TMI Blog2013 (11) TMI 1494X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Assessing Officer on the material available, thus cannot be a subject matter of reassessment. The petitioner had in its profit and loss accounts allocated various common expenses between the non 80IB unit and 80IB unit. This was also subject to examination in determining the deduction available under Section 80IB of the Act to the Silvasa Unit - There has been disclosure of material facts truly and fully for the purposes of assessment on the part of the petitioner - The notice issued u/s 148 is quashed - Decided in favour of assessee. - Writ Petition (L) No. 2741 of 2013 - - - Dated:- 27-11-2013 - Mohit S. Shah, C.J. And M. S. Sanklecha,JJ. For the Petitioner : Ms. Aasifa Khan For the Respondent : Mr. Tejveer Singh JUDGMENT (Per M. S. Sanklecha, J.): RULE; returnable forthwith. At the request of learned Counsel for the parties, the petition is taken up for final disposal. 2 By this Petition under Article 226 of the Constitution of India, the petitioner challenges: (a) Notice dated 28 March 2013 issued by respondent No.1 (Assessing Officer) under Section 148 of the Income Tax Act, 1961 (the Act) by which the assessment for the Assessment Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... others. Both units consume same raw material and manufacture same outputs. However, in respect of Tarapur unit the assessee company had debited conversion charges of Rs.3393254/where as in r/o Silvasa Unit no such expenditure was debited. All other expenditure (manufacturing) were more or less in the said proportion of the turnover of both the units. As such, conversion charges of both the units were debited in Tarapur unit only. Proportionate expenses of silvasa unit would be Rs.1945004/. Similarly in respect of Administrative, selling and other expenditures Tarapur unit with turnover of Rs.29.76 crore has been charged with Rs.24976318/whereas Silvasa unit (with turnover of Rs.30.61 crore) had been charged with only Rs.12991615/. Moreover, Director's Remuneration of Rs.8400000/-has been charged on Tarapur Unit. However, during Assessment Year 200506, only Rs.840,000/paid to the Directors of the Company. Thus there was 10 fold increase in the directors remuneration during the A Y 200607. It would not be out of place to mention here that even the Tarapur unit enjoyed the status of 80IB unit till A Y 200506. So the assessee company suppressed expenses of 80IB unit by debiting excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the assessment subsequently. 9 Ms. Aasifa Khan, learned Counsel appearing for the petitioner in support of the petitioner submits : (a) The notice dated 28 March 2008 under Section 148 of the Act seeking to reopen the assessment for Assessment Year 200607 is without jurisdiction. This is so because the reasons furnished do not indicate any tangible material to have reason to believe that income chargeable to tax has escaped assessment. Besides, as in this case the assessment being sought to be reopened is beyond a period of four years from the end of the Assessment Year, the reasons for reopening do not indicate any failure on the part of the petitioner to truly and fully disclose all material facts necessary for assessment. Both the aforesaid conditions precedent are not satisfied in this case resulting in the proceedings for reopening being without jurisdiction; (b) The entire basis for reopening of the assessment for Assessment Year 200607 is that the claim for deduction under Section 80IB of the Act made by the petitioner in respect of its Silvasa Unit was not justified. This for the reason as stated in the grounds for reopening is that expenses incurred in the oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld apply to the present facts; and (d) The claim of the petitioner that the allocation of the expenditure between non 80IB unit and 80IB unit was appropriate/ just could be considered during the course of reassessment proceedings. At this stage, the Court should not interdict the reopening proceedings, by quashing the impugned orders. 11 It is a settled position in law that under the Act, the Assessing Officer has power to reassess but has no power to review an assessment as settled by the Apex Court in the matter of CIT vs. Kelvinator India 320 ITR 561. The power of reassessment could only be exercised if certain preconditions are satisfied. The primary conditions being that the Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment. This reason to believe must be based upon some tangible material i.e. it cannot be a mere ipsi dixit of the Assessing Officer. A different view on tangible material available earlier would be a change of opinion and not amount to reason to believe that income chargeable to tax has escaped assessment. Besides, one more additional requirement to be satisfied where assessment sought to be reopened is beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment when the original assessment proceedings took place. 14 So far as the first precondition for reopening is concerned, we find that reasons as disclosed rely upon the same tangible material which was and/or ought to have been a subject matter of examination before determining the deduction available under Section 80IB of the Act and passing the Assessment order. The material which forms the basis of reason to believe is the allocation of expenditure between the two units leading to higher deduction under Section 80IB of the Act in respect of the petitioner s Silvasa Unit. We find that during the Assessment proceedings the Assessing Officer has examined the claim for deduction under Section 80IB of the Act and for that purpose had called upon the petitioner to file details of expenses claimed in its profit and loss account. This allocation of expenditure between the two units was very much present before the Assessing Officer while considering the claim for deduction under Section 80IB of the Act with regard to Silvasa Unit. The Assessing Officer at that point of time appears to have been satisfied that the allocation of expenditure made by the petitioner between the two units ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment by the Asssesee. Therefore we find that there has been disclosure of material facts truly and fully for the purposes of assessment on the part of the petitioner. 16 The reliance by the revenue upon the decision of Delhi High Court in Honda Siel Power Products Ltd.(supra) is misplaced. In the above case the revenue sought to reopen an assessment beyond the end of four years from the end of the relevant Assessment year 20002001 on the ground of failure to fully and truly disclose all material facts during the original assessment proceedings. In its return of income as originally filed no details with regard to proportionate expenses relatable to tax free and other income were furnished and deduction of all expenses from taxable income was claimed. The case of the petitioner therein was that there was no obligation when the return was filed in 2000 to disclose the proportionate expenses relating to tax free income as Section 14A of the Act was not in the statute. However the court held that Section 14A of the Act was brought on the statute on 1 April 2001 w.e.f. 1962. Thus during the course of assessment proceedings which culminated with an Assessment order on 30 November 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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