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Adani Exports Versus Income Tax Officer & 1

2015 (8) TMI 469 - GUJARAT HIGH COURT

Validity of reopening of assessment - exemption claimed under Section 10AA - revision u/s 263, Held that:- Once having participated in the reassessment proceedings without challenging the notice under Section 148 of the Act and thereafter reassessment proceedings are dropped and thereafter a show-cause notice has been issued by the Commissioner taking the reassessment order [which is a one line order] under revision, in such facts and circumstances of the case, it is not open for the petitioner .....

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ction 143(1) of the Act, without any discussion on the issue / exemption under Section 10AA of the Act claimed by the assessee. As the same was allowed in the first year which was without any discussion at all and it was an intimation under Section 143(3) of the Act, in the subsequent years the Assessing Officers have mechanically allowed the exemption under Section 10AA of the Act claimed by the assessee. That does not mean that the exemption under Section 10AA of the Act allowed by the Assessi .....

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ion 148 of the Act in the facts and circumstances of the case narrated hereinabove. - Decided against assessee. - Special Civil Application No. 2120 of 2015 - Dated:- 29-4-2015 - M. R. Shah And S. H. Vora, JJ. For the Appellant : Mr S N Soparkar, Sr. Adv. with Mr B S Soparkar, Adv. For the Respondents : Mrs Mauna M Bhatt, Adv. JUDGMENT (Per : Honourable Mr. Justice M. R. Shah) [1.0] By way of this petition under Article 226 of the Constitution of India, the petitioner has challenged the impugned .....

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pon to show-cause why the assessment made under section 143(3) read with section 147 of the Act dated 25.06.2014 may not be treated as erroneous and prejudicial to the interest of the Revenue and by which the petitioner assessee has been called upon and/or required to show cause why the assessment may not be re-framed by making additions as suggested in the said show-cause notice. [1.1] At the outset it is required to be noted that Shri Soparkar, learned Senior Advocate appearing on behalf of th .....

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on 148 of the Act by the Assessing Officer to reopen the assessment for AY 2007-08 only. [2.0] The facts leading to the present Special Civil Application and which are necessary for deciding the present Special Civil Application in nutshell are as under: [2.1] That the petitioner assessee who according to the petitioner is a partnership firm and derives income from business of manufacturing and export of gold jewellery, which activities are carried out from the Special Economic Zone (SEZ), Surat .....

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he subject matter of present Special Civil Application). That thereafter the petitioner participated in the reassessment proceedings and the Assessing Officer completed the assessment under section 143(3) of the Act read with section 147 of the Act and passed the reassessment order on 25.05.2014 dropping the proceedings which were initiated. That thereafter the Revisional Authority - Principal Commissioner of Income Tax, Ahmedabad5 had issued the show-cause notice dated 26.11.2014 under section .....

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y which the petitioner assessee has been called upon to show-cause as to why the assessment be not reframed by making the additions as suggested in the said show-cause notice issued under section 263 of the Act, the petitioner has preferred the present Special Civil Application in the month of January 2015 initially challenging both the notices i.e. notice issued under section 148 of the Act dated 29.03.2014 and the subsequent show-cause notice issued under section 263 of the Act, however as rec .....

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ct is absolutely bad and invalid inasmuch as it was at the instance of the audit party. It is submitted that as the initiation of the reassessment proceedings itself is / was bad in law and invalid, the subsequent reassessment order also cannot be sustained and the same deserves to be quashed and set aside. [3.1] Shri Soparkar, learned Counsel appearing on behalf of the petitioner has further submitted that at the time when the reassessment proceedings were initiated by issuing the notice under .....

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years completed after thorough scrutiny, exemption under section 10AA of the Act was consistently allowed in similar facts and circumstances. It is submitted that therefore consistency of approach has to be adopted for the present assessment year also. In support of his above submissions, he has heavily relied upon the following decisions of the Hon ble Supreme as well as different High Courts. 1. Radhasoami Satsang v. CIT [1992] 193 ITR 321 2. Taraben Ramanbhai Patel v. ITO [1995] 215 ITR 323 .....

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missible and/or invalid. 1. Calcutta Discount Co. Ltd. v. IncomeTax Officer [1961] 41 ITR 191 (Guj.) 2. Jagan Nath Singhal v. Deputy Commissioner of IncomeTax & Anr. [2000] 242 ITR 554 (P&H) 3. Commissioner of Income Tax v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) 4. Parixit Industries Ltd. v. Assistant Commissioner of IncomeTax [2013] 352 ITR 349 (Guj.) 5. Synbiotics Ltd. v. Assistant Commissioner of IncomeTax [2015] 370 ITR 119 (Guj.) [3.3] Shri Soparkar, learned Counsel appear .....

