ACIT, Circle-2(2),Hyderabad, Hyderabad V. TNS India Pvt Ltd., Hyd, Hyderabad

ITA 515/HYD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2580 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P CHANDRA SEKHAR
• Keywords: Capital asset; Depreciation; Transfer pricing; Search and seizure; Audit objection; Period of limitation; Assessment record; Reason to believe
• Section: 45(2); 143(3); 147; 148; 139

Judgement Text

ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 1 OF 20 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.515/HYD/2015 (ASSESSMENT YEAR: 2005-06) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 2(2) HYDERABAD VS M/S. TNS INDIA PRIVATE LTD HYDERABAD PAN: AABCN 2278 C (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI P. CHANDRA SEKHAR, DR FOR ASSESSEE : SHRI RAVI BHARADWAJ O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2005-06. THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT (A)-2 HYDERABAD, DATED 23 RD FEBRUARY, 2015. THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL: 1.THE CIT(A) ERRED ON FACTS AND IN LAW IN QUASHING THE RE-OPENING OF ASSESSMENT U/S.147 OF THE IT ACT 2. THE CIT(A) OUGHT TO HAVE DECIDED THE CASE BASED ON THE MERITS OF THE CASE. 3. THE CIT(A) HAS ERRED IN QUASHING THE RE-OPENED ASSESSMENT ON THE BASIS THAT RE-OPENING WAS DONE BASED ON THE AUDIT OBJECTION. THE CIT(A) HAS FAILED TO NOTE THAT THE HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME VS. PVS BEEDIES PVT. LTD. 237 ITR 13, HELD THAT THE RE-OPENING OF THE DATE OF HEARING : 19.06.2017 DATE OF PRONOUNCEMENT : 13.09.2017 ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 2 OF 20 CASE ON THE BASIS OF FACTUAL INFORMATION GIVEN BY THE AUDIT PARTY IS VALID IN LAW. 4. ANY OTHER GROUND THAT MAY BE TAKEN UP AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, WHICH IS ENGAGED IN THE BUSINESS OF MARKET RESEARCH AND DATA PROCESSING, FILED ITS RETURN OF INCOME ON 23.3.2006 ADMITTING TAXABLE INCOME AT RS.6,25,76,413. THE RETURN WAS IN ITIALLY PROCESSED U/S 143(1) OF THE I.T. ACT AND SUBSEQUENT LY SELECTED FOR SCRUTINY AND THE ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED ON 15.12.2008 ASSESSING THE INCOME AT RS.8,8 1,69,093 AFTER MAKING ADDITION OF THE PROPOSED ADJUSTMENT BY THE TPO U/S 92CA OF THE ACT. SUBSEQUENTLY, THE INTERNAL AUDIT D EPARTMENT OF THE REVENUE RAISED AUDIT OBJECTIONS AND ON THE BASI S OF THE SAID OBJECTIONS, THE CASE WAS REOPENED U/S 147 OF THE I. T. ACT BY ISSUANCE OF NOTICE U/S 148 DATED, 26.03.2013. THE A SSESSEE, VIDE ITS LETTER DATED 25.4.2012, SUBMITTED ITS REPLY STA TING THAT ACCORDING TO ITS INFORMATION AND KNOWLEDGE, NO INCO ME HAS ESCAPED ASSESSMENT IN RELATION TO THE RELEVANT A.Y A ND THEREFORE, THE INITIATION OF PROCEEDINGS U/S 147 IS NOT WARRAN TED. WITHOUT PREJUDICE TO THE SAID CONTENTION, THE ASSESSEE ALSO CONTENDED THAT THE RETURN ALREADY FILED ON 23.3.2006 BE TREATED AS A RETURN IN RESPONSE TO THE NOTICE U/S 148 AND REQUESTED THE AO TO PROVIDE THE REASONS RECORDED FOR REOPENING OF THE ASSESSMEN T TO IT. IN RESPONSE TO THE SAME, THE REASONS FOR REOPENING OF THE ASSESSMENT WERE FURNISHED TO THE ASSESSEE AND THE A SSESSEE FILED ITS OBJECTIONS AGAINST SUCH REOPENING. VIDE ORDER DATED 11.3.2013, THE AO DISPOSED OFF THE PRELIMINARY OBJE CTION RAISED BY ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 3 OF 20 THE ASSESSEE AND THEREAFTER COMPLETED THE ASSESSMEN T BY MAKING VARIOUS DISALLOWANCES AND THE CONSEQUENT ADDITIONS TO THE RETURNED INCOME OF THE ASSESSEE. AGGRIEVED, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) RAISING THE GROUNDS AG AINST THE VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS AND ALSO AGAINST THE MERITS OF THE ADDITIONS. FURTHER, THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND THAT THE LEARNED AO HAS ERRED IN INITIATING THE RE-ASSESSMENT PROCEEDINGS BASED ON AUDIT OBJECTION. IN SUPPORT OF THE GROUNDS RAISED, THE ASSESSEE FILED DETAILED SUB MISSIONS BEFORE THE CIT (A). THE CIT (A) OBSERVED THAT THE GROUNDS 1, 2 AND 10 ARE AGAINST THE VALIDITY OF THE RE-ASSESSMENT PROCEEDIN GS AND AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AT LENGTH, H E HELD THAT THE NOTICE U/S 148 ON THE BASIS OF AUDIT OBJECTION AND THE CONSEQUENT RE-ASSESSMENT PROCEEDINGS ARE VOID AB INITIO. HE RE LIED UPON VARIOUS JUDICIAL PRECEDENTS FOR COMING TO THIS CONC LUSION. HE THEREFORE, DID NOT DEAL WITH THE MERITS OF THE OTHE R GROUNDS OF APPEAL RAISED BY THE ASSESSEE ON MERITS OF THE ADDI TIONS. AGAINST THE RELIEF GIVEN BY THE CIT (A) BY QUASHING THE RE- ASSESSMENT PROCEEDINGS AS VOID AB INITIO, THE REVENUE IS IN AP PEAL BEFORE US BY RAISING THE ABOVE GROUNDS OF APPEAL. 