNDER: 13. HAVING R EGARD TO THE JUDICIAL INTERPRETATION PLACED UPON THE EXPRESSION REASON TO BELIEVE, AND THE CONTINUED USE OF THAT EXPRESSION RIGHT FROM 1948 TILL DATE, WE HAVE TO UNDERSTAND THE MEANING OF THE EXPRESSION IN EXACTLY THE SAME MANNER IN WHICH IT HAS BEEN UND ERSTOOD BY THE COURTS. THE ASSUMPTION OF THE REVENUE THAT SOMEHOW THE WORDS REASON TO BELIEVE HAVE TO BE UNDERSTOOD IN A LIBERAL MANNER WHERE THE FINALITY OF AN INTIMATION UNDER SECTION 143(1) IS SOUGHT TO BE DISTURBED IS ERRONEOUS AND MISCONCEIVED. AS P OINTED OUT EARLIER, THERE IS NO WARRANT FOR SUCH AN ASSUMPTION BECAUSE OF THE LANGUAGE EMPLOYED IN SECTION 147; IT MAKES NO DISTINCTION BETWEEN AN ORDER PASSED UNDER SECTION 143(3) AND THE INTIMATION ISSUED UNDER SECTION 143(1). THEREFORE IT IS NOT PERMISS IBLE TO ADOPT DIFFERENT STANDARDS WHILE INTERPRETING THE WORDS REASON TO BELIEVE VIS - - VIS SECTION 143(1) AND SECTION 143(3). WE ARE UNABLE TO APPRECIATE WHAT PERMITS THE REVENUE TO ASSUME THAT SOMEHOW THE SAME RIGOROUS STANDARDS WHICH ARE APPLICABLE IN THE INTERPRETATION OF THE EXPRESSION WHEN IT IS APPLIED TO THE REOPENING OF AN ASSESSMENT EARLIER MADE UNDER SECTION 143(3) CANNOT APPLY WHERE ONLY AN INTIMATION WAS ISSUED EARLIER UNDER SECTION 143(1). IT WOULD IN EFFECT PLACE AN ASSESSEE IN WHOSE CASE TH E RETURN WAS PROCESSED UNDER SECTION 143(1) IN A MORE VULNERABLE POSITION THAN AN ASSESSEE IN WHOSE CASE THERE WAS A FULL - FLEDGED SCRUTINY ASSESSMENT MADE UNDER SECTION 143(3). WHETHER THE RETURN IS PUT TO SCRUTINY OR IS ACCEPTED WITHOUT DEMUR IS NOT A MAT TER WHICH IS WITHIN THE CONTROL OF ASSESSEE; HE HAS NO CHOICE IN THE MATTER. THE OTHER CONSEQUENCE, WHICH IS SOMEWHAT GRAVER, WOULD BE THAT THE ENTIRE RIGOROUS PROCEDURE INVOLVED IN REOPENING AN ASSESSMENT AND THE BURDEN OF PROVING VALID REASONS TO BELIEVE COULD BE CIRCUMVENTED BY FIRST ACCEPTING THE RETURN UNDER SECTION 143(1) AND THEREAFTER ISSUE NOTICES TO REOPEN THE ASSESSMENT. AN INTERPRETATION WHICH MAKES A DISTINCTION BETWEEN THE MEANING AND CONTENT OF THE EXPRESSION REASON TO BELIEVE IN CASES WHER E ASSESSMENTS WERE FRAMED EARLIER UNDER SECTION 143(3) AND CASES WHERE MERE INTIMATIONS WERE ISSUED EARLIER UNDER SECTION 143(1) MAY WELL LEAD TO SUCH AN UNINTENDED MISCHIEF. IT WOULD BE DISCRIMINATORY TOO. AN INTERPRETATION THAT LEADS TO ABSURD RESULTS OR MISCHIEF IS TO BE ESCHEWED. 17. