TMI Blog2013 (7) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... ts will demonstrate that the Assessing Officer effectively frustrated the directives contained in the decision of the Supreme Court in the case of GKN Driveshafts (India) Ltd v. I.T.O. [2002 (11) TMI 7 - SUPREME Court] - The entire purpose to supply reasons recorded by the Assessing Officer to the petitioner-assessee is that the the assessee would have a fair opportunity of raising objections and an expectation that such objections would be considered objectively - Though the reasons were very much available with the Assessing Officer, he consumed nearly one year in supplying the same leaving less than four weeks before the assessment was to become time-barred. - Notice quashed - Decided in favor of assessee. - Special Civil Application No. 3703 of 2013 - - - Dated:- 7-5-2013 - Akil Kureshi And Sonia Gokani,JJ. For the Petitioner : Mr. RK Patel For the Respondent : Mr. Sudhir M Mehta ORDER (Per : Honourable Mr. Justice Akil Kureshi) Heard the learned counsel for the parties for final disposal of the petition. Petitioner has challenged the notice dated 9.3.2012 as at Annexure G to the petition issued by respondent No.1, Assessing Officer, under section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, section 10B of the Act does not provide for deduction of freight and insurance from the total turnover. Similarly, liability written off and offered under section 41(1) of Rs.37,72,385 and sale of scrap of Rs.82,899 were also not included in the total turnover. The deduction admissible u/s 10B of the Act was Rs.57,81,87,170/-. Thus, assessee was allowed excess deduction of Rs.55,86,880 (Rs.58,37,74,050) (-) Rs.57,81,87,170) under section 10B of the Act. Further, the reallocation of depreciation of Rs.6,39,631 from DTA unit of EOU unit would enhance income of DTA unit by Rs.6,39,631. I.T. involved on Rs.62,26,511 (Rs.55,86,880 + Rs.6,39,631) was Rs.33,03,732. (2) The provisions of section 145A of the Act mandate inclusive of accounting for the purpose of the Act in respect of duty, cess and taxes even though the assessee might be following exclusive method of accounting. Assessee was a manufacturer of pesticides and intermediates. Assessee followed mercantile system of accounting. It followed exclusive method of accounting CENVAT as derived from the statement in Annexure 1 to clause 12(b) of Form 3CD, furnishing details of deviation from the method of valuation prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund of Excise Duty paid on export sales of Rs.17766236 was neither passed through the profit and loss account nor offered as income for taxation under the Act. As per clause (1)(h) of Schedule 22 Notes on Account , sales were recognized net of Excise Duty. In view of the above facts, the refund/rebate of Excise Duty on export sales was liable to income tax. The I.T. involved on Rs.17766236 was as under:- Tax detail Rs. I.T.on Rs.1,77,66,236@35% 62,18,183 Surcharge 2.5% 1,55,455 Edu. Cess @2% on Rs.63,73,638 1,27,473 Total. 65,01,111 Interest u/s.234B @ 1% month on Rs.65,01,111 from 1.4.05 to 31.12.08 (45 months) I.e. 45% 29,25,500 Total short levy of I.T. 94,26,611 The petitioner, thereupon, raised detailed objections before the Assessing Officer under communication dated 14.3.2013. Such objections, however, were disposed of by order dated 26.3.2013. Hence the petition. Having heard the learned counsel for the parties, we notice that in the reasons, the Assessing Officer has indicated three different grounds for issuing notice for reopening. Such groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on by the industrial undertaking it is only attributable to the business of the assessee. xxxxx 29) Please explain the allocation of expenditure between Bilag-1 Unit and EOU unit. In this regard, you will please justify the allocation of expenditure considering priority and non-priority units. You will also please explain why the expenditure should not be allocated between both the units as was done in A.Y. 2004-095 and subsequently confirmed by the CIT (A). Such queries were replied by the petitioner under communication dated 22.1.2007, in following manner. The other income shown in Profit Loss A/c. of Rs.23,21,21,71,560/- pertains to Bilag Industries Pvt Ltd whereas the deduction u/s.10B is claimed only on the income arising from the operations of 100% EOU unit and hence section 10B has no relevance with respect to other income shown in Profit Loss A/c. The details relating to export benefit income of Rs.58,48,05,813/- is attached herewith at Annexure 12. Yet further correspondence ensued between the parties with respect to this claim. It is not necessary to burden this order with recording of such details. Suffice it to notice that in the order of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d inadvertently overlooked the issue of allowability of deduction under section 10B and issue of excise duty refund as income. Accordingly, objections on this count are also rejected. Even from such order, it can be gathered that this was not a case of any failure on the part of the assessee to disclose truly and fully all material facts. In the result, the impugned notice dated 9.3.2012 is quashed. Before closing, we may record one disturbing feature of the matter. That upon receipt of notice for reopening dated 9.3.2012, the petitioner had requested the Assessing Officer under its communication dated 19.3.2012 for supplying the reasons recorded by him. Since the reasons were not supplied, the petitioner reiterated the request under communication dated 18.7.2012. The reasons were ultimately communicated under letter dated 6.3.2013. On 20.3.2013, the petitioner raised objections. Such objections were disposed of on 26.3.2013. The entire sequence of events will demonstrate that the Assessing Officer effectively frustrated the directives contained in the decision of the Supreme Court in the case of GKN Driveshafts (India) Ltd v. I.T.O., 259 ITR 19. The entire purpose to supp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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