TMI Blog2009 (5) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... n be reached in any manner and is not qualified by a mere condition of faith and true disclosure of material fact by the assessee as contemplated in pre-amended section 147( a ) of the Income-tax Act. The CIT(A) further erred in not taking note of the observations of the Hon ble Delhi High Court in the said case that the reason which may weigh with the Assessing Officer may come from any source that he considers reliable, formation of his belief is not a judicial decision but is an administrative decision. (2)On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that the reopening of the assessment under section 147 to disallow the deduction under section 80HHC of the Income-tax Act on the DEPB receipts originally allowed by the Assessing Officer, on the basis of the Board s Circular F.No. 153/90/2004-TPL, dated 8th September, 2004, was not legally valid. (3)On the facts and in the circumstances of the case and in law, the CIT(A) erred in not adjudicating the case on merit holding that there was no need to proceed, as the proceedings under section 147 had been held ab initio void." Ground Nos. 4 5 are general in nature. 3. Briefly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provisions of clause ( c ) to Explanation 2 of section 147 are clearly applicable and in view of this the opinion of the learned CIT(A) that there is change of opinion is not correct. He further submitted that that Assessing Officer has never considered the issue of DEPB in the original assessment and no request for details were called for and referred to the order of the Assessing Officer under section 143(3) originally made to submit that the Assessing Officer has never considered the issue of DEPB at the time of original assessment and, hence, there is no evidence on record to hold that the Assessing Officer has formed an opinion. If the learned CIT(A) s opinion is accepted the provisions of clause ( c ) of Explanation 2 will become redundant since in all cases where an assessment has been made one can presume that the Assessing Officer has formed an opinion. Since there is nothing on record to prove that the Assessing Officer has formed an opinion reopening within four years is correct according to the law. He further referred to the order of the learned CIT(A) in para 2.4 to say that he has wrongly concluded that reopening could have been made after the amendment was broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have formed an opinion at the time of original assessment on allowing section 80HHC deduction on DEPB. There is nothing on record to support the opinion formed by the learned CIT(A) on this issue. The learned counsel during the present proceedings could not point out any show cause letter or clarification sought by the Assessing Officer on the issue of DEPB income and has relied on only legal issues before us. There is no evidence that the Assessing Officer has at least sought clarification or considered the issue of DEPB at the time of original assessment. As seen from the order under section 143(3) passed on 28-2-2003 the issue which was discussed in the order was with reference to manufacturing/ processing of goods and recomputation on that basis and in that recomputation in page 10, 90 per cent of the incentives were considered in the working. Except this mention of the incentives in the working, nowhere there was any discussion about the nature of incentives or the incentive being DPEB income. Only the Assessing Officer considered 90 per cent of the incentives at Rs. 77,59,495 in the working of deduction under section 80HHC(3) based on the Audit report submitted by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for assessment. Even in those cases Explanation 1 was considered by the Hon ble Bombay High Court in the case of Dr. Amin s Pathology Laboratory v. P.N. Prasad (No. 1) Jt. CIT [2001] 252 ITR 673 wherein the following has been considered : "After introduction of changes in section 147 of the Income-tax Act, 1961, with effect from 1-4-1989, the scope of reassessment has been widened. After the amendment, the only restriction put in the section is "reason to believe". The reason has been a reason of a prudent person. That reason should be fair and not necessarily due to failure of the assessee to disclose fully or partially some material facts relevant for assessment. However, where a period of four years has elapsed the proviso to section 147 of the Income-tax Act, 1961, comes into the picture. Under the said proviso, no action can be taken after four years unless any income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Under Explanation 1 to the proviso, mere production of account books for which material evidence could have been discovered by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 28, it may be appropriately inferred that the Assessing Officer had scanty reason to reopen assessment on the point under reference on already considered issue before the amendment was brought under section 80HHC(3). The Assessing Officer reopened the assessment under section 147 much earlier to the aforesaid amendments brought on the statute book and needless to mention that the Assessing Officer did not have the benefit of such amendments brought at the time of reopening the assessment under section 147. Therefore, the Assessing Officer can be said to have acted in quite hurriedness to reopen the assessment under section 147 before waiting the amendments to be brought on the statute book. In fact, the Assessing Officer should have reopened the assessment only after the amendment was brought on the statute book in section 80HHC(3) by Taxation Law Amendment Act, 2005. Since, the reopening was merely made only on the difference of opinion, I cannot sustain the legality of Sec. 147 on the fact of the case. Hence, the proceedings taken under section 147 is held illegal and without any proper sanction of law and as a result, the assessment made under section 143(3) on 29-9-2006 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned CIT(A) and further carried in appeal to the ITAT. During the pendency of this appeal a notice has been issued to the petitioner under section 148 on the ground that a valid notice under section 143(2) was not issued before the expiry of the period of limitation and hence to protect the interest of Revenue proceedings were reopened under section 148. In that context following the judgment of Ador Technopack Ltd. v. Dy. CIT [2004] 271 ITR 50 (Bom.), the Hon ble Bombay High Court held that during the pendency of such proceedings the assessment could not be treated as final. The basis for the original assessment and the basis for reopening were the same income and on the fact that reopening on technical ground that section 143(2) notice was not issued at the time of completion of original assessment, the same was not upheld in the said decision rendered the Hon ble Bombay High Court. In the case of Ador Technopack Ltd. ( supra ) the assessment was set aside on revision and no fresh order was passed and the Assessing Officer issued notice of reassessment. In these circumstances the Hon ble Bombay High Court has held that so long the assessment proceedings on certain incomes w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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