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he reassessment proceedings and/or reopening of the assessment. No other submissions have been made. Making above submissions and relying upon above decisions it is requested to allow the present Special Civil Application and grant the relief as prayed for. [4.0] Present petition is opposed by Mrs. Bhatt, learned Counsel appearing on behalf of the Revenue. Mrs. Bhatt, learned Counsel appearing on behalf of the Revenue has vehemently submitted that in the facts and circumstances of the case, now .....

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sment order has been passed. It is submitted that even at that stage also, the petitioner did not thought it fit to challenge the initiation of the reassessment proceedings. It is submitted that only thereafter when in exercise of powers under section 263 of the Act, the order of reassessment is taken under revision as it is found that the reassessment order is absolutely without application of mind and prejudicial to the interest of Revenue and only thereafter and having been served with the no .....

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rder cannot be sustained. [4.3] It is further submitted by Mrs. Bhatt, learned Counsel appearing on behalf of the Revenue that even the exemption under Section 10AA of the Act was granted to the petitioner in the first year i.e. AY 2007-08 (year under consideration) without any scrutiny and the intimation under section 143(1) of the Act was given and in the subsequent years the same has been mechanically followed. It is submitted that therefore when the original assessment for AY 2007-08 was reo .....

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t to entertain the present petition challenging the notice under Section 148 of the Act. It is submitted that therefore none of the decisions which have been relied upon by the learned Counsel appearing on behalf of the petitioner in support of challenge to the notice under Section 148 of the Act would be applicable to the facts of the case on hand and/or shall be of any assistance to the petitioner. [5.0] Heard learned Counsel appearing on behalf of respective parties at length. At the outset i .....

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ar. No scrutiny notice was issued and the AO accepted the return filed by the petitioner assessee by sending the intimation under Section 143(1) of the Act and without any further inquiry in detail and/or even any discussion on the issue with respect to the exemption claimed under section 10AA of the Act, and accepted the return and allowed the exemption under Section 10AA of the Act claimed by the assessee. That by notice dated 29.03.2014, the assessment for AY 200708 was reopened. That the pet .....

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r AY 200708, pursuant to the notice under Section 148 of the Act on 29.03.2014, by a one line order which reads as under: "Order dropping reassessment proceedings In this case, the reassessment proceedings initiated by way of issue of notice u/s.148 of the I.T. Act on 29.03.2014 is hereby dropped." [5.1] It is required to be noted at this stage that even at that stage also the petitioner did not challenge the notice under Section 148 of the Act dated 29.03.2014, obviously because the r .....

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required to be noted that initially the petitioner challenged the notice under Section 148 of the Act dated 29.03.2014 as well as the show-cause notice under Section 263 of the Act dated 26.11.2014, however for the reasons best known, the petitioner has restricted the present petition with respect to challenge to the notice under Section 148 of the Act dated 29.03.2014 only. [5.2] Considering the aforesaid facts and circumstances of the case and in the facts and circumstances of the case narrat .....

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order dated 25.06.2014 is taken under revision, thereafter now it is not open for the petitioner to challenge the notice under Section 148 of the Act and/or reopening of the assessment for AY 2007-08, as the same is malafide and nothing but an afterthought. It is required to be noted that if the reassessment order dated 25.06.2014 was not taken under revision by the Commissioner under Section 263 of the Act, naturally the petitioner would not have challenged the notice under Section 148 of the A .....

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sessing Officer without any further discussion and/or considering the exemption claimed under Section 10AA of the Act in detail accepted the return filed by the assessee and sent the intimation under Section 143(1) of the Act. There was no scrutiny assessment under Section 143(3) of the Act at the time of original assessment. That is how the assessment for AY 2007-08 was reopened for which the notice under Section 148 of the Act dated 29.03.2014 was issued. However, again without any application .....

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e petitioners in support of his submission challenging the notice under Section 148 of the Act are required to be considered and/or none of them shall be applicable to the facts of the case on hand. As observed hereinabove, once having participated in the reassessment proceedings without challenging the notice under Section 148 of the Act and thereafter reassessment proceedings are dropped and thereafter a show-cause notice has been issued by the Commissioner taking the reassessment order [which .....

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