TMI Blog2014 (9) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... s when he observed that the petitioner had failed to disclose fully and truly all material facts - even on this presumption the AO was not correct. In the Transfer Pricing Report submitted by the assessee it had been clearly indicated that it had processed raw beads to the extent of 1,03,213 Kgs into finished imitation pearls in the financial year 2004-2005 which related to the AY 2005-2006 – thus, the entire activity and particularly the nature of manufacturing/production activity carried out by the petitioner “on job work basis” was clearly revealed before the AO in the original round as well as in the round of re-assessment - the statement of the AO in support of the notice dated 23.03.2012 that there had been failure on the part of the petitioner/assessee to fully and truly disclose the material facts, is completely belied by the records of the case – thus, the notice for reopening of assessment is set aside – Decided in favour of Assessee. - W.P.(C) 1909/2013 - - - Dated:- 8-8-2014 - Badar Durrez Ahmed And Siddharth Mridul,JJ. For the Petitioner : Mr. M. S. Syali, Sr. Advocate with Ms. Husanl Syali and Mr. Mayank Nagi, Advocates. For the Respondent : Mr. Kama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to computation of the Arms Length Price in relation to international transactions with associated enterprises reported in form 3CEB. 5. Thereafter a notice under section 154 of the said Act was issued on 21.04.2010 whereby it was proposed that the deduction of ₹ 6,34,90,243/- claimed under section 10B of the said Act ought to be disallowed inasmuch as the petitioner had undertaken activities on job work basis. There was another proposal also that the other income of ₹ 1,32,97,000/- had not been taxed separately and had been included in the deduction claimed under section 10B of the said Act. 6. The petitioner filed detailed submissions in reply to the said notice on 24.05.2010. The petitioner indicated that it would eligible for the deduction under section 10B of the said Act for the Pune Unit inasmuch as the petitioner was engaged in the manufacturing/production of finished imitation pearls after carrying out the processing activities on raw beads. On the submission of the said reply by the petitioner, no further action was taken by the Department pursuant to the said notice under section 154 of the said Act. 7. In the meanwhile, a notice under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment within the meaning of section 147(c) of the IT Act, 1961. The escapement of the income has been by the reason of failure on the part of the assessee to disclose fully and truly, all material fact necessary for assessment. Since the assessment has been completed u/s 143(3) of the IT Act, 1961 and 4 years have since elapsed. The assessment record is being submitted for kind perusal and approval u/s 151(1) of the IT Act, 1961 for issuance of notice u/s 148 of the IT Act, 1961. 9. On going through the above reasons, it is evident that while the Assessing Officer mentioned that income had escaped assessment because of the failure on the part of the assessee to fully and truly disclose the material facts for assessment, he has not indicated as to which material fact had not been fully and truly disclosed by the assessee. Presumably the material fact could have been the fact that the assessee was carrying out its activities at its Pune unit on a job work basis. In this backdrop, the point we have to consider in this case is whether the petitioner had, in fact, failed to disclose fully and truly all the material facts which were necessary for the purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Electrification Corporation Ltd. vs. Commissioner of Income Tax: [2013] 355 ITR 356. It may not be out of place here to mention that this court in Microsoft Corporation (I) Pvt Ltd vs. Deputy Commissioner of Income Tax Anr: [WP(C) 284/2013 decided on 23.05.2013] had observed as under:- From the above, it is evident that merely having a reason to believe that income had escaped assessment is not sufficient for reopening the assessment beyond the four year period referred to above. It is essential that the escapement of income from assessment must be occasioned by the failure on the part of the assessee to, inter alia, disclose material facts, fully and truly. If this condition is not satisfied, there would be a bar to taking any action under Section 147 of the said Act. 12. It is clear that the escapement of income by itself is not sufficient for reopening the assessment in a case covered by the first proviso to Section 147 of the said Act unless and until there is failure on the part of the assessee to disclose fully and truly all the material facts necessary for assessment. In the present case, it has not been specifically indicated as to which material fact or facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking activities such as coating of raw beads, polishing, stringing and knotting, quality control customs bonded warehousing etc. on job work basis. (underlining added) 14. It is evident from the above that the petitioner had categorically stated that the Pune Unit was a 100 per cent export oriented unit and was undertaking activities on raw beads such as coating, polishing, stringing and knotting etc., on job work basis . Therefore, it is abundantly clear that the petitioner had on a specific query raised by the Assessing Officer informed the Assessing Officer that it was carrying out the manufacturing/production activity on job work basis . 15. It may be further pointed out that even in the re-assessment order dated 26.10.2010, pursuant to the first re-assessment notice for this very year i.e. assessment year 2005-06, the Assessing Officer has categorically noted that the petitioner was engaged in the business of manufacturing/processing imitation pearls and in the business of import and sale of crystal and related items in India. From this, also, it is evident that the entire activity and particularly the nature of manufacturing/production activity carried out by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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