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2018 (7) TMI 1172 - HC - Income TaxValidity of reopening of assessment - Assessing Officer empowered to reopen an assessment based on a subsequent Supreme Court decision - Section 80 HHC denied for tyre retreating charges - whether reopening of the assessments both within four years and beyond four years could have been done for the reasons assigned by the Revenue? - Held that:- As pointed out in the preceding paragraphs, the Assessing Officer, while reopening the assessment, has not disclosed the reasons for reopening. This is evident from the assessment order dated 05.03.1999, which only states that the assessment was reopened to consider certain points with prior permission of the Commissioner of Income Tax. Thus, the basic requirement for recording reasons to believe that income chargeable to tax has escaped assessment is absent in the instance case, which would be sufficient to hold that the reopening proceedings are wholly without jurisdiction. The power to assess or reassess or recompute the loss or depreciation allowance or any other allowance could be done only if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. Therefore, Explanation 2 cannot be read in isolation and it has to be read harmoniously with the powers under Section 147 of the Act including the proviso under the said Section. Therefore, we are unable to accept the submission of the learned Senior Standing Counsel for the Revenue. One more submission, which was made, was that the Assessing Officer without application of mind, had granted the benefit of deduction and therefore, the Revenue had to file appeals before the CIT(A). On a reading of the assessment orders passed under Section 143(3) dated 18.03.1993, it is clear that there has been discussion between the assessee and the Assessing Officer and all materials have been placed before him and then the assessment has been completed granting benefit. Therefore, the order of assessment cannot not be stated to be an order without application of mind. Whether reopening of an assessment could be done based upon the decision in the case of Madurai Pandian Engineering Corporation Ltd (1998 (3) TMI 65 - MADRAS HIGH COURT ) as as held that retreading of tyres does not amount to manufacture? - Held that:- The law stood in the case of Madurai Pandian Engineering Corporation Ltd (supra) was in favour of the assessee. Notices, under Section 148 of the Act, were issued on 08.08.1997. Thus, the notices for reopening were issued prior to the decision in the case of Madurai Pandian Engineering Corporation Ltd (supra) and on the date when the notices were issued, the law was clearly in favour of the assessee and retreading of tyres was held to be a manufacturing activity. Based on the decision in Madurai Pandian Engineering Corporation Ltd (supra), reopening could not have been done. The Hon'ble Supreme Court in Simplex Concrete Piles (India) Ltd. (2012 (9) TMI 516 - SUPREME COURT ), held that the subsequent reversal of the legal position by the judgment of the Hon'ble Supreme Court does not authorise the Department to reopen the assessment, which stood closed on the basis of law, as it stood at the relevant point of time. Thus the reopening proceedings was wholly without jurisdiction - decided in favour of assessee.
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