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF KHUBCHANDANI HEALTHPARKS (P) LTD. VS. ITO (SUPRA) HAS REITERATED THAT NOTICE ISSUED U/S.148 WOULD BE WITHOUT JURISDICTION FOR ABSENCE OF ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 12 REASON TO BELIEVE THAT INCOME HAS ESC APED ASSESSMENT EVEN IN CASE WHERE ASSESSMENT HAS BEEN COMPLETED EARLIER BY INTIMATION U/S.143(1) OF THE ACT. THE HONBLE HIGH COURT WHILE HOLDING SO, CONSIDERED THE DECISIONS RENDERED BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. RAJESH JHAVERI STOCK B ROKERS (P) LTD. REPORTED AS 291 ITR 500 AND CIT VS. ZUARI ESTATE DEVELOPMENT & INVESTMENT CO. LTD. (SUPRA). THE RELEVANT EXTRACT OF THE JUDGMENT RENDERED IN THE CASE OF KHUBCHANDANI HEALTHPARKS (P) LTD. VS. ITO (SUPRA) READS AS UNDER : 3. ON HEARING THE PARTIES, WE FIND THAT THE APEX COURT IN ASSISTANT COMMISSIONER OF INCOME TAX VS. RAJESH JHAVERI STOCK BROKERS P. LTD. 291 ITR 500, HAD AN OCCASION TO DEAL WITH IDENTICAL FACTS, NAMELY REOPENING NOTICES ISSUED UNDER SECTION 148 OF THE ACT WHERE ASSESSMENT I S COMPLETED EARLIER BY INTIMATION UNDER SECTION 143(1) OF THE ACT. IN THE ABOVE CASE, THE APEX COURT HELD THAT A NOTICE FOR - REOPENING AN ASSESSMENT UNDER SECTION 148 OF THE ACT COULD ONLY BE JUSTIFIED IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THIS DECISION OF THE SUPREME COURT IN RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA) HAS NOT BEEN DISTURBED BY THE APEX COURT IN ZUARI ESTATE DEVELOPMENT AND INVESTMENT CO. LTD. (SUPRA). IN FACT, THE SUPREME COUR T IN ZUARI ESTATE DEVELOPMENT AND INVESTMENT CO. LTD. (SUPRA) MAKES A SPECIFIC REFERENCE TO ITS DECISION IN RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA) TO HOLD THAT WHERE THE ASSESSMENT HAS BEEN COMPLETED BY INTIMATION UNDER SECTION 143(1) OF THE ACT, THE RE CAN BE NO QUESTION OF CHANGE OF OPINION. 4. WE FURTHER FIND THAT THE APEX COURT IN ZUARI ESTATE DEVELOPMENT AND INVESTMENT CO. LTD. (SUPRA) HAS NOT DEALT WITH THE ISSUE WHETHER BEFORE INVOKING SECTION 148 OF THE ACT, THE ASSESSING OFFICER MUST HAVE RE ASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, WHERE THE ORIGINAL ASSESSMENT HAS BEEN COMPLETED BY INTIMATION UNDER SECTION 143(1) OF THE ACT. THE REVENUE IS TRYING TO INFER THAT BECAUSE THE APEX COURT IN ZUARI ESTATE DEVELOPMENT AND INVESTMENT CO. LTD. (SUPRA) HAS SET ASIDE THE ORDER OF THIS COURT AND RESTORED THE ISSUE TO BE DECIDED ON MERITS BY THE TRIBUNAL, IT MUST BE INFERRED THAT THE APEX COURT HAD COME TO THE CONCLUSION THAT REASON TO BELIEVE WAS NOT NECESSARY FOR ISSUING REASS ESSMENT NOTICES WHERE THE REGULAR ASSESSMENT WAS COMPLETED UNDER SECTION 143(1) OF THE ACT. AS RIGHTLY POINTED OUT BY MR. PARDIWALLA, IT CAN EQUALLY BE INFERRED THAT THE APEX COURT IN THE ABOVE CASE HAD COME TO THE CONCLUSION THAT THERE IS REASON TO BELIEV E THAT INCOME HAD ESCAPED ASSESSMENT AND CONSEQUENTLY RESTORED THE ISSUE TO THE TRIBUNAL TO DECIDE THE REASSESSMENT PROCEEDINGS ON MERITS. 