3. THE LEARNED DR, WHILE SUPPORTING THE ORDER OF TH E AO SUBMITTED THAT THE ASSESSEE HAS FILED THE RETURN BE LATEDLY ON 23.3.2006 WHEREAS THE ASSESSEE OUGHT TO HAVE FILED IT BEFORE 30.09.2005. HE SUBMITTED THAT THE ASSESSEE NOT ONLY HAS TO FILE THE RETURN BUT HAS TO DISCLOSE TRULY AND FULLY ALL THE MATERIAL FACTS RELEVANT FOR THE ASSESSMENT OF ITS INCOME. HE DREW OUR ATTENTION TO FORM NO.3CED AT PAGE 11 OF THE PAPER BOOK FILED B Y THE REVENUE AND INTERNAL PAGE NO.7 THEREOF, WHEREIN THE ASSESSEE WAS ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 4 OF 20 REQUIRED TO DECLARE AS TO WHETHER THE ASSESSEE HAS DEDUCTED THE TAX AT SOURCE AND PAID THE AMOUNT TO THE CENTRAL GO VT. IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII B OF THE ACT. HE ALSO DREW OUR ATTENTION TO THE REPLY OF THE ASSESSE E TO THE AOS QUESTIONNAIRE YES, BUT THERE WAS A SHORT DELAY IN PAYMENT. HE SUBMITTED THAT THIS SUBMISSION OF THE ASSESSEE IS I NCORRECT IN SO FAR AS THE PAYMENT TO THE GOVERNMENT WAS IN THE SUB SEQUENT FINANCIAL YEAR AND NOT IN THE RELEVANT FINANCIAL YE AR. HE SUBMITTED THAT THE RELEVANT DOCUMENTS WITH REGARD TO TDS MADE AND REMITTED WERE NOT FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS BUT WERE FILED ONLY DURING THE RE-ASSES SMENT PROCEEDINGS. HE HAS ALSO DRAWN OUR ATTENTION TO THE RELEVANT COPIES OF FORM-16 WHICH ARE PLACED AT PAGES 62 TO 64 OF THE PAPER BOOK FILED BY THE REVENUE TO DEMONSTRATE THAT THE D UE DATES OF PAYMENT DURING THE RELEVANT FINANCIAL YEAR ARE 23.0 9.2004, 30.11.2004 AND 22.11.2004 BUT THE PAYMENT INTO THE GOVT. A/C WAS MADE ON 19.07.2005 IN ALL THE THREE CASES. THUS , ACCORDING TO HIM, THERE IS NO TRUE AND FULL DISCLOSURE OF ALL THE MATERIAL FACTS BY THE ASSESSEE WHILE FILING THE RETURN OF INCOME O R DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT. AS RE GARDS THE ASSESSEES CONTENTION THAT THE RE-ASSESSMENT IS ON THE BASIS OF AN AUDIT OBJECTION AND THEREFORE IS NOT SUSTAINABLE, T HE LEARNED DR SUBMITTED THAT THE AUDIT OBJECTIONS ARE THE INFORMA TION BROUGHT TO THE NOTICE OF THE AO ABOUT THE ESCAPEMENT OF INCOME AND THE AO HAS VERIFIED THE ASSESSMENT RECORDS PURSUANT TO SUC H AUDIT OBJECTION BEFORE FORMING THE OPINION THAT THERE IS ESCAPEMENT OF INCOME AND IT IS ONLY THEREAFTER, THAT THE AO HAS I SSUED NOTICE U/S 148 OF THE ACT. IN SUPPORT OF HIS CONTENTION THE AU DIT OBJECTION ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 5 OF 20 CAN BE CONSIDERED AS INFORMATION FOR REOPENING OF A N ASSESSMENT, THE LEARNED DR PLACED RELIANCE UPON THE FOLLOWING D ECISIONS: I) CIT VS. PVS BEEDIES PVT. LTD REPORTED IN (1999) 237 ITR 0013. II) INDIAN & EASTERN NEWSPAPER SOCIETY V. CIT [1979 ] 119 ITR 996 (S.C) III) CIT COCHIN VS. NATIONAL TYRES & RUBBER CO. OF INDIA LTD REPORTED IN (2011) 15 TAXMANN.COM 3 (KER.) THUS, ACCORDING TO HIM, THE ORDER OF THE CIT (A), H OLDING THE RE- ASSESSMENT PROCEEDINGS TO BE VOID AB INITIO , HAS TO BE SET ASIDE AND PRAYED THAT THE MATTER MAY BE REMITTED TO THE C IT (A) WITH A DIRECTION TO DECIDE THE APPEAL ON MERITS OF THE ADD ITIONS CHALLENGED BY THE ASSESSEE. 4. