TMI Blog2011 (11) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 IA on merits, is concerned, no grievance was raised by the appellant nor any question of law framed thereupon. We may only reiterate that the Tribunal has rightly held that such a claim was not admissible on miscellaneous income like sale of import licence, interest, weighbridge income, insurance claim etc. It is rightly disallowed having regard to the judgment of this Court in Cement Distributor Ltd (1994 - TMI - 20126 - DELHI High Court) – Decided against the assessee. - ITA No.685 OF 2009 & ITA No. 686 OF 2009 - - - Dated:- 18-11-2011 - MR. JUSTICE M.L. MEHTA, J. For Appellant: Mr. C.S. Aggarwal, Sr. Advocate with Mr. Prakash Kumar, Advocate. For Respondent: Mr. Sanjeev Sabharwal, Sr. Standing Counsel. A.K. SIKRI, ACTING CHIEF JUSTICE: 1. These appeals are preferred by the appellant/assessee under Section 260-A of the Income-Tax Act, 1961 (hereinafter referred to as the Act‟) questioning the validity of order passed by the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal‟) dated 18th May, 2007 whereby two appeals of the appellant herein, involving common issues pertaining to the assessment years 1994-95 and 1995-96 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer passed an order u/s 143(1)(a) at ₹ 1,97,16,610/- on 30th September, 2006. The Assessing Officer did not allow deduction under Section 80IA of the Act for the reason that in the absence of separate working of the industrial profit the deduction claimed under Section 80-IA is not allowable . The appellant company filed an appeal against the intimation u/s 143(1)(a) of the Act and the Commissioner of Income Tax (Appeals) by an order dated 6th August, 1997 held that the adjustment made by the Assessing Officer did not constitute a prima facie adjustment within the purview of Section 143 (1) (a) of the Act and allowed the appeal of the appellant company on this ground. The Commissioner of Income Tax (Appeals) filed an appeal before the Tribunal, which was dismissed by an order dated 18th October, 2002. The proceedings under Section 147 of the Act was initiated by issuance of a notice under Section 148 of the Act on 8th March, 1999 for the instant assessment year 1994-95. The reasons recorded (as per the order of the Commissioner of Income Tax (Appeals) and order of the Tribunal) for the initiation of proceedings under Section 147 of the Act are reproduced as under:- P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings under Section 147 of the Act, by holding as under:- 4.We have considered rival submissions and the case laws cited. In the assessment U/S 143(1)(a) which do not envisage consideration of any point and formation of any opinion for assessment purposes. The powers are only to make certain prima facie adjustment based on the material available in the return of income itself. He cannot travel beyond what is mentioned in the return of income and documents accompanying thereto. Thus, it cannot be said that any opinion was formed by the AO as regards allowability or otherwise of the deduction U/S 80-IA in respect of various miscellaneous income like sale of import licence, rent, insurance claim, weighbridge charges etc. It is also a matter of fact that the details of miscellaneous income were not filed with the return of income. As per the copy of computation of income filed alongwith the return of income which are at pages 1 to 17 of the paper book, we find that even the details regarding claim of deduction U/S 80-IA is not furnished. Thus, it cannot be said that the AO has issued the notice U/S 148 on the basis of change of opinion. From the reasons recorded, it is found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has upheld the initiation of reopening of the assessment. In the second appeal, the issue on merit is questioned. 8. The facts disclosed above, would demonstrate that the original assessment order was passed under Section 143 (1) (a) of the Act. Notwithstanding the same, endeavour of the Mr. C.S. Aggarwal, learned Senior Counsel appearing for the assessee was that in the original assessment the issue pertaining to deduction under Section 80 IA of the Act was specifically dealt with. The Assessing Officer had not allowed this deduction which was allowed by the CIT (A) in appeal vide his orders dated 6th August, 1997 specifically discussing this issue and the ITAT has affirmed the same. In such circumstances, argued the learned Senior Counsel, notice under Section 148 of the Act was not permissible. Referring to the Reasons to Believe‟ Mr. Aggarwal, submitted that the Assessing Officer had relied upon the judgment of jurisdiction Court in CIT Vs. Cement Distributor, 208 ITR 355 which judgment was rendered on 24th march, 1994. However, the original assessment order was passed much thereafter on 31st March, 1995 and, therefore, the aforesaid judgment was available with the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le conclusion that would have to be reached is that while assessment proceedings remain inchoate, no 'fresh evidence or material' could possibly be unearthed. If any such material or evidence is available, there would be no restrictions or constraints on its being taken into consideration by the AO for framing the then current assessment. If the assessment is not framed before the expiry of the period of limitation for a particular AY, it would have to be assumed that since proceedings had not been opened under Section 143(2), the Return had been accepted as correct. It may be argued that thereafter recourse could be taken to Section 147, provided fresh material had been received by the AO after the expiry of limitation fixed for framing the original assessment. So far as the present case is concerned we are of the view that it is evident that, faced with severe paucity of time, the AO had attempted to travel the path of Section 147 in the vain attempt to enlarge the time available for framing the assessment. This is not permissible in law. 10. In CIT Vs. Ved Co. 302 ITR 328 the Court held as under:- There is no indication as to on what information or on what material t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that when the Income-tax Officer had all the material facts before him when he had framed the original assessment, he could not make recourse to Section 147(a) to remedy the error resulting from his own oversight. Similar view was expressed in Indian and Eastern Newspaper Society v. Commissioner of Income-Tax, New Delhi [1979]119 ITR 996 (SC). 12. To buttress his submission that in the original assessment proceedings the issue was deliberated by the authorities, Mr. Aggarwal pointed out that details of claim under this provision were furnished. He also pointed out that even in succeeding years when the assessment was made under Section 143 (2). After issuance of notice under Section 143(2) of the Act, deduction under Section 80 IA was allowed which would further demonstrate that the issue was dealt with. 13. Mr. Sabharwal, learned counsel appearing for the Department submitted, per contra, that when admittedly in the original assessment proceedings, intimation was sent only under Section 143 (1)(a) of the Act on the basis of which revised return was filed on 30th November, 1995. The reassessment proceedings were followed more so when categorical finding of fact was arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under Section 148 read with section 147 (a). But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at the hand is covered by the main provision and not the proviso. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under Section 147 and failure to take steps under Section 143 (3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under Section 143 (1) had been issued. The inevitable conclusion is that the High Court has wrongly applied Adani‟s case [1999] 240 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act came to be allowed under the aforesaid background without examining the merit of the same, the judgment of the Supreme Court in Rajesh Jhaveri (supra) is clearly applicable. The Tribunal is right in holding that the assessment under Section 143 (1) (a) of the Act does not envisage consideration of any point and formation of any opinion for assessment purposes. The powers are only to make certain prima facie adjustment based on the material available in the return of income itself. The Assessing Officer did not even travel beyond what is mentioned in the return of income and documents accompanying thereto. It cannot be said that any opinion was formed by the Assessing Officer as regards allowability or otherwise of the deduction u/s 80-IA in respect of various miscellaneous income like sale of import licence, rent, insurance claim, weighbridge charges etc. Therefore, it cannot be said that it is a case of mere change of opinion when no opinion was formed in the first instance. We also do not find any merit in the submission of learned counsel for the assessee that there was no new material found for initiation of the proceedings. Mr. Sabharwal, is correct in his submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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