TMI Blog2003 (5) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A) has grossly erred in upholding the reassessment of the income of the appellant company under section 147, in spite of the fact brought to her notice during appellate proceedings that no notice under section 148 of the Income-tax Act was served on the appellant company. 4. That the ld. CIT(A) has grossly erred in not adjudicating ground No. 4 of the grounds of appeal wherein the appellant company challenged the observations by the Assessing Officer in the assessment order wherein it was alleged that the appellant company lodged false claim of deduction under section 80HH of the IT Act, whereas the appellant company claimed the deduction under section 80HH of Income-tax Act on the basis of the circular published in Income Tax Commentary and the said claim was scrutinized by the Assessing Officer. 5. That the ld. CIT(A) has grossly erred, both on the facts of the case and as per law, in upholding the levying of interest under sections 234A, 234B and 234C of the Income-tax Act." 2. In ground No. 2 the assessee has challenged validity of initiation of reassessment proceeding under section 147 by reviewing the order of his predecessor. Since the appellant challenges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of the assessee and allowed the deduction claimed by the assessee. This issue, therefore was not a subject matter of appeal before CIT(A). On transfer of case records from Central Circle-8 to Central Circle-1, the current and past records of the assessee were reviewed and during this review it was found that the text of the Notification relied upon and furnished by the assessee was false. The Notification furnished by assessee with regard to backward area of Uttar Pradesh read as under: '14. Uttar Pradesh: The districts of Almora, Azamgarh, Badaun, Bahraich, BaHia, Banda, Barabanki, Basti, Bulandshahar Block, Sikandrabad Block, and Bisrakh Block (Ghaziabad) Chamoli....' Whereas the authentic Notification in this regard reads as under:-- '21. Uttar Pradesh: The districts of Almora, Azamgarh, Badaun, Bahraich, BaHia, Banda, Barabanki, Basti, Bulandshahar excluding Dibia Block, Bulandshahar Block, Sikandrabad Block and Bisrakh Block (Ghaziabad) Chamoli....' It will be seen from above that the assessee has falsely claimed that its Industrial Undertaking was functioning in a backward area whereas the fact is that it is functioning in an area covered by exceptions to the back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d disclosed all basic and material facts. There was no new information with the Assessing Officer. The Assessing Officer has reviewed the material which was there in the original assessment for allowing deduction under section 80HH of the Act to the appellant on the basis of reliable and authentic Notification, copy of which was placed before him during the course of original assessment proceedings. A certificate from the concerned authorities showing that NOIDA zone falls under Bisrakh Block was also given.Due and proper application of mind was there by the assessing authority before allowing deduction to the appellant. Under such circumstances initiation of action under section 147 was nothing but a mere change of opinion. Basis taken cannot be a ground for reassessment. Amendment of section 147 w.e.f. 1-4-1989 has not altered the position. Reliance has been placed on the decision of jurisdictional High Court in the case of CIT v. Kelvinator of India Ltd. [2002] 256 ITR 11 (Delhi)(FB) and also to the case of Jindal Photo Films Ltd. v. Dy. CIT [1998] 234 ITR 170 (Delhi). Reliance has also been placed on the decision rendered by Hon'ble Kerala High Court in the case of Pala Marketi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rasad, Jt. CIT (No.1) [2001] 252 ITR 673 (Bom.), G. Sukesh v. Dy. CIT [2001] 252 ITR 230 (Ker.). 11. We have heard the parties with reference to the precedents relied upon by them and taken ourselves through the record. During the course of assessment proceedings the appellant furnished a copy of Notification dated 19-12-1986. This Notification contained list of backward areas specified w.e.f. 1-4-1983 under section 80HH(2) of the Income-tax Act, 1961. Under the heading "Uttar Pradesh" Bisrakh Block, Ghaziabad was shown to have been covered by the list of backward areas. The assessee also furnished a certificate from NOIDA authorities showing that NOIDA is a part of Bisrakh Block. The Assessing Officer hereinafter referred as "AO" allowed deduction of Rs. 5,28,324 under section 80HH of the Act, considering the appellant eligible for deduction on account of its industrial unit located in backward area. It is the location of the industrial unit in backward area which is a material fact which has been found falsely claimed on the basis of the said Notification as in the authentic Notification the Assessing Officer found that Bisrakh Block, Ghaziabad is excluded from the list of back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptions to the backward area. Once it has been found that the particular statement or information furnished or facts stated are false, untrue or incorrect, which in this case are stated in the reasons itself, the assessment is liable to be reopened and it is no answer to say that the assessee has stated basic and primary facts. It is not that the assessee is under obligation to state all information and particulars but he is under obligation to state them truly and correctly. This having not been done the action to reopen cannot be held to be vitiated. 12. In Phool Chand Bajrang Lal's case page 473 referred by the ld. DR it has clearly been observed that acquiring fresh information, specific in nature and reliable in character, relating to the concluded assessment which goes to expose the falsity of the statement made by the assessee at the time of the original assessment is different from drawing a fresh inference from the same fact and material which were available with the Income-tax Officer at the time of the original assessment proceedings. The two situations are distinct and different. Thus, where the transaction itself on the basis of subsequent information, is found to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore not a case of fresh application of mind to the same set of facts and hence would not be termed as a case of mere change of opinion. We therefore are of the opinion that both the decisions of the jurisdictional High Court in the case of Jindal Photo Films Ltd. and Kelvinator of India Ltd. do not apply to the facts and circumstances of the case for the reasons stated hereinbefore. In the light of the aforesaid findings the decision of Pala Marketing Co-operative Society Ltd.'s case is also found distinguishable. 15. The perusal of reasons recorded clearly reveals that there has been a failure on the part of the assessee to fully and truly disclose all the material facts necessary for his assessment, with which we agree. This has led to formation of bona fide belief that income of the appellant has escaped assessment. The reasons therefore cannot be held as vitiated nor as a mere change of opinion. The ground of the assessee therefore is liable to be dismissed. 16. In ground No. 1 the assessee challenged the proceedings as barred by limitation in view of proviso to section 147. It has been contended that as per proviso to section 147 the action under section 147 could not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred by the assessee's counsel. In this case the assessee has come up with the issue of validity of notice under section 148 before the CIT(A)-XXI, New Delhi who has set aside the original assessment order and remanded the matter back to the Assessing Officer with a direction to take proceedings afresh after giving full opportunity to the appellant. At least at this stage the assessee can be said to have taken notice of the proceedings. Mere denial made by the appellant also without making any affidavit was not sufficient to rebut the presumption relating to service of notice on him as the notice was sent through speed post which is a service rendered by the Indian Posts Department. In the modern days quickest mode of service by speed post by the same Postal Department through whom the registered post is done does not alter the position of effective service on a person. Only a plea of denial of service has been raised without bringing any material on record. Also because the name of the Principal Officer was not mentioned on the notice will not render the notice invalid as the same was only a minor irregularity. Such a minor irregularity does not prejudice the interests of the ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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