TMI Blog2010 (7) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment years under section 143(1) of the Act, accepting the disclosed income. The assessment order, in the form of intimation, has been passed without any enquiry and scrutiny of the books of account. It appears that in the profit and loss account the petitioner has claimed deduction of "duty drawback" under section 80-IB of the Act treating the receipt of the amount towards "duty drawback" as income derived by the industrial undertaking. The said deduction has been allowed without any scrutiny and enquiry by passing the assessment order/intimation under section 143(1) of the Act. 3. Both for the assessment years 2005-06 and 2006-07, the assessing authority had issued the notices datedFebruary 9, 2010under section 148 of the Act. The notices have been issued within four years from the date of expiry of the assessment years. There is no dispute in this regard. On receipt of the notices under section 148 of the Act, the petitioner asked the assessing authority to let it know the reason for reopening of the assessment. Accordingly, the petitioner was informed that the profit and loss account revealed that deduction at the rate of 25 per cent. under section 80-IB of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial to form any belief that there is an escaped assessment. He submitted that prior to the decision of the apex court there was a decision of the Gujarat High Court in the case of CIT v. India Gelatine and Chemicals Ltd. reported in [2005] 275 ITR 284 and the decision of the Tribunal, Lucknow Bench, in I. T. A. No. 694 of 2001 (Deputy CIT v. Rotomac Pens Ltd.) in which it has been held that the "duty drawback" is eligible for deduction under section 80-IB of the Act and, therefore, in the assessment order under section 143(1) of the Act the deduction of "duty drawback" has been rightly allowed under section 80-IB of the Act. He submitted that the provision of section 147 is equivalent to the provision of Order 47, rule 1 of the Code of Civil Procedure, which pro-vides review of the order under certain circumstances, viz., discovery of new and important matter or evidence, which, after exercise of due diligence was not within the knowledge or could not be produced by him at the time when the decree was passed or order made or on account of some mistake or error apparent on the face of record or for any other sufficient reason. It does not contemplate review of the order on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year : Provided further that the Assessing Officer may assess or reassess such income, other than th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two conditions and fulfillment of the said conditions alone conferred juris-diction on the Assessing Officer to make a back assessment, but in section 147 of the Act (with effect from 1st April, 1989), they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words `reason to believe' failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of `mere change of opinion', which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review ; he has the power to reassess. But reassessment has to be based on fulfilment of certain pre-conditions and if the concept of `change of opinion' is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the High Court has been held justified. 13. In the case of Ess Ess Kay Engineering Co. P. Ltd. v. CIT [2001] 247 ITR 818 the apex court held that the Income-tax Officer is not precluded from reopening of the assessment of an earlier year on the basis of his finding of fact made on the basis of the fresh materials in the course of assessment of the next assessment year. 14. In view of the above, we are of the view that the decision of the apex court which declares the law from the very beginning of the existence of the provision itself constitute material to reopen the proceeding under section 147 of the Act. It constitutes material to form a belief that there is an escaped assessment. 15. In the case of Liberty India v. CIT [2009] 317 ITR 218 the apex court has considered the scheme of the duty drawback and it has been held that the duty drawback received from the Central Government under the scheme does not fall within the purview of the income derived from the business of the industrial undertaking so as to entitle the assessee to deduction under section 80-IB of the Act. In this view of the matter the petitioner was not entitled for the deduction on the dut ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
