TMI Blog2014 (8) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration - All the material facts i.e. unrealized convertible foreign exchange before the specified date, non-inclusion of processing charges in the total turnover were duly disclosed by the assessee in the computation of deduction u/s.10B, Form No.56G filed with the original return of income and from the same material facts, the Assessing Officer in the present order worked out the excess claim u/s.10B - The details of foreign exchange realization and the processing charges were very much available on record at the time of passing the original assessment order and also at the time of passing the reassessment order. When all material facts were furnished by the assessee, even if the assessee erroneously claimed excess deduction u/s.10B, it would not be a case of failure to disclose fully and truly all materials facts unless certain additional information has come to the notice of the AO subsequent to passing of original assessment order - There is nothing on record to suggest that any new material had come on record on the date of recording the reasons, if no new information had been received by the AO - So it could not be inferred that there is failure on the part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law the Ld CIT(A) has erred in allowing assessee's appeal holding that the Assessing Officer is not justified to reopen the assessment u/s. 147 of the I. T. Act, ignoring the fact that the Assessing Officer had recorded proper reasons for reopening the assessment. 02. On facts and circumstances of the case and in law the Ld CIT(A) has erred in allowing assessee's appeal holding that the reopening of assessment u/s. 147 is not justified after expiry of four years ignoring that the Assessing Officer was well within his powers to reopen the assessment as per the provisions of section 149(b) of the I. T. Act, 1961. 03. On the facts and circumstances of the case and in law the Ld CIT(A) has erred in allowing assessee's appeal ignoring the fact that there was definite failure on the part of the assessee to disclose fully and truly all material facts related to the issue of realization of export proceeds and that of processing charges relevant for computation of deduction u/s. 10B of the I. T. Act, 1961. 04. On the facts and circumstances of the case and in law the Ld CIT(A) has erred in allowing assessee's appeal ignoring the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s.147, the Assessing Officer has to serve a notice thereunder and before issuing any notice under the said provisions he has to record reasons for doing so. The relevant provisions of section 148 are reproduced as under: 148.(1). Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. 5. The provisions of section 151 of the Act enjoins that in certain situations, no notice u/s.148 was to be issued by the Assessing Officer unless on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saving drugs and vaccines etc. The operations of the company are bifurcated into two separate units i.e. export oriented unit DTA Unit. 2. The assessee had filed return of income showing total income at ₹ 29,97,23,580/- on 31/10/2002. The original assessment in this case was completed u/s.143 (3) on 22/03/2005, determining the total income of the assessee at ₹ 33,71,86,300/-. The assessee had filed appeal against the said order and on decision of CIT(A)S the assessed income was revised to ₹ 33,26,62,127/- vide order giving effect to the order of the CIT(A) dated. 20/11/2006. Subsequently, information was received from the Board, calling for an enquiry in this case on the basis of Volcker Committee report. Based on the information received and on conducting preliminary enquiries, the Assessing Officer had issued notice u/s.148 on 28/02/2007 (after recording the reasons). During the reassessment, it was noticed by the Assessing Officer (Addl.CIT, Range-6, Pane) that the assessee had claimed expenditure of ₹ 16,98,413/- towards payment of commission to M/s. A1-Taiseer Drugstore and M/s. A1-Qak Pharmacy of Jordan, claimed to be agents of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the above chart, it is apparent that an amount of ₹ 54,83,460/- was not realized before 31/12/2002 (extn. Granted by RBI), the same was realized on 13/06/2003. Thus, as provided in Sec. 10B(3], the amount of ₹ 54,83,346/- is required to be deducted from the export turnover while working out the exemption u/s.10B. 3.2 It was further noticed that process charges amounting to ₹ 4,80,98,505/- was not included, in the total turnover of ₹ 147,45,79,782/-. In the report in farm No.56G, the Auditors have contended that the process charges do not form part of the turnover. These process charges were charged by EOU for filling ampoules and vials from DTA unit. The profit on processing activity was included while arriving at the profit of the EOU. Since processing charges are in the nature of receipts like job work, it is required to be included in the total turnover for computing deduction u/s.10B. 3.3 The reduction of unrealized FOB value has resulted in excess allowance of exemption u/s.10B to the extent of ₹ 2,43,30,358/-. 4. In view of the above, I have reasons to believe that income chargeable to tax to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record as to whether the assessee has received approval from RBI or how much of those sales proceeds have been realized are on record. The assessee was, therefore, asked to submit a detailed note along with date of realization of export sales and the amount realized. On perusal of the note, the date of extension granted by RBI and the realization date given below:- S. No. Invoice No. Inv. Value Date of invoice Due date as per 10B Dt. up to which Extn. was granted by RBI Date of realization Whether amt. realized as per Col.7 Amount realized 1 2 3 4 5 6 7 8 9 1 171055043 16302185 15/05/02 30/09/03 31/08/03 19/05/04 No 16336629 2 171052127 249248 08/01/03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to make a return u/s.139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for the assessment. Thus, for the purpose of invoking the provisions of section 147 after the expiry of four years from the end of the relevant assessment year, the income chargeable to tax should have escaped assessment by reason of failure on the part of the assessee either (i) to make a return u/s. 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or (ii) to disclose fully and truly all material facts necessary for the assessment. It is undisputed that there was no failure on the part of the assessee insofar as the first condition is concerned. Insofar as the second condition, viz. failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment is concerned, on a plain reading of the reasons recorded as extracted hereinabove, it was apparent that the reasons are totally silent with regard to any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EXPORT TURNOVER i.e. FOB Value 83126760 1392391772 Add: FOB not realized Invoice No. Amount 17105127 / 13.10.2011 2447100 17105204 / 15.03.2002 5427187 17105205 / 19.03.2002 5533395 13407685 EXPORT TURNOVER i.e. FOB Value 1405799454 Note: The FOB in respect of above invoices yet to be realised. The Company is in the process of making application to RBI for approval for extension of time limit In respect of the said amount not realised till 30.09.2002 C DEDUCTION U/S 10B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ___________x 1209531428 = 2306916249 1144889843 PROFIT CLAIMED EXEMPT U/S 10B 1144889843 PROFIT CLAIMED EXEMPT U/S 10B-90% 1030400859 8. Thus, in the case of assessee, prima facie, the reasons recorded reveals that the income has escaped assessment is based on the disclosure made by the assessee itself in the original return of income and documents accompanying the return of income. In fact, as which is evident from the reasons extracted above, the reasons recorded by the Assessing Officer begin with the sentence on going through the record , which clearly indicate that the finding is based on the details filed by the assessee in the computation of total income as reproduced hereinabove. The reasons recorded do not contain a finding to the effect that there was a failure on the part of the assessee to disclose fully and truly all necessary facts, necessary for the purpose of assessment. When all material facts were furnished by the assessee, even if the assessee erroneously claimed excess deduction u/s.10B, it would not be a case of failure to disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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