TMI Blog2014 (10) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on the statutory provisions – AO has to apply his own mind to form a reasonable belief that income chargeable to tax has escaped the assessment - the question of opinion on statutory provision is an issue which would only arise, if the statutory jurisdictional requirement of failure to disclose fully and truly all material facts necessary for assessment is satisfied – thus, the notice for reopening of assessment is to be set aside – Decided in favour of assessee. - Writ Petition No. 877 of 2006, Writ Petition No. 878 of 2006 - - - Dated:- 17-9-2014 - M. S. Sanklecha And N. M. Jamdar,JJ. For the Petitioner : Mr. J. D. Mistry, Sr. Adv. Mr Sachin Kudalkar i/b M/s Madekar Co. For the Respondent : Mr. Arvind Pinto i/b Mr Suresh Kumar JUDGMENT (Per M. S. Sanklecha, J.) :- Both these two Petitions under Article 226 of the Constitution of India, challenge:- (a) Notices dated 2nd February, 2005 and 3rd February, 2005 both issued under Section 148 of the Income Tax Act, 1961 (the Act), seeking to reopen the assessment for the Assessment Years (A.Y.) 1999-2000 and 1998-1999 respectively; and (b) Two orders dated 10th March, 2006 (one for each assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct Taxes vide its Circular Vide F. No.153/93/2004/TPL dated 08.09.2004 has stated as under: It has been concluded that section 80HHC provides for deduction from the total income in respect of profits derived from the export of goods or merchandise which are realized in convertible foreign exchange and not in respect of incidental income arising through a Government Scheme. Further, the elaborate scheme of computation of the deduction provided u/s. 80HHC(3) of the I. T. Act does not cover profit on sale of DEPB credits. Such profits are therefore, not eligible for deduction under Section 80HHC. 4 Therefore, in view of the circular of the CBDT, the assessee is not entitled to claim deduction u/s. 80HHC on the DEPB receipts. 5 In view of the above, I am satisfied that the income has escaped assessment to the extent of ₹ 1,15,24.463/within the meaning of provision of section 147 of the Income Tax Act, 1961. The tax effect comes to ₹ 40,33,562/-. 6 Hence, notice u/s. 148 of the I.T. Act, 1961 is required to be issued after taking approval of the Commissioner of Income Tax8, Mumbai. (SUJIT KUMAR) Asst. Commissioner of Income Tax 8(1) Mumbai. (e) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icates the Circular dated 8th September, 2004 issued by CBDT as the basis for the impugned notices. The Circular merely gives an interpretation of the CBDT on Section 80HHC (3)of the Act that the deduction provided therein would not cover profit on sale of DEPB credit. It is submitted that the opinion/ interpretation of a statutory provisions by the CBDT can not be the basis for reopening of assessment as the view has to be of the Assessing Officer on material not considered earlier; and (d) In any view of the matter, the issue on merits now stands concluded by the decision of the Apex Court in Topman Exports v/s. Commissioner of Income Tax (2012) 342 ITR 49 in favour of the Petitioner. Consequently, the entire exercise of reassessment proceedings would be an academic exercise in view of the law declared by the Supreme Court in Topman Exports (supra). 5. As against the above, Mr. Pinto, learned Counsel appearing for Respondent-Revenue in support of the impugned notices submit as under:- (a) There has been a failure on the part of the Petitioner to disclose fully and truly all material facts necessary for the assessment, inasmuch as, the nature and character of the DEPB ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the basis of notional entitlement. Thus, it is submitted that there is a failure to disclose truly and fully all material facts necessary for assessment. 8. Our Court has time and again reiterated the view expressed in Hindustan Lever Ltd. v/s. R.B. Wadkar, Asst. Commissioner of Income Tax Others - 268-ITR 332, that the reasons for reopening of an assessment are required to be tested/examined as recorded at the time of issuing of notice under Section 148 of the Act. No substitution, deletion or addition to the reasons recorded at the time of issuing notice can be made to support the impugned notices either by affidavit or in the order disposing of objections. The reopening notices would stand or fall by the reasons recorded at the time when the notices were issued. Therefore, the reliance being placed upon by the Respondent-Revenue on the affidavit in reply and/or the order dated 10th March, 2010 rejecting the objections to allege that there is a failure to disclose details cannot support the impugned notices. Thus the submission of Mr. Pinto that there is a failure on the part of the Petitioner to disclose truly and fully all material facts necessary for assessment cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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