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITT ED THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME DISCLOSING ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF ITS INCOME. H E SUBMITTED THAT THE NOTICE U/S 148 HAS BEEN ISSUED AFTER EXPIR Y OF FOUR YEARS FROM THE END OF THE RELEVANT A.Y AND THEREFORE, THE PROVISO TO SECTION 147 OF THE ACT WOULD APPLY. HE SUBMITTED TH AT THE AUDIT PARTY HAS RAISED THE OBJECTIONS AFTER VERIFYING THE ASSESSMENT RECORDS OF THE ASSESSEE AND THEREFORE, IT IS CLEAR THAT ALL THE RELEVANT FACTS WERE PART OF THE RECORD AND NO NEW M ATERIAL HAS COME TO THE KNOWLEDGE OF THE AO TO FORM A BELIEF TH AT THE INCOME HAS ESCAPED ASSESSMENT. HE SUBMITTED THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT OF ITS INCOME AND IN SUCH ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 6 OF 20 CIRCUMSTANCES, THE REOPENING OF THE ASSESSMENT AFTE R THE LAPSE OF FOUR YEARS ON THE BASIS OF AUDIT OBJECTION IS BAD I N LAW. HE ALSO SUBMITTED THAT THE AO, WHILE RECORDING THE REASONS FOR REOPENING, HAS VERBATIM REPRODUCED THE OBJECTIONS RAISED BY TH E REVENUE AND HAS NOWHERE RECORDED THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS. HE SUBMITTED THAT IT IS ONLY WHILE DISPOSING THE ASSES SEES OBJECTIONS AGAINST THE RE-ASSESSMENT, THAT THE AO HAS MENTIONE D THAT THE ASSESSEE HAS FAILED TO DISPOSING FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR ASSESSMENT OF ITS INCOME. HE SUBMITTE D THAT THE REQUIREMENT OF THE LAW IS THAT THE AO HAS TO BE SAT ISFIED AT THE TIME OF RECORDING THE REASONS ITSELF THAT THE ASSES SEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. HE ALS O SUBMITTED THAT THE REVENUE HAS NOT RAISED ANY GROUND BEFORE THIS T RIBUNAL THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND THEREFORE, THE LEARNED DR CANNOT NOW RAISE A GR OUND THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT O F ITS INCOME. 5. THE ASSESSEE HAS ALSO FILED A PAPER BOOK CONSIST ING OF THE COPIES OF THE JUDICIAL PRECEDENTS IN SUPPORT OF ITS CONTENTION. AS REGARDS THE DRS RELIANCE UPON THE DECISION OF T HE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. PVS BEEDIES PV T. LTD AND ALSO INDIAN & EASTERN NEWSPAPER SOCIETY V. CIT (CIT ED SUPRA), THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THO SE DECISIONS WERE ON THE PROVISIONS OF SECTION 147(B) OF THE ACT WHICH EXISTED AT THAT POINT OF TIME, WHEREAS THE SECTION 147 HAS UNDERGONE AMENDMENT BY INTRODUCTION OF THE PROVISO TO SECTION 147 AND THEREFORE, ACCORDING TO HIM, THOSE DECISIONS CANNOT BE APPLIED TO ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 7 OF 20 THE CASE BEFORE US FOR POST AMENDED PERIOD OF THE A .Y 2005-06. THEREFORE, ACCORDING TO HIM, THOSE DECISIONS ARE NO T APPLICABLE TO THE FACTS OF THE CASE BEFORE US. THE DECISIONS RELI ED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, IN SUPPORT OF ITS CONTENTIONS ARE AS UNDER: A) HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT- III VS. LGE & C-NCC (JT. VENTURE) IN ITTA NO.390 OF 2014 B) HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. ARVIND REMEDIES LTD (2015) (93 CCH 121) C) HON'BLE SUPREME COURT IN THE CASE OF CIT V. BHAN JI LAVJI (1971) (79 ITR 582) D) HON'BLE SUPREME COURT IN THE CASE OF CIT VS. LUC AS T.V.S. LTD (2001) (249 ITR 306) E) HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DRM ENTERPRISES (2014) (230 TAXMAN 61) 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE QUESTION BEFORE US IS W HETHER THE RE- ASSESSMENT PROCEEDINGS HAVE BEEN INITIATED ONLY ON THE BASIS OF THE AUDIT OBJECTION WITHOUT ANY APPLICATION OF MIND BY THE AO AND WHETHER THE RE-ASSESSMENT U/S 147 IS VALID IN LAW. UNDISPUTEDLY, THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMP LETED U/S 143(3) OF THE I.T. ACT BY ORDERS DATED 15.12.2008 A ND THE NOTICE U/S 148 IS DATED 26.3.2013. THE RELEVANT A.Y 2005-06 ENDED ON 31.03.2006. THEREFORE, THE REOPENING OF THE ASSESSM ENT IS CLEARLY AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RE LEVANT A.Y AND IN SUCH CIRCUMSTANCES, THE PROVISO TO SECTION 147 OF T HE ACT WOULD APPLY. IT IS ALSO NOT IN DISPUTE THAT THE AUDIT PAR TY HAS RAISED OBJECTIONS AND THE AO REPLIED TO THE SAID OBJECTION S STATING THAT THE ISSUE RELATING TO THE ISSUANCE OF LICENSE FEE A ND ROYALTY PAYMENT HAVE BEEN CONSIDERED BY THE TPO DURING THE TRANSFER PRICING PROCEEDINGS AND FOR THE OBJECTIONS RELATING I.E. 1 TO 4, THE ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 8 OF 20 AO WHILE SCRUTINIZING THE FILE WOULD HAVE VERIFIED THE SAME BUT THE OBJECTIONS RAISED BY THE RAP NEEDS VERIFICATION AND THEREFORE, REQUESTED THE CIT-II HYDERABAD FOR DIRECTIONS TO TA KE NECESSARY REMEDIAL ACTION. THE OBJECTIONS OF THE AUDIT PARTY ARE THE INFORMATION BROUGHT TO THE NOTICE OF THE AO. IT IS A SETTLED POSITION OF LAW THAT THE INFORMATION CAN BE BROUGHT TO THE N OTICE OF THE AO FROM ANY SOURCE INCLUDING THE AUDIT PARTY, BUT FOR INITIATING THE RE-ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT, THE A O HAS TO INDEPENDENTLY APPLY HIS MIND TO FORM AN OPINION/BEL IEF THAT THERE IS ESCAPEMENT OF INCOME. FURTHER, WHERE THE PROVISO TO SECTION 147 APPLIES, THE AO HAS TO FURTHER RECORD THAT THE ESCAPEMENT OF INCOME IS DUE TO THE FAILURE OF THE ASSESSEE TO DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT O F ITS INCOME. THE REASONS FOR REOPENING THE ASSESSMENT HAVE BEEN FILED BEFORE US IN THE PAPER BOOK FILED BY THE ASSESSEE AT PAGE 3 OF THE PAPER BOOK CONTAINING JUDICIAL PRECEDENTS (VOL.-I) AND IT IS NOTICED THEREFROM THAT THE AUDIT OBJECTIONS ARE REPRODUCED THEREIN AS REASONS FOR REOPENING OF THE ASSESSMENT AND THERE I S NO WHISPER OF THE FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AN D TRULY ALL MATERIAL FACTS. FOR THE SAKE OF CLARITY AND READY REFERENCE, THEY ARE REPRODUCED HEREUNDER: SUB: REASONS FOR THE RE-OPENING OF ASSESSMENT II/S.147 OF I.T. ACT 1961 - IN YOUR CASE - ASS YEAR 2005-06 - COMMUNICATING - REG. THE REASONS FOR RE-OPENING. OF ASSESSMENT U/S.147 O F THE INCOME TAX ACT, 1961, FOR THE ASST. YEAR 2005-0 6, ARE FURNISHED AS UNDER:- IT IS NOTICED THAT: ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 9 OF 20 1) VIDE SCHEDULE-F (D) OTHER CURRENT ASSETS: THAT THE ASSESSEE COMPANY WAS IN RECEIPT OF RS.1 ,93,35,049/- AS 'ACCRUED INCOME'. HOWEVER, AS SEEN FROM THE P & L ACCOUNT, THE SAID ACCRUED INCOME WAS NOT ACCOUNTED FOR THOUGH THE ASSESSEE WAS FOLLOWING MERCANTILE METHOD OF ACCOUNTING. THEREFORE , THE ACCRUED INCOME OF RS. 1,93,35,049/-- ESCAPED ASSESSMENT. 2) IT IS NOTICED VIDE SCHEDULE-I 'ADMINISTRATIVE COST ' FORMING PART OF THE P & L ACCOUNT, THE ASSESSEE COMPANY DEBITED AN AMOUNT OF RS.2,50,63,559/- TOWARDS 'LICENCE FEES' (RS.L,60,41,152/- TOWARDS LICENCE FEE PAYMENT FOR USING 'CENTRAL AUTO TECHNOLOGY' AND RS.90,,22,405/- TOWARDS 'BUSINESS SOLUTIONS LICENSE FEE PAYMENT'). THE PAYMENTS WERE MADE TO ASSOCIATED ENTERPRISES/GROUP NAMELY M/S.TNS U.K LTD AND M/S.TNS SINGAPORE P. LTD. THE PAYMENTS ATTRACTS THE PROVISIONS OF SECTION 40(A)(I ) AND SECTION 195 OF THE ACT. FURTHER, AS SEEN FROM THE NATURE OF PAYMENT THE 'LICENCE FEE' HAD AN ENDURING BENEFIT TO THE ASSESSEE COMPANY ON ITS USAGE IN THE DAY TO DAY BUSINESS ACTIVITY. HENCE, IN VIEW OF THE NATURE OF BUSINESS AND NATURE OF PAYMENT MADE FOR ACQUIRING 'LICENCE FEE' FROM GROUP COMPANIES, THE SAID EXPENDITURE NEEDS TO BE CAPITALIZED UNDER 'INTANGIBLE ASSETS' AND DEPRECIATION @ 25% ON RS.2,50,63,559/- AMOUNTING TO RS.62,65,890/- IS ONLY ALLOWABLE AND THE BALANCE OF RS.L,87,97,669/- NEEDS TO BE BROUGHT TO TAX. 3) IT IS OBSERVED FROM SCHEDULE-I - ADMINISTRATIVE COS T THAT AN AMOUNT OFRS.L,14,58,641/- WAS DEBITED TOWARDS 'ROYALTY PAYMENT' (INCLUDING THE CENTRAL GROUP SERVICE CHARGES) MADE TO GROUP COMPANIES. IN THE ABSENCE OF DETAILS OF TDS MADE U/S 195 ON 'ROYALTY PAYMENT' IT WOULD ATTRACT PROVISION OF SECT ION 40(A)(I) AND THE ENTIRE EXPENDITURE NEEDS TO BE DISALLOWED AND BROUGHT TO TAX. 4) THE ASSESSEE COMPANY WAS ALLOWED A TDS CREDIT OF RS.L,91,36,242/-. HOWEVER, AS PER THE ASSESSMENT ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 10 OF 20 RECORD, THE AVAILABLE TDS CERTIFICATES WERE ONLY 17, WHOSE GROSS RECEIPTS WORKED OUT TO RS.99,49,738/- AND THE CORRESPONDING TAX CREDIT WORKED OUT RS.4,90,752/-. THE DETAILS FOR REMAINING TDS CREDIT ARE NOT FORTHCOMING FROM THE ASSESSMENT RECORD. ALSO AS SEEN FROM SCHEDULE-F (D) - CURRENT ASSETS, LOANS AND ADVANCES, THE ASSESSEE COMPANY HAD RECEIVED TDS CREDIT WORTH RS.10,13,44,415/-. OUT OF THIS RS.L,91,36,242/- WAS ALLOWED IN THE SCRUTINY ORDER. THE DETAILS OF ENTIRE TURNOVER COULD NOT BE CORRECTLY ASCERTAINED. 