TMI Blog2007 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... 6th March, 2006 whereby the completed assessments for A.Y.2000-01 and A.Y. 2001-02 are sought to be reopened under Section 148 of the Income Tax Act, 1961 ('Act' for short). 2. Since the reasons recorded for reopening of the assessments are common, both these petitions are heard together and disposed off by this common judgment. 3. Although the facts are not in dispute, to appreciate the rival contentions, we may note few facts in Writ Petition No.43 of 2007. 4. Return of income filed by the petitioner/assessee for A.Y.2000-2001 was assessed under Section 143(3) of the Act on 28-3-2003. By the said assessment order, deduction under Section 80HHD was allowed to the extent of Rs.3,28,09,526/- as against the amount claimed at Rs.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) purchase of sports equipments (4) construction of conference centre and (5) provision of other facilities for the growth of Indian tourism and subscription to eligible issue of equity shares. Where in amount credit to the Reserve Account has been utilized for any purpose other than those referred to in sub-section (4), the amount so utilized shall be deemed to be profit and shall be charged to tax in the year in which the amount was so utilized. It is seen from the balance sheet as on 31/03/2000 that the assessee has an opening balance of Rs.16.25 Cr. in its Reserve Account (80HHD). The assessee transferred Rs.7,89,46,000/- to 80HHD Utilized Account but actually utilized only Rs.4,60,96,779/- (wrongly recorded as Rs.4,16,96,779/-) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance 50% is allowed only to the extent it is credited to a reserve account and subsequently utilised for making certain specified investments for the business of the assessee. In other words, if the assessee fails to utilise the amount credited to the '80HHD reserve account' for the purpose of its business in the manner laid down in Section 80HHD(4) of the Act or utilises the amount for the purposes other than those specified in Section 80HHD(4) of the Act, then the amount so utilized becomes chargeable to tax. 9. Mr.Sathe, learned Senior counsel appearing on behalf of the petitioner submitted that in the present case, the total amount credited to the '80HHD reserve account' during the A.Y. from 1989-90 to 1999-2000 was Rs.16,25,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.10,50,71,000/- has been utilised for the purpose specified in Section 80HHD(4), then transferring the said amount or any part thereof from '80HHD reserve account' to the '80HHD utilized account' would be in no way in violation of the provisions of Section 80HHD. Accordingly, Mr.Sathe submitted that the reopening of the assessments on the ground that the amount transferred from the '80HHD reserve account' have not been utilised for specified purposes set out in Section 80HHD is wholly unsustainable and consequently the impugned notices are liable to be quashed and set aside. 11. Mr.Chatterjee, learned counsel appearing on behalf of the respondents, on the other hand, submitted that in the present case reopening of the assessment is ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer has reason to believe that the income chargeable to tax has escaped assessment. The reasons for reopening the assessments must be genuine, reliable and not imaginary or based on conjectures or surmises. In the present case, the specific case of the assessee is that as against the credit of Rs.16,25,00,000/- in the '80HHD reserve account', during the assessment years from 1989-90 to 1999-2000, a sum of Rs.10,50,71,000/- has been utilized for the purposes specified in Section 80HHD (4) of the Act. Accordingly, it was contended before the assessing officer that out of the sum of Rs.16,25,00,000/- a sum of Rs.10,50,71,000/- had become free reserve. Out of the said free reserve amount of Rs.10,50,71,000/- a sum of Rs.2,61,25,000/- had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simply, where the assessee utilises certain amount for the purposes specified in Section 80HHD(4) and draws that much amount from the '80HHD reserve account', it would be open to the assessee to utilise the said amount for any purpose it deems fit and proper. In the present case, instead of utilising the amount so drawn, the assessee has transferred the said amount to a separate account called '80HHD utilised account'. In such cases, it cannot be said that there is violation of Section 80HHD and consequently it cannot be said that the income has escaped assessment. 15. The argument of the revenue based on the audit report and the annual report of the assessee that out of the amount Rs.7,89,46,000/- drawn from the '80HHD reserve account' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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