The Delhi High Court has ruled that the Revenue can reopen the assessment proceedings on change of opinion that the income of the assessee has escaped assessment.
Such re-opening of the assessment by the Income Tax department is legal where no return has been filed by the assessee for the assessment year in dispute, high court said. The court rejected the plea of Areva T&D SA (now renamed as Areva T&D SAS) which had objected to reopening of the assessment proceedings for the year 2005-06.
It had said that the income of the assessee was assessed and appropriate orders were passed which can not be reopened on the ground of change of opinion of the assessing officer.
"On a conjoint reading of sections 195 and 197 of the act (Income Tax Act), we are of the view that if any opinion is expressed at the time of grant of certificate it is tentative or provisional or interim in nature and the same would not debar the assessing officer from initiating a proceeding under section 147 of the act on the ground that there has been a change of opinion," said a bench comprising Chief Justice Dopak Misra and Justice Sanjeev Khana in its judgement on Monday.
The assessee company was awarded four contracts encompassing Onshore supply, Onshore services and Offshore supply of the equipments by Power Grid Corporation of India (PGCIL). The contracts for Onshore supply and Onshore services were given on sub contract to Areva T&D Systems India at the same price at which the said contracts were awarded to the petitioner company by PGCIL.
The PGCIL had moved an application under section 195(2) of the IT Act, with regard to the payments to be made to the assessee. The Revenue passed orders for tax deduction only in respect of the payments made to the petitioner company on Offshore contract and Onshore services contract at 10% on gross basis in respect of the payment made for training charges and 10% on gross basis in respect of the payments made for maintenance and service charges respectively and on other payments, deduction was to be made at nil rate.
The petitioner company had been regularly filing applications under section 197(1) of the act with regard to the payments to be made by PGCIL to it under various contracts. The revenue had been issuing certificates for tax deduction at source.
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