7. WE HAVE ALSO PERUSED THE AUDIT OBJECTIONS PLACED AT PAGES 1 & 2 OF THE PAPER BOOK FILED BY THE ASSESSEE AND FIND THAT THE AUDIT OBJECTIONS ONLY ARE RECORDED AS REASONS F OR REOPENING AND THE AO HAS NOT RECORDED THAT THERE IS ESCAPEMEN T OF INCOME WHICH IS DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IT IS ALSO NOT CLEAR WHETHER HE HAS VERIFIED THE ASSESSMENT RECORD BEFORE FORMING A BEL IEF THAT THERE IS ESCAPEMENT OF THE INCOME ON THE GROUNDS ON WHICH TH E AUDIT PARTY HAS RAISED THE OBJECTIONS. IN THE LIGHT OF AB OVE FACTS AND CIRCUMSTANCES, LET US NOW EXAMINE THE APPLICABILITY OR OTHERWISE OF THE RATIOS OF THE DECISIONS RELIED UPON BY BOTH THE PARTIES TO THE FACTS OF THE CASE BEFORE US. THE LEARNED DR HAS REA D OUT EXTENSIVELY FROM THE FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTIONS. (I) CIT VS. PVS BEEDIS PVT. LTD (237 ITR 13 (S.C) THE HON'BLE SUPREME COURT IN THIS CASE, WHILE CONSIDERING THE MEANING OF SECTION 147(B) OF THE AC T HELD THAT THE INFORMATION GIVEN BY THE INTERNAL AUDIT PARTY COULD BE TREATED AS ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 11 OF 20 INFORMATION AND THE REOPENING OF THE CASE ON THE BA SIS OF SUCH INFORMATION WAS VALID IN LAW. SECTION 147(B) AT THE RELEVANT POINT OF TIME READ AS UNDER: IF- (A).. (B) NOTWITHSTANDING THAT THERE HAS BEEN NO OMISSION OR FAILURE AS MENTIONED IN CLAUSE (A) ON THE PART OF THE ASSESSEE, THE 96A(ASSESSING) OFFICER HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY A.Y, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE, AS THE CASE MAY BE, FOR THE A.Y CONCERNED (HEREAFTER IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT A.Y. 8. THUS, IT IS CLEAR THAT AT THE RELEVANT POINT OF TIME I.E. PRIOR TO 1.4.1989, THE AO HAD THE POWER TO REOPEN T HE ASSESSMENT WITHOUT ANY TIME LIMIT EVEN WHERE THE ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS TRULY AND FULLY. SUBSEQUENT TO THE I NTRODUCTION OF THE PROVISO TO SECTION 147, THE AO HAS THE POWER TO REOPEN THE ASSESSMENT ONLY ON SATISFACTION OF THE CONDITIONS M ENTIONED THEREIN. THUS, BY VIRTUE OF THIS AMENDMENT, THE POW ER HITHERTO VESTED WITH THE AO ARE SUBJECT TO THE CONDITIONS ME NTIONED IN THE PROVISO. WE ARE, THEREFORE, SATISFIED THAT THE DECI SION OF THE HON'BLE SUPREME COURT IN THE ABOVE CASE IS APPLICAB LE ONLY TO THE EXTENT THAT AUDIT OBJECTION CAN BE CONSIDERED AS IN FORMATION BROUGHT TO THE NOTICE OF THE AO AND NOT FOR THE PRO POSITION ADVANCED BY THE LEARNED DR THAT AN ASSESSMENT CAN B E REOPENED ON THE BASIS OF AN AUDIT OBJECTION. ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 12 OF 20 (II) INDIAN & EASTERN NEWS PAPERS AND SOCIETY V. CIT (119 ITR 996)(S.C) THE HON'BLE SUPREME COURT IN THIS CASE, HAS HELD TH AT THOUGH THE AUDIT PARTY DOES NOT POSSESS THE POWER TO PRONOUNCE ON THE LAW, IT NEVERTHELESS MAY DRAW THE ATTENTION OF THE ITO T O IT AND WHEN SUCH INFORMATION IS BROUGHT TO HIS NOTICE, THE INCO ME TAX OFFICER MUST DETERMINE FOR HIMSELF WHAT IS THE EFFECT AND C ONSEQUENCE OF THE LAW MENTIONED IN THE AUDIT NOTE AND WHETHER IN CONSEQUENCE OF THE LAW WHICH HAS NOW COME TO HIS NOTICE, HE CAN REASONABLY BELIEVE THAT THE INCOME HAS ESCAPED THE ASSESSMENT AND THE BASIS OF HIS BELIEF MUST BE THE LAW WHICH HE HAS NOW BECO ME AWARE. THE HON'BLE SUPREME COURT HAS FURTHER HELD THAT THE TRU E EVALUATION OF LAW IN ITS BEARING ON THE ASSESSMENT MUST BE MAD E DIRECTLY AND SOLELY BY THE ITO. WE FIND THAT THE HON'BLE SUPREM E COURT IN THIS CASE ALSO WAS DEALING WITH THE PROVISIONS OF SECTIO N 147(B) OF THE ACT. FURTHER, AS HELD BY THE APEX COURT, IT IS THE AO WHO HAS TO BE SATISFIED THAT THE INCOME HAS ESCAPED ASSESSMENT AND CANNOT SOLELY RELY UPON THE AUDIT OBJECTION TO REOPEN AN A SSESSMENT. WE FIND THAT THIS DECISION IS IN FACT IN FAVOUR OF THE ASSESSEE. (III) CIT VS. NATIONAL TYRES AND RUBBER CO. OF INDIA LTD (202 TAXMANN 625) (KERALA) IN THIS CASE, THE HON'BLE KERALA HIGH COURT WAS CON SIDERING THE CASE OF AN ASSESSEE WHOSE ASSESSMENT FOR THE A.Y 199 5-96 WAS REOPENED ON THE BASIS OF AN AUDIT OBJECTION THAT TH E CAPITAL GAIN ON CONVERSION OF CAPITAL ASSET INTO STOCK-IN-TRADE WAS NOT OFFERED TO TAX. THE HON'BLE HIGH COURT CONSIDERED THE FACT THAT IN THE SAID CASE, THE ASSESSEE HAD NOT FILED THE RETURN OF INCO ME FOR THE RELEVANT A.Y AND NEITHER DID THE AO ASSESS THE LIABI LITY UNDER THE SAID SECTION I.E. SECTION 45(2) AND IT WAS THE AUDI T PARTY WHICH ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 13 OF 20 BROUGHT TO THE NOTICE OF THE AO THAT THE INCOME CHA RGEABLE TO TAX U/S 45(2) HAS NOT BEEN ASSESSED FOR THE A.Y 1995-96 BECAUSE IN THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAD SOLD M AJOR PORTION OF THE LAND AND BUILDING THEREON HELD BY IT AND THAT IT WAS ORIGINALLY THE CAPITAL ASSET WHICH WAS TRANSFERRED OR CONVERTE D INTO STOCK-IN- TRADE IN THE YEAR 1992-93 LEADING TO A GOOD AMOUNT OF PROFIT TO THE ASSESSEE. IT WAS IN THESE CIRCUMSTANCES, THAT T HE HON'BLE HIGH COURT HELD THAT SO LONG AS INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT AND THE AO HAS REASON TO BELIEVE SO, WHETHER SUO MOTO FOUND BY HIM FROM RECORD OR BROUGHT TO ITS NOT ICE BY AUDIT PARTY, THE AO WILL BE JUSTIFIED IN REVISING THE ASS ESSMENT WITHIN THE PERIOD OF LIMITATION PROVIDED THEREIN. IT WAS F URTHER HELD THAT THE RE-ASSESSMENT IN THE SAID CASE WAS WITHIN THE P ERIOD OF 4 YEARS, WHEREAS, IN THE CASE BEFORE US, THE REOPENIN G OF THE ASSESSMENT IS BEYOND 4 YEARS. THEREFORE, IN OUR OPI NION, THIS DECISION IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. (IV) HARYANA AGRO INDUSTRIES CORPORATION LTD VS. CIT REPORTED IN (2016) (385 ITR 488 (P&H) IN THIS CASE, THE HON'BLE PUNJAB & HARYANA HIGH COU RT WAS CONSIDERING THE CASE OF REOPENING OF THE ASSESSMENT ON THE BASIS OF AUDIT OBJECTION WITHIN A PERIOD OF 4 YEARS AND T HEREFORE, THE SAID DECISION IS ALSO NOT APPLICABLE TO THE FACTS O F THE CASE BEFORE US. (V) FRANCHISE INDIA HOLDINGS LTD VS. ACIT REPORTED IN (2016) (388 ITR 563) (P&H) (VI) DALMIYA BROTHERS (P) LTD VS. CIT REPORTED IN (2011) (204 TAXMAN 83) (DEL.) ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 14 OF 20 IN THIS CASE THE HON'BLE DELHI HIGH COURT WAS DEALI NG WITH A CASE WHERE DURING THE ASSESSMENT PROCEEDINGS THE AO HAD ASKED THE ASSESSEE TO FURNISH COMPLETE DETAILS/CONFIRMATION I N RESPECT OF SUNDRY CREDITORS AMOUNTING TO RS.1,66,37,402 WHILE THE ASSESSEE SUBMITTED CONFIRMATION IN RESPECT OF THE PART OF T HE CREDITORS ONLY AND FOR THE BALANCE, THE AUDIT OBJECTION WAS RAISED ON THE BASIS OF WHICH THE ASSESSMENT WAS REOPENED AND THE HON'BLE H IGH COURT HAS HELD THAT THE RE-ASSESSMENT WAS VALID. THIS CAS E, IN OUR VIEW, IS DISTINGUISHABLE ON FACTS. (VII) HVK INTERNATIONAL PVT. LTD REPORTED IN (2016) 389 ITR 630 (GUJ.) IN THIS CASE, THE HON'BLE GUJARAT HIGH COURT WAS CO NSIDERING THE CASE OF AN ASSESSEE WHERE THE RE-ASSESSMENT WAS INI TIATED AFTER A PERIOD OF 4 YEARS. IN THIS CASE, THERE WAS A SEARCH AND SEIZURE OPERATION DURING WHICH, THE MATERIAL WAS FOUND AND SEIZED ON THE BASIS OF WHICH THE ASSESSMENT HAS BEEN REOPENED. TH IS IS THE CASE WHERE FRESH INFORMATION HAS BEEN BROUGHT ON RE CORD BY THE INVESTIGATION WING AND THAT IS THE BASIS FOR REOPEN ING OF THE CASE AFTER A PERIOD OF 4 YEARS. THEREFORE, THE FACTS OF THIS CASE ARE ALSO DISTINGUISHABLE FROM THE FACTS OF THE CASE BEFORE U S. (VIII) ABC CLASSES PRS VS. PR.CIT REPORTED IN (2016) (387 ITR 119) (ALLAHABAD) IN THIS CASE ALSO, THE BASIS FOR REOPENING OF THE A SSESSMENT IS THE INFORMATION GATHERED BY THE EXCISE DEPARTMENT FROM THE STATEMENT OF PARTNERS DURING A SEARCH. FOR THE REASO NS STATED ABOVE IN REFERENCE TO THE CASE OF HVK INTERNATIONAL PVT. LTD, THIS CASE IS ALSO NOT APPLICABLE TO THE FACTS OF THE CAS E BEFORE US. ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 15 OF 20 (IX) RAYMOND WOLLEN MILLS LTD VS. ITO & OTHERS (207 ITR 929) (BOMBAY) THE ASSESSMENT YEAR IN THIS CASE ARE 1967-68, 1968- 69, 1970-71 TO 1973-74 AND THE REOPENING OF THE ASSESSMENT WAS U/S 147(A) I.E. THE PRE-AMENDED PROVISIONS AND THEREFORE, THE SAME IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. (X) GIRILAL & CO. VS. ITO & OTHERS (387 ITR 122) (S.C) IN THIS CASE, THE HON'BLE SUPREME COURT WAS CONSIDE RING THE CASE OF AN ASSESSEE WHERE THE RE-OPENING OF THE ASSESSME NT WAS AFTER A PERIOD OF 4 YEARS. IN THIS CASE, THE HON'BLE SUPREM E COURT HAS CONSIDERED THE FACT THAT THERE WAS NO TRUE AND FULL DISCLOSURE OF FACTS BY THE ASSESSEE BEFORE THE AUTHORITIES. IN TH E CASE BEFORE US, THERE IS NO FINDING OF THE AO THAT THE INFORMATION WAS NOT AVAILABLE IN THE ASSESSMENT RECORDS OR THAT THERE W AS A FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS BEFORE HIM. IN SUCH CIRCUMSTANCES, WE ARE OF THE OPINION T HAT THIS DECISION ALSO IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. 9) THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAD RELIED UPON THE FOLLOWING DECISIONS: I) UNREPORTED DECISION OF HON'BLE A.P & TELANGANA HIGH COURT IN THE CASE OF CIT-II VS. LGE & C-NCC (JT.VENTURE) (ITTA NO.390 OF 2014). THE HON'BLE ANDHRA PRADESH HIGH COURT IN THIS CASE HAS HELD THAT WHERE THE PRE CONDITIONS FOR ISSUANCE OF NOTICE U/S 148 AFTER FOUR YEARS AND WITHIN SIX YEARS, NAMELY, THE ALLEGATION OF ESCAPEMENT ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 16 OF 20 OF INCOME ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 139 OR IN RESPONSE TO NOTICE ISSU ED UNDER SUB- SECTION (1) OF SECTION 147 OR SECTION 148, OR TO DI SCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSME NT FOR THAT A.Y, HAVE NOT BEEN FULFILLED, INITIATION OF PROCEEDINGS U/S 147 IS BAD IN LAW. II) HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. ARVIND REMEDIES LTD REPORTED IN (2015) (93 CCH 121) 10) THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CI T VS. ARVIND REMEDIES LTD (CITED SUPRA) HAS AT PARA 12 OF ITS ORDER HELD AS UNDER: 12. IN THE LIGHT OF THE ABOVE, WE HOLD THAT WHEN TH E ASSESSING OFFICER HAD FAILED TO RECORD ANYWHERE HIS SATISFACTION OR BELIEF THAT THE INCOME CHARGEABLE T O TAX HAD ESCAPED ASSESSMENT ON ACCOUNT OF THE FAILURE OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT. ON THE CONTRARY, IT WAS T HE ASSESSING OFFICER, WHO FAILED TO CONSIDER THE MATER IALS PLACED BEFORE HIM AT THE TIME OF REGULAR ASSESSMENT FOR WHICH THE ASSESSEE CANNOT BE FOUND FAULT WITH. THER EFORE, THE NOTICE ISSUED UNDER SECTION 147 OF THE INCOME TAX ACT BEYOND THE PERIOD OF FOUR YEARS WAS WHOLLY WITHOUT JURISDICTION AND CANNOT BE SUSTAINED. ACCORDINGLY, FOR THE REASONS STATED ABOVE, THE SUBSTANTIAL QUESTION OF L AW IS ANSWERED IN FAVOUR OF THE RESPONDENT/ASSESSEE AND AGAINST THE APPELLANT/REVENUE. III) HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF MAHALASXMI MOTORS LTD VS. DY.CIT REPORTED IN (2004) (265 ITR 53). IN THIS CASE, THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT WHERE ALL THE FACTS WERE AVAILABLE BEFORE THE ASSES SING AUTHORITY WHILE MAKING THE ORIGINAL ASSESSMENT AND THE ASSESS ING AUTHORITY ALLOWED THE CLAIM, THE DEPARTMENT CANNOT REOPEN THE ASSESSMENT ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 17 OF 20 EVEN IF THERE IS LOSS OF REVENUE OR EVEN IF LEGAL I NFERENCES DRAWN BY THE ASSESSEE IS ERRONEOUS IN THE FIRST PLACE WHEN F ULL AND TRUE DISCLOSURE OF THE FACTS WAS MADE BY THE ASSESSEE. IV) HON'BLE SUPREME COURT IN THE CASE OF ITO VS. LAKHMANI MEWAL DAS REPORTED IN (1976) 103 ITR 437. IN THE CASE OF INCOME TAX OFFICER VS. LAKHMANI MEWA L DAS REPORTED IN (1976) (103 ITR 437), THE HON'BLE SUPRE ME COURT HELD THAT THE EXPRESSION REASON TO BELIEVE DOES NOT ME AN A PURELY SUBJECTIVE SATISFACTION ON THE PART OF THE ITO BUT THE REASONS MUST BE HELD IN GOOD FAITH V) HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BHA NJI LAVJI REPORTED IN (1971) 79 ITR 582. