9911796707
TMI Blog2013 (6) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer of grills, diffusers, dampers, fire dampers, VAV boxes, VAV terminals, sound attenuators, ducting, false ceilings and electrical lighting fixtures. The Petitioner has a manufacturing facility at Dadra and is registered as a small scale industry. 4. The Petitioner filed a return of income for A.Y. 2004-05 in which, inter alia, it claimed the benefit of section 80IB of the Income-tax Act, 1961. In the course of the assessment proceedings, a notice was issued to the Petitioner by the Assessing Officer under section 143(2) on 23 June 2006, inter alia, requiring the Petitioner to furnish information on the nature of the business and in respect of various other details that were set out in an annexure to the notice. The Petitioner filed a reply dated 24 June 2006 recording that it carries on business as a manufacturer of grills, diffusers, false ceilings and other products needed for air handling and control to be used with or in central air-conditioning plants. The Petitioner, inter alia, relied upon information furnished in form 10CCB. An order of assessment was passed under section 143(3) on 7 September 2006 for A.Y. 2004-05 allowing the Petitioner the benefit of the ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on register monthwise - (a) Vapi Unit - Valsad (b) Parth Industrial Estate Unit , Dadra. 3. Who is Mr.Haria, proprietor of Developers at Vapi. Why some electric bills are in the name of Mr.Haria. 4. Please give complete details of manufacturing units set up at Vapi, Valsad. 5. Have you done any work for others in your factory at Dadra. If yes please give complete address. 6. Have you given any goods for job work to others. If yes give complete details with name and address of the party to whom the goods given for job work. 7. Copy of monthwise stock statement supplied to the bank. 8. Books of account with stock register." The Petitioner responded to the notice of 20 June 2007. Photo copies of monthly wage registers, bills of the labour contractor and the R.G.I. Register for finished goods maintained under the Central Excise Act, 1944 were disclosed together with other material as sought. Eventually, an order for asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing operation has not been duly verified to understand that whether the assessee is actually manufacturing or is just doing some misc work." The Assessing Officer noted that an air-conditioning system requires various parts which when assembled together become a cooling system; and from the details furnished, it would appear that the assessee purchased certain parts from out of India and other raw-materials from local suppliers. The Assessing Officer held that it appears 'from a perusal of the assessee's submission' that the entire manufacturing work is not carried out in the factory and there is a major element of trading of goods and providing installation services at the place of the client. Moreover, the Assessing Officer has noted that 'as per the information furnished by the assessee' showing a break-up of the purchases, 41% of the total product is manufactured in the factory while the rest is procured from outside. On these facts, the Assessing Officer held that the case would require a thorough verification of the manufacturing activity of the assessee in order to decide whether it is actually carrying out any manufacturing activity. 8. The Petitioner submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer had fully applied his mind as is evident from the fact that two questionnaires were issued to the assessee which were duly replied; (iv) The reasons for the re-opening of the assessment would indicate that the assessments are sought to be re-opened on the basis of material which has been furnished by the assessee which itself would indicate that there was no suppression on the part of the assessee. 11. An affidavit-in-reply has been filed by the Assessing Officer. Apart from supporting the re-opening on the basis of the averments contained therein, the learned Counsel appearing on behalf of the Revenue urged that: (i) Though the assessment has been re-opened for A.Y. 2005-06 and 2006-07 beyond a period of four years, this was sought to be done on the basis of material which was placed before the Assessing Officer during the course of the assessment proceedings for A.Y. 2009-10; (ii) Though as a matter of fact, the reasons which have been disclosed to the assessee do not state that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment that has been explained by the Assessing Officer while disposing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarded them. 14. Such objections to the reopening of an assessment are not an idle formality. That, however, is what Assessing Officers are reducing the exercise to. Treating the exercise as a meaningless formality would be a serious breach of the law laid down by the Supreme Court. The Supreme Court has now mandated that reasons must be disclosed to the assessee; that the assessee must have an opportunity to file its objections and that those objections must be disposed of by the Assessing Officer by a reasoned order (J.K.N. Drive Shafts (India) Ltd. v. ITO . The assessee drew the attention of the Assessing Officer while filing objections to the judgements of this Court in Titanor Components Ltd. v. Asstt.; Hindustan Lever Ltd. v. R.B. Wadkar and in NYK Line (India) Ltd. v. Dy. and to other decisions. The Assessing Officer while disposing of the objections observed as follows:- "Notice u/s 148/ITNS-34 which is prescribed by the CBDT does not contain any provisions to disclose that the assessee has failed to disclose fully and truly all material facts necessary for assessment." Again the Assessing Officer while dealing with the submission that the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides form 10CCB. The detailed nature of the inquiry that was carried out by the Assessing Officer is evident from two questionnaires that were issued to the assessee during the course of the assessment proceedings on 24 April 2007 and 14 June 2007 (exh. 'I' and 'K') when the assessment was pending. It was after the assessee had furnished a reply to the questionnaires that the Assessing Officer passed an order under section 143(3). In the order of assessment, the Assessing Officer noted that the assessee had produced books of account such as purchases/sales registers, cash book, bank book and ledger for verification and that these were test checked. The Assessing Officer has also noted that the eligibility of the assessee for claiming a deduction under section 80IB has been duly verified. In this context, it would be totally contrary to the record for the Assessing Officer to state that the nature of the activity of the assessee was not verified during the course of the assessment proceedings. 17. For these reasons, we have come to the conclusion that the re-opening of the assessment for A.Ys. 2005-06 and 2006-07 failed to meet the jurisdictional requirements spelt by the proviso t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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