18. THUS, IN VIEW OF THE FACTS OF THE PRESENT CASE AND THE CASE LAWS DISCUSSED ABOVE WE HOLD THAT THE ASSESSING OFF ICER HAD NO TANGIBLE MATERIAL TO JUSTIFY HIS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER U/S.147 ARE WITHOUT JURISDICTION AND HENCE, ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 13 ARE NOT SUSTAINABLE. ACCORDINGLY GROUND NO.1 TO 3 RAISED BY DEPARTMENT IN APPEAL ARE DISMISSED. 14. IN THE FACTS OF THE PRESENT CASE ALSO THE ASSESSEE IN THE COMPUTATION OF TOTAL INCOME, COPY OF WHICH IS PLACED AT PAGE 2 OF THE PAPER BOOK, HAD IN THE NOTE GIVEN A DECLARATION IN RESPECT OF SUCH RECEIP TS AND HAD POINTED OUT THAT THE SAME DO NOT FALL WITHIN AMBIT OF ROYALTY OR FEES FOR TECHNICAL SERVICES. THE RELEVANT NOTE READS AS UNDER: - NOTE: 1 . SANDVIK SYSTEMS DEVELOPMENT AB (SSDAD) IS A NON - RESIDENT COMPANY INCORPORATED IN SWEDEN. SSDAB DOES N OT HAVE ANY OFFICE (OR ANY OTHER ESTABLISHMENT) IN INDIA. IT IS A TAX RESIDENT OF SWEDEN UNDER THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND SWEDEN (TAX TREATY). 2 . SSDAB PROVIDES IT SUPPORT SERVICES TO SANDVIK AB GROUP COMPANIES ALL OVER THE WORLD, INCLUDING SANDVIK ASIA LIMITED (SAL) AND WALTER TOOLS INDIA PRIVATE LIMITED (WALTER INDIA) IN INDIA. 3 . DURING THE YEAR ENDED 31 MARCH 2008, SSDAB HAS CHARGED RS.19,414,642 TO SAL AND RS 310,396 TO WALTER INDIA TOWARDS THE AFORESAID IT SUPPORT SER VICES. THE RECEIPTS TOWARDS SUCH IT SUPPORT SERVICES RENDERED BY SSDAB DO NOT FALL WITHIN THE AMBIT OF ROYALTIES OR FEES FOR TECHNICAL SERVICES WITHIN THE MEANING OF ARTICLE 12 OF THE TAX TREATY READ WITH THE PROTOCOL THERETO. 15. FURTHER IN FORM NO.3CE B, AUDITED REPORT, THE ASSESSEE IN CLAUSE 12 APPENDIX B HAS GIVEN DECLARATION IN RESPECT OF INTERNATIONAL TRANSACTIONS WITH ASSOCIATED ENTERPRISES, WHICH IS AS UNDER: - PARTICULARS IN RESPECT OF MUTUAL AGREEMENT OR ARRANGEMENT: INTERNATIONAL TRANSACTION S WITH AN ASSOCIATED ENTERPRISE OR ENTERPRISES BY WAY OF MUTUAL AGREEMENT OR ARRANGEMENT FOR THE ALLOCATION OR APPORTIONMENT OF, OR ANY CONTRIBUTION TO, ANY COST OR EXPENSE INCURRED OR TO BE INCURRED IN CONNECTION WITH A BENEFIT. SR.NO. NAME AND ADDRESS O F THE ASSOCIATED ENTERPRISE WITH WHOM THE INTERNATIONAL TRANSACTION HAS BEEN ENTERED INTO DESCRIPTION OF SUCH MUTUAL AGREEMENT OR ARRANGEMENT AMOUNT PAID/RECEIVED OR PAYABLE/RECEIVABLE IN THE TRANSACTION METHOD USED FOR DETERMINING THE ARM'S LENGTH PRICE ( SEE SECTION 92C(1) AS PER BOOKS OF ACCOUNT AS COMPUTED BY THE ASSESSEE HAVING REGARD TO THE ARM'S LENGTH PRICE (RS) (RS) CLAUSE 12(A) CLAUSE 12(B) CLAUSE 12(C) CLAUSE 12(D) ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 14 1 SANDVIK ASIA LIMITED, MUMBAI - PUNE ROAD, DAPODI, PUNE - 411012 RECEIPT FOR IT SUPPORT SERVICES 19,414,642 19,414,642 REFER NOTE 7 TO APPENDIX C 2 WALTER TOOLS INDIA PRIVATE LIMITED, MUMBAI - PUNE ROAD, DAPODI, PUNE - 411012 RECEIPT FOR IT SUPPORT SERVICES 310,396 310,396 