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BH ANJI LAVJI (CITED SUPRA) HAS HELD WHERE ITO HAS PASSED AN ORDE R HOLDING THAT THE ASSESSEE HAS NO INCOME CHARGEABLE TO TAX I N BRITISH INDIA, WITH FULL KNOWLEDGE, HE COULD NOT SEEK TO RE ASSESS THE ASSESSEE ON THE GROUND OF FAILURE TO DISCLOSE FULLY AND TRULY THE FACTS NECESSARY FOR THE ASSESSMENT OF HIS INCOME. VI) HON'BLE SUPREME COURT IN THE CASE OF CALCUTTA DISCOUNT CO. V. ITO [1961] 41 ITR 191 (SC) 11) IN THIS CASE, THE HON'BLE SUPREME COURT HAS HEL D THAT IT IS THE DUTY OF THE ASSESSEE TO DISCLOSE THE PRIM ARY FACTS RELEVANT TO THE DECISION OF THE QUESTION BEFORE THE ASSESSIN G AUTHORITY AND ONCE ALL THE PRIMARY FACTS ARE BEFORE THE AO, HE RE QUIRES NO FURTHER ASSISTANCE BY WAY OF DISCLOSURE. IT IS HELD THAT IT IS FOR THE AO TO DECIDE WHAT INFERENCES OF FACTS CAN BE REASON ABLY DRAWN AND WHAT LEGAL INFERENCES HAVE ULTIMATELY TO BE DRA WN AND IT IS ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 18 OF 20 NOT FOR SOMEBODY ELSE FAR LESS THE ASSESSEE - TO TE LL THE ASSESSING AUTHORITY WHAT INFERENCES- WHETHER OF FACTS OR LAW SHOULD BE DRAWN. IT HAS ALSO BEEN HELD THAT EXPLANATION TO THE SUB-S ECTION TO SECTION 34 OF 1922 ACT HAS NOTHING TO DO WITH THE INFERENCE S TO BE DRAWN AND DEALS ONLY WITH THE QUESTION WHETHER PRIMARY MA TERIAL FACTS NOT DISCLOSED, COULD STILL BE SAID TO BE CONSTRUCTIVELY DISCLOSED ON THE GROUND THAT WITH DUE DILIGENCE, THE INCOME TAX OFFI CER HAS DISCOVERED THEM FROM THE FACTS ACTUALLY DISCLOSED. FROM THE ABOVE DECISION, IT IS CLEAR THAT THOUGH THE AUDIT PARTY C AN BRING INFORMATION TO THE KNOWLEDGE OF THE AO THAT THE INC OME OF THE ASSESSEE HAS ESCAPED THE ASSESSMENT, IT IS INCUMBEN T UPON THE AO TO RECORD A FINDING ALONG WITH THE REASONS FOR REOP ENING OF THE ASSESSMENT, THAT THE INCOME HAS ESCAPED ASSESSMENT DUE TO THE FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS FOR THE ASSESSMENT OF ITS INCOME. 12. THUS, IT IS CLEAR THAT FOR ISSUANCE OF NOTICE U /S 148 BEYOND A PERIOD OF 4 YEARS FROM THE END OF THE RELE VANT A.Y, IT WAS NECESSARY FOR AO TO RECORD THAT THE INCOME HAS ESCA PED ASSESSMENT ON ACCOUNT OF THE FAILURE OF THE ASSESSE E TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT. WE HAVE ALSO GONE THROUGH THE ORDER SHEET ENTRIES OF T HE AO PLACED AT PAGES 30 & 31 FILED BY THE REVENUE AND THERE IS NO RECORDING WHATSOEVER EVEN IN THE ORDER SHEET THAT THERE IS ES CAPEMENT OF INCOME DUE TO FAILURE OF THE ASSESSEE TO DISCLOSE T RULY AND FULLY ALL MATERIAL FACTS. THE CIT (DR) HAS TRIED TO JUSTIFY T HAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS BY DRAWING OUR ATTENTION TO THE FINA NCIALS OF THE ASSESSEE BUT IT IS THE AO WHO HAS TO RECORD THE FIN DING AND NOT THE CIT (DR). IT HAS BEEN HELD THAT THE AO HAS TO S PEAK HIS MIND ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 19 OF 20 THROUGH HIS ORDER AND IT CANNOT BE PRESUMED IN THE ABSENCE OF ANY SUCH RECORDING. 13. IN THE CASE BEFORE US ALSO, THE ASSESSEE HAS FI LED THE RETURN OF INCOME FOR THE RELEVANT FINANCIAL YEAR AN D IT IS ONLY FROM THESE DOCUMENTS THAT THE AUDIT PARTY HAS RAISED ITS OBJECTIONS. THUS, THERE IS NO NEW MATERIAL WHICH HAS COME TO TH E NOTICE OF THE AUDIT PARTY OR THE AO FOR RAISING SUCH OBJECTIO N OR FORMING A BELIEF THAT THERE IS ESCAPEMENT OF INCOME. WHEN ALL THE MATERIAL FACTS WERE PART OF THE RECORD, EVEN IF THERE IS LOS S OF REVENUE, IT CANNOT BE REASSESSED AFTER LAPSE OF FOUR YEARS FROM THE END OF THE RELEVANT A.Y UNLESS THE LOSS HAS OCCURRED DUE TO FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS. SINCE THE PRECONDITIONS FOR INITIATION OF PROCEEDIN GS U/S 147 OF THE ACT BY ISSUANCE OF NOTICE U/S 148 OF THE ACT AR E NOT SATISFIED, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT (A) AND THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 16. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH SEPTEMBER, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 13 TH SEPTEMBER, 2017. VINODAN/SPS ITA NO 515 OF 2015 TNS INDIA P LTD HYDERABAD PAGE 20 OF 20 COPY TO: 1 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 2(2), R OOM NO.513, 5 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, HYDERABAD 2 M/S. TNS INDIA PRIVATE LTD, PLOT NO.17, ROAD NO.3 , BANJARA HILLS, HYDERABAD 500034 3 CIT (A)-2 HYDERABAD 4 PR.CIT 2 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER