2014 (1) TMI 1400 - AT - Income Tax

Validity of reassessment proceedings u/s 147 - Held that - Decision in CIT Vs. Ajanta Pharma Ltd. 2009 (5) TMI 7 - BOMBAY HIGH COURT was available at the time of issue of notice u/s 147 - Later on the the said decision has been overruled by the Supreme Court and law has also been amended by Finance Act 2011 - Decision in Commissioner Of Income-Tax Versus Novapan India Limited 1998 (10) TMI 67 - ANDHRA PRADESH High Court followed - On the basis of any recent judicial decision which subsequently comes to the knowledge of the AO the AO can reopen the assessment based on such information - The Ld. CIT(A) passed the order on 31.10.2011 and at the time of passing the said order by the Ld. CIT(A) the Finance Act 2011 deleting the provisions of clause (vi) of 115JB 2 of the Act was available since the same has been passed on 08.04.2011 - Decided against assessee.

Summary

Issues:
Validity of reopening assessment under section 147 regarding deduction u/s 80HHC for Book Profit u/s 115JB.

Analysis:
The appeal challenged the Ld.CIT(A)'s decision upholding the reassessment proceedings initiated by the AO u/s 147 of the Act for the Assessment Year 2005-06. The assessee, engaged in the manufacture and distribution of moulded luggage, filed its return declaring income under normal provisions and Book Profit u/s 115JB. The AO reopened the assessment to disallow a deduction on profit eligible u/s 80HHC for Book Profit determination u/s 115JB. The Ld.CIT(A) upheld the reopening. The assessee contended that reopening was a change of opinion, citing legal position changes. The Ld.Counsel argued based on High Court decisions and retrospective amendments. The Ld. DR supported the Ld.CIT(A)'s decision, citing various legal precedents.

The crux of the matter revolved around the legal position change regarding the deduction of profit u/s 80HHC for Book Profit u/s 115JB. The Bombay High Court's decision in Ajanta Pharma Ltd. was reversed by the Apex Court, leading to a retrospective amendment in 2011 deleting a clause in 115JB 2. The notice for reopening was issued based on the Ajanta Pharma case. Legal precedents were cited to support the AO's action based on new information justifying reassessment.

The Ld.Counsel argued that the AO ignored the Apex Court's decision during reassessment. However, the Tribunal found this insufficient to invalidate the reassessment. The Finance Act, 2011's retrospective amendment rendered the assessee's claim unjustified. The Rallis India Ltd. case cited by the Ld.Counsel was deemed inapplicable as the relevant amendment postdated the notice in the present case. Consequently, the Tribunal upheld the Ld.CIT(A)'s decision on the validity of the reassessment, leading to the dismissal of the appeal.

In conclusion, the Tribunal dismissed the appeal, pronouncing the order on January 24, 2014.