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TMI Blog2012 (8) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... y include reappraisal of the same material following a finding in another year, as was the case here. (b) The ld. CIT(A) erred in deciding the matter without considering the binding decision of the jurisdictional High Court in the case of Praful Chunnilal Patel & Vasant Chunnilal Patel vs. ACIT 236 ITR (Guj) laying down: "Merely because during the assessment proceedings the relevant material was on record or could have been with due diligence discerned by the Assessing Officer for the purpose of assessing a particular item of income chargeable to tax, it cannot be inferred that the Assessing Officer must necessarily have deliberated over it and taken it out while ascertaining the taxable income or that he had formed any opinion in respect thereof. In our view, the words "escaped assessment" where the return is filed, are apt to cover the case of discovery of a mistake in the assessment caused by either an erroneous construction of the transaction or due to its non-consideration, or, caused by a mistake of law applicable to such transfer or transaction." (pp.839-40 of 236 ITR), thus rendering the consideration of 'change of opinion' as irrelevant. (c ) The ld. CIT(A) erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed more benefits u/s 10B than it is entitled to, by not claiming these expenses and depreciation in respect of its EOU. At the same time, by indulging into this exercise the assessee has reduced its taxable profit to the extent as discussed above........ In view of these facts, then the income to the extent as discussed above has escaped assessment." 4. The assessee objected to the reopening of the assessment vide its letter dated 04.10.2006. On merits of the issue of apportioning expenses between EOU and the DTA, detailed sub missions were made by the assessee before the A.O. However, the A.O. rejected the same and effected reallocation of expenses which resulted in an addition of Rs. 49,01,141/-. 5. Aggrieved by this order of the A.O. assessee went in appeal before the ld. CIT(A). While agitating the ground taken by the assessee before the ld. CIT(A) regarding reassessment proceedings, the contention of the assessee was that the A.O. had already framed regular assessment u/s 143(3). During these assessment proceedings full details with regard to the claim of deduction u/s 10B were furnished by him and the matter was examined by the A.O. at the time of original assessment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions. It is pertinent to point out that the Assessing Officer in the original assessment order u/s. 143(3) dated 30-3-2004 has recorded in the first para of the order that "The assessee is having two different units; one which was engaged in the business since 1962 and the other unit set up as 100% Export Oriented Unit in 1966-67. After going through the case records and on the basis of details placed on the record the assessment proceedings are finalized...........". Further, it is noted that the Assessing Officer vide para 13 of its letter / questionnaire dated 18-3-2004 had specifically required the appellant "to furnish certified copy of the profit and loss account and the balance sheet of the unit (EOU) claiming exemption of income u/s. 10B of the IT Act" and "to furnish the same along with the details of sales /purchases, other income and major expenses. In case of failure, it is proposed to disallow your claim and consider the same as taxable income...........". The appellant vide its letter dated 25-3-2004 furnished the details at para 11 by stating that we enclose herewith detailed working of profit and loss account for the year ended 31-03- 2001 for our said EOU (whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of expenses to the software division and the fulfillment JRdivision and even suggested allocation on proportionate basis. The assessee had given a detailed reply justifying the allocation made by it. After a detailed examination of the same, the assessment was completed and a deduction u/s. 10A to the extent of Rs. 4,86,62,452/- was allowed. Subsequently, notice was issued u/s. 148 on the ground that the deduction u/s.lOA had been allowed in excess. The Hon'ble Delhi High .Court," on a writ petition against the notice of re-assessment held that "it was evident that no new material came to light and on the same set of facts, the subsequent Assessing Officer merely had a change of opinion with regard to deduction u/s. 10A allowed to the assessee. In this view of the matter, the reopening of the assessment would not be justified and would be without jurisdiction. Accordingly, the reopening of the assessment by issuance of notice u/s. 148.............. and proceedings pursuant thereto are liable to be quashed." It is observed that the facts in the appellant's case are very similar to this case. Under the circumstances, it is held that the reassessment proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings for assessment year 2003-04 it was found that allocation of expenses between the DTA and EOU unit has not been properly done and expenses are to be charged to the EOU also and in order to compute the benefit u/s 10B in the ratio of turn over of EOU and the DTA because these expenses are relatable to the EOU also. The assessee's case is that the question of such claim was subject matter of enquiry at the stage of original assessment proceedings with a questionnaire dated 18.03.2004 in which vide para 13 of this letter the A.O. specifically required the assessee to furnish certified copy of the profit and loss accounts and the balance sheet of the unit EOU claiming exemption of income u/s 10B of the Act and to furnish the same along with the detail of sales/purchases, other income and major expenses. In case of failure it was proposed to disallow the claim and consider the same as taxable income of the assessee (page 67 of the paper book). The assessee vide its letter dated 25.03.2004 furnished the detail at para 11 by stating that required details are enclosed along with working of profit and loss accounts for the year ending 31.03.2001 for EOU unit. These details als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was made and the A.O. applied his mind to that material and accepted the view taken by the assessee. Merely because he did not express this in the assessment order that by itself would not come as a ground to a conclude that assessee has escaped assessment and therefore, the assessment needed to be reopened. On the other hand, if the A.O. did not apply his mind and omitted a lapse, there is no reason why the assessee should be made to suffer the consequence of that lapse. In the case of M/s Startronic Investment Consultants Pvt. Ltd. Vs. ITO in ITA No.2196/Ahd/2002, on identical facts Hon'ble ITAT, Ahmedabad placing reliance on the decision of jurisdictional High Court has held as under:- "We have heard the parties and considered the submissions. It is true that the assessment has been reopened within four years from the end of the assessment year and in view of the decision of the Gujarat High Court in the case of Prafful Chunilal Patel [236 ITR 832] wherein it was held that assessment can be reopened even in cases where there has been complete disclosure of all the relevant facts necessary for assessment and the words "escaped assessment" are apt to cover the case of discover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be reopened and it would amount to change of opinion, which is not permissible even after the amendment and the case falls within the four years time limit. We, therefore, hold that reopening was not proper and quash the same. Even otherwise, we find that the expenditure on membership fees paid to Vadodara Stock Exchange is covered by the Madras High Court in the case of CIT Vs. S. Venkatasubramaniam [207 CTR (Mad) 88] wherein the Court held that the payment of admission fees as well as contribution to infrastructure development fund to acquire the membership of Coimbatore Stock Exchange and to carry on the business at the terminal of the Stock Exchange is revenue expenditure. In view of this also the reopening does not seem to be justified. We, accordingly, hold that reopening of assessment was invalid and cancel the assessment." 12. The case law of Hon'ble Apex Court, relied upon by the Revenue in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra) is not applicable to the facts of this case because in that case no scrutiny assessment u/s 143(3) of the Act was done in the first place and the return filed by the assessee was processed u/s 143(1)(a) of the Act and in ..... 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