TMI Blog2014 (11) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... overted by the revenue – Decided against revenue. Validity of assessment u/s 147 - Claim of deduction U/s 80IB on Duty drawback - Held that:- The assessee’s return was only processed u/s 143(1) of the Act and there was no scrutiny assessment - in Assistant Commissioner of Income-Tax Versus Rajesh Jhaveri Stock Brokers P. Limited [2007 (5) TMI 197 - SUPREME Court] it has been held that in such case there being no assessment, no opinion has formed by the AO - if a 148 notice is issued, it does not amount to any change of opinion since there was no opinion in existence at all - the AO is duty bound to take due notice of the judgment and give remedial effect in accordance with law - Since there was no opinion, the AO rightly reopened the assessment u/s 147 of the Act - the AO has acted within the parameters of law and reopening of the assessment has been rightly initiated - the validity of the reopening assessment is upheld - the deduction U/s 80IB of the Act is also not allowable to the assessee – Decided against assessee. - I.T.A. No. 1035/JP/2011, C.O. No. 12/JP/2012 - - - Dated:- 5-11-2014 - Shri R. P. Tolani And Shri T. R. Meena,JJ. For the Petitioner : Shri Rajesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is not in proper manner as explained to us. It can be presumed that the assessee had not maintained quantitative tally of the opening stock and closing stock properly. Hence, quantitative verification of the stock cannot be made out. The difficulty to verify the purchases of raw material in meters and readymade garments were sold in pieces and shortage cannot be calculated without specific quantitative details. It is further observed that sales price per piece was less than per piece cost of manufacturing. He further relied the decision in the case of CIT Vs. British Paint India Ltd. (188 ITR 44) wherein rejection of books U/s 145(3) of the Income Tax Act, 1961 (in short the Act) held justified on the basis of valuation of closing stock. The Assessing Officer also rejected the book of the assessee and further considering the past history of the assessee, he applied 25% G.P. for the year under consideration and difference of R. 32,86,536/- was added in the income of the assessee. 3. Being aggrieved by the order of the learned Assessing Officer, the assessee carried the matter to the learned CIT(A), who had allowed the appeal by observing that the observations made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee submitted that the assessee has been maintaining regular books of account. All these books alongwith the bills and vouchers were produced before the Assessing Officer. The Assessing Officer has not pointed out any defects in the books of account. The entire addition had been made as day to day stock records was not properly maintained and the G.P. rate declined during the year compared to preceding year. He further argued that the assessee s turnover has substantially increased from 2 crores to 3.74 cores and gross profit also in total has increased, which can only be achieved by reducing the sale price or changing the composition of the sales. He also explained the reasons for declining on G.P. i.e. purchased grey fabric and printed outside. He also argued that the cost of printing and dying has increased with cost of raw material. The average price of material cost was less compared to preceding year due to change of the items purchased and exported. Selling price includes raw material cost plus printing cost and profit, therefore, it was more than previous year. He relied upon the case laws referred by the learned CIT(A) in appellate order, besides this he also referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer reopened the assessee s case U/s 148 by recording the reasons that the assessee has claimed 80IB deduction on duty drawback which was allowed U/s 143(1) of the Act, which is not allowable as per the Hon'ble Supreme Court decision in the case of Liberty India Ltd. Vs. CIT (2009) 317 ITR 218. Accordingly, notice U/s 148 of the Act was given to the assessee, which was confirmed by the learned CIT(A) by relying the decision of Hon ble Kerala High Court in the case of CIT Vs. Best Wood Industry and Saw Mills 331 ITR 63. Notice U/s 148 was issued for the withdrawal of deduction U/s 80IB on duty drawback of ₹ 44,27,103/-. The Assessing Officer has withdrawn the deduction of ₹ 2,72,148/- by completing the reassessment order. During the reassessment proceedings, the Assessing Officer has rejected the books of account and made trading addition also. No fault would be found with the approach of the Assessing Officer accordingly, the learned CIT(A) confirmed the addition. 10. Now the assessee in C.O. before us. It is contended by the learned AR that the Assessing Officer in the reassessment proceedings has disallowed the assessee s claim of deduction U/s 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes a debatable one in the light of the above decision. It is settled position of law that where any issue is debatable, it cannot be corrected U/s 154 of the Act. The Hon ble ITAT in this case, thus held that the decision of Liberty India will not rule the field after amendment. Further, the Hon'ble Supreme Court in the case of Liberty India has not considered the difference in the language employed in section 80I and 80IB. In Sec. 80I, the phraseology used is any profits and gains derived from an industrial undertaking whereas in Sec. 80IB, the phraseology used is any profits and gains derived from any business of an industrial undertaking . Thus, the language of Section 8-IB is broader to cover profits and gains derived from any business of an industrial undertaking. Sec. 29(iiid) specifically provides that profit on transfer of DEPB is chargeable to income tax under the head profits and gains of business. Therefore, profit on transfer of DEPB is profit derived from any business of industrial undertaking eligible for deduction U/s 80IB. Therefore, he prayed to hold action of the Assessing Officer is not justifiable. 11. At the outset, the learned DR supported the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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