REFER NOTE 7 TO APPENDIX C 16. IN VIEW OF THE A BOVE SAID DECLARATIONS MADE BY THE ASSESSEE WHICH HAS ALSO BEEN CONSIDERED BY THE PUNE BENCH OF TRIBUNAL IN SISTER CONCERN OF THE ASSESSEE I.E. SANDVIK INFORMATION TECHNOLOGY AB, THOUGH FOR ASSESSMENT YEAR 2005 - 06, WE HOLD THAT IN THE ABSENCE OF ANY TANGIB LE MATERIAL ESTABLISHING ESCAPEMENT OF INCOME IN THE HANDS OF ASSESSEE, THERE IS NO MERIT IN THE EXERCISE OF INVOKING OF RE - ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT. THE REASON TO BELIEVE ESCAPEMENT OF INCOME SHOULD HAVE A LIVE LINK. THERE IS NO MERIT IN THE STAND OF AUTHORITIES BELOW THAT IN THE PRESENT CASE, WHERE THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(1) OF THE ACT, THEN THE ASSESSING OFFICER HAD NO ACTION TO LOOK AT OR TO CONSIDER THE SAME. UNDER THE PROVISIONS OF THE ACT, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO COME TO FINDING ON THE BASIS OF TANGIBLE MATERIAL TO ESTABLISH HIS CASE OF REASON TO BELIEVE OF ESCAPEMENT OF INCOME; IN THE ABSENCE OF WHICH, RE - ASSESSMENT PROCEEDINGS ARE INVALID AND BAD IN LAW. ACCORDINGLY, WE H OLD SO AND CANCEL THE SAME. THE CONSEQUENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ALSO DOES NOT STAND. THUS, THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS ALLOWED AND THE BALANCE GROUNDS OF APPEAL BECOME ACADEMIC IN NATURE. 12. W E FIND THAT ISSUE RAISED IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL AND FOLLOWING THE SAME PARITY OF REASONING AS IN THE CASE OF SISTER CONCERN OF THE ASSESSEE, WE HOLD THAT IN THE ABSENCE OF ANY TANGIBLE MATERIAL ESTABLISHING ESCA PEMENT OF INCOME IN THE HANDS OF ASSESSEE, THE ASSESSING OFFICER HAS ERRED IN EXERCISE OF JURISDICTION UNDER SECTION 147 OF THE ACT BY REOPENING ASSESSMENT AFTER RECORDING REASONS. THE REASONS TO BELIEVE OF ESCAPEMENT OF INCOME SHOULD HAVE A LIVE LINK WIT H THE TANGIBLE MATERIAL AND EVEN IF THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(1) OF THE ACT, THE REQUIREMENT IS FOR THE ASSESSING OFFICER TO COME TO A FINDING ON THE BASIS OF TANGIBLE MATERIAL TO ESTABLISH HIS CASE OF REASON TO BELIEVE OF ESCAPEMEN T OF INCOME; IN THE ABSENCE OF WHICH, RE - ASSESSMENT PROCEEDINGS ARE BOTH INVALID AND BAD IN LAW. ACCORDINGLY, WE HOLD SO AND CANCEL THE RE - ASSESSMENT PROCEEDINGS INITIATED IN THE CASE OF ASSESSEE, THE CONSEQUENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 14 7 OF THE ACT DOES NOT STAND. THUS, THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS ALLOWED AND BALANCE GROUNDS OF APPEAL BECOME ACADEMIC IN NATURE. 8. IN THE FACTS OF THE PRESENT CASE BEFORE US ALSO, THE ASSESSEE HAD MADE SIMILAR DISCLOSURE OF ITS R ECEIPTS IN THE RETURN OF INCOME AND ALSO THE AUDITOR IN THE AUDIT REPORT IN FORM NO.3CEB. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS BEFORE THE TRIBUNAL IN THE CASE OF M/S. SANDVIK TOOLING SVERIGE AB ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 15 VS. DDIT (SUPRA), WE UPHOLD THE ORD ER OF CIT(A) IN HOLDING THAT REOPENING OF ASSESSMENT PROCEEDINGS IN THE ABSENCE OF ANY TANGIBLE MATERIAL TO HOLD THAT THERE WAS REASON TO BELIEVE OF ESCAPEMENT OF INCOME, THUS IS NOT VALID IN LAW. ACCORDINGLY, WE DISMISS THE APPEAL FILED BY THE REVENUE. THE CROSS OBJECTIONS FILED BY THE ASSESSEE BECOME ACADEMIC IN NATURE. 9. IN ASSESSMENT YEAR 2007 - 08, THE FACTS ARE IDENTICAL BUT THE POSITION OF APPEALS ARE REVERSE. THE REVENUE IS IN APPEAL ON MERITS OF THE CASE AND THE CROSS OBJECTIONS HAVE BEEN RAISED BY THE ASSESSEE AGAINST REOPENING OF ASSESSMENT PROCEEDINGS UNDER SECT ION 147/148 OF THE ACT. SAME REASONS FOR REOPENING THE ASSESSMENT AS IN ASSESSMENT YEAR 2006 - 07 HAVE BEEN RECORDED, WHICH ARE PLACED AT PAGES 16 AND 17 OF THE PAPER BOOK. THE ASSESSEE HAD DECLARED THE SAID RECEIPTS IN ITS COMPUTATION OF INCOME AND CLAIME D THEM TO BE EXEMPT AND SIMILAR DECLARATION WAS MADE BY THE AUDITOR IN THE AUDIT REPORT. THUS, APPLYING THE RATIO AS IN THE PARAS HEREINABOVE, WE ALLOW THE CROSS OBJECTIONS RAISED BY THE ASSESSEE AGAINST JURISDICTIONAL ISSUE. THE APPEAL FILED BY THE REVE NUE BECOMES ACADEMIC IN NATURE. 10. NOW, COMING TO THE APPEAL IN ASSESSMENT YEAR 2008 - 09, WHICH IS ASSESSEES APPEAL WHERE GROUND OF APPEAL NO.1 IS AGAINST RE - ASSESSMENT PROCEEDINGS AND THE GROUNDS OF APPEAL NO.2 AND 3 ARE AGAINST ADDITION MADE ON MERITS. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT ARE PLACED AT PAGES 9 TO 11 AND ARE SIMILAR TO THE EARLIER YEARS AND FOLLOWING THE SAME PARITY OF REASONING AS IN EARLIER YEARS, WE HOLD THAT RE - ASSESSMENT PROCEEDINGS COMPLETED IN THE CASE ARE INVALID AN D BAD IN LAW. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS THUS, ALLOWED AND GROUNDS OF APPEAL NO.2 AND 3 WOULD BECOME ACADEMIC IN NATURE. ITA NO S . 436 & 465 /P U N/20 1 5 ITA NO.499/PUN/2016 CO NO S . 03 & 123 /P U N/201 7 16 11 . IN THE RESULT, APPEALS OF REVENUE IN ASSESSMENT YEARS 2006 - 07 & 2007 - 08 ARE DISMISSED, CROSS OBJECTIONS FILED BY THE ASSESSEE IN ASSESSMENT YEAR 2006 - 07 BECOME ACADEMIC, CROSS OBJECTIONS FILED IN ASSESSMENT YEAR 2007 - 08 ARE ALLOWED AND THE APPEAL OF ASSESSEE IN ASSESSMENT YEAR 2008 - 09 IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 23 RD DAY OF JANUARY , 201 8 . SD/ - SD/ - ( ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 23 RD JANUARY, 2018 GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APP ELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A PPEALS ) - 13 , PUNE ; 4. / THE CIT - I T/TP , PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE