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2015 (8) TMI 1036 - ITAT PUNE

2015 (8) TMI 1036 - ITAT PUNE - TMI - Reopening of assessment under section 147 - disallowance of deduction under section 80-IA - Held that:- A perusal of reasons for reopening reproduced hereinabove show that nowhere it is alleged by the Revenue, that the assessment proceedings are initiated as the assessee has failed to disclose fully and truly all material facts necessary for its assessment. The two preconditions laid down by the Hon'ble Delhi High Court in the case of CIT vs. Kelvinator of I .....

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turn of income. The Hon'ble Delhi High Court in the case of CIT vs. Orient Craft Ltd. (2013 (1) TMI 177 - DELHI HIGH COURT) has erased the line of distinction between assessment made under section 143(1) and 143(3). Thus, the contention of the Ld. DR does not hold ground.

A perusal of the original assessment orders passed under section 143(3) of the Act for the assessment years 2005-06 and 2006-07 shows that the Assessing Officer has clearly stated that the assessee has claimed deduct .....

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the assessee under section 80-IA of the Act has come to the knowledge of the Assessing Officer after passing of assessment orders. In our considered view, it is clear case of change of opinion. Thus, AO has acted beyond his jurisdiction in initiating reassessment proceedings under section 147 of the Act. - Decided in favour of assessee. - ITA Nos. 740 to 744/PN/2010 - Dated:- 29-5-2015 - R. K. Panda, AM And Vikas Awasthy, JM, JJ. For the Appellant : Shri M R Bhagwat For the Respondent : Shri B C .....

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sessment years. 3. In the first round, the Tribunal vide order dated 30.03.2012 adjudicated the issue of disallowance of deduction under section 80-IA of the Act alone. In respect of reopening of assessment, the Tribunal observed that the issue of disallowance under section 80-IA is covered in favour of the assessee by the judgement of Hon'ble Madras High Court rendered in the case of Velayudhaswamy Spinning Mills (P) Ltd. vs. ACIT reported as 38 DTR 57 (Mad.). Therefore, issue of reopening .....

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ng of assessment under section 147 of the Act. 4. Before we proceed with the issue of reopening, it is necessary to recapitulate the facts of the case as emanating from the records. The assessee is a partnership firm and is engaged in manufacturing of plastic moulded products. The assessee had installed windmill in assessment year 2000-01 for generation of power. In its return of income for the assessment year 2002-03 onwards, the assessee has been claiming deduction under section 80-IA of the A .....

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o the assessee in respect of all the impugned five assessment years. The Assessing Officer had given similar reasons for reopening of assessment in all the years. Assessment orders under section 143(3) r.w.s. 147 of the Act for all the impugned assessment years were passed on 25.11.2009. In reassessment proceedings the claim of deduction under section 80-IA was denied to the assessee. Aggrieved by the re-assessment orders, the assessee challenged the orders for respective assessment years in app .....

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claimed under section 80-IA of the Act. 5. Shri M.R. Bhagwat appearing on behalf of the assessee submitted that re-assessment proceedings initiated in respect of assessment years 2002-03 and 2003-04 are beyond the period of four years. The Revenue has not been able to show that the income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Further, no tangible material has come into .....

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f the Act. In reassessment proceedings, the Revenue has disallowed the claim of assessee under section 80-IA, whereas in the case of the assessee's sister concern, M/s Prima Papers and Engineering Industry the claim of deduction under section 80-IA has been granted in the assessment year 2001-02. The assessee in support of his submissions placed reliance on the following decisions :- (i) Balakrishna H. Wani vs. ITO, 321 ITR 519 (Bom); (ii) Arun Gupta vs. UOI & Others, 371 ITR 394 (All); .....

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scussion in any of the assessment orders with regard to the deduction under section 80-IA. Since, no opinion was formed by the Assessing Officer in the original assessment orders there is no question of change of opinion. The Ld. Departmental Representative vehemently defended the impugned order and the action of the authorities below in initiating reassessment proceedings against the assessee. 7. We have heard the submissions made by the representatives of both the sides and have perused the or .....

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In other four impugned assessment years, assessment orders were passed under section 143(3) of the Act. The assessments in all the five years was reopened on the same date i.e. 20.03.2009. The Ld. AR has placed on record the reasons for reopening of the assessment in all the five years. The reasons given in assessment year 2002-03 are reproduced hereinbelow :- "The assessee firm has claimed the deduction under section 80IA of IT Act of ₹ 11,79,686/- for the AY 2002-03 on account of i .....

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ding years including the year under consideration, the assessee is left with no positive income from the windmill and is hence not eligible for any deduction under section 80IA. The position of such deduction which is claimed is as per column F of the enclosed chart, whereas position of deduction allowable for various years is as per the column H of the chart. Wherever the deduction allowable is lower than deduction claimed under section 80IA, there is escapement of income assessed, by virtue of .....

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e under section 148 of the IT Act 1961 for the AY 2002-03. Sd/- (A D Chaubal) Income Tax Officer Ward 5(4), Pune" A perusal of reasons of reopening the assessment in all the years show that except for the amount, they are all identical. 8. First, we take-up the appeals of the assessee for the assessment years 2002-03 and 2003-04, where reopening proceedings have been initiated after the expiry of four years from the end of the relevant assessment years. For invoking jurisdiction under secti .....

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the assessee to disclose fully and truly all material facts necessary for his assessment for that year. The Hon'ble Delhi High Court in the case of CIT vs. Kelvinator of India Ltd. reported as 256 ITR 1 (Delhi) has held that the aforestated two conditions are precedent for invoking jurisdiction to reopen the assessment under section 147 of the Act. Both the conditions are cumulative, if any, of the said two conditions are not fulfilled, the notice issued by the Assessing Officer under secti .....

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lose all material facts necessary for its assessment. If the reasons do not even allege that there had been a failure on the part of the assessee to disclose all material facts which are necessary for the assessment, the notice is itself bad in law and is liable to be quashed. 10. The Hon'ble Delhi High Court in the case of CIT vs. Orient Craft Ltd. reported as 354 ITR 536 (Delhi) while dealing with the reassessment proceedings in respect of return of income assessed under section 143(1) and .....

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finality of an intimation under section 143(1) is sought to be disturbed is erroneous and misconceived. As pointed out earlier, there is no warrant for such an assumption because of the language employed in section 147 ; it makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1). Therefore, it is not permissible to adopt different standards while interpreting the words "reason to believe" vis-a-vis section 143(1) and section 143 .....

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was a fullfledged scrutiny assessment made under section 143(3). Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of the assessee; he has no choice in the matter. The other consequence, which is somewhat graver, would be that the entire rigorous procedure involved in reopening an assessment and the burden of proving valid reasons to believe could be circumvented by first accepting the return under section 143(1) and, there-after, issu .....

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of Rajesh Jhaveri (supra) are sought to be relied upon by the Revenue to point out the difference between an "assessment" and an "intimation". The context in which those observations were made has to be kept in mind. They were made to point out that where an "intimation" is issued under section 143(1) there is no opportunity to the assessing authority to form an opinion and, therefore, when its finality is sought to be disturbed by issuing a notice under section 148 .....

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y requirement for disturbing the finality of an intimation is that the Assessing Officer should have "reason to believe" that income chargeable to tax has escaped assessment. In our opinion, the said expression should apply to an intimation in the same manner and subject to the same interpretation as it would have applied to an assessment made under section 143(3). The argument of the Revenue that an intimation cannot be equated to an assessment, relying upon certain observations of th .....

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, is that if the Revenue wants to invoke section 147 it should play by the rules of that section and cannot bog down. In other words, the expression "reason to believe" cannot have two different standards or sets of meaning, one applicable where the assessment was earlier made under section 143(3) and another applicable where an intimation was earlier issued under section 143(1). It follows that it is open to the assessee to contend that notwithstanding that the argument of "chang .....

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1. The Hon'ble Gujarat High Court in the case of Cadila Healthcare Ltd. vs. DCIT reported as 334 ITR 420 (Guj) has struck down the reassessment proceedings where the reassessment was initiated after the period of four years only on the ground that the claim of deduction under section 80HHC of the Act was not examined properly. The Hon'ble High Court held as under :- From the facts emerging on record, there is nothing to indicate that the petitioner has withheld any particulars. The succe .....

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to a particular amount, it was the job of the Assessing Officer to correctly compute the tax liability. Merely making a claim cannot be stated to be non-disclosure of material facts so as to vest in the Assessing Officer jurisdiction under section 147 of the Act. Besides, as already noted hereinabove, the respondent seeks to reopen the (sic) after a period of four years from the end of the relevant assessment year. In the reasons recorded, there is nothing to indicate that the assessee has fail .....

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ion and as such, cannot be sustained." 12. There are catena of judgements wherein it has been held that for reopening of assessment after the expiry of four years from the end of the relevant assessment years, it is essential to show that the assessee has failed to disclose fully and truly all material facts necessary for the assessment year under consideration. A perusal of reasons for reopening reproduced hereinabove show that nowhere it is alleged by the Revenue, that the assessment proc .....

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ns of Ld. DR is that in assessment year 2002-03 assessment was made under section 143(1), therefore the Assessing Officer had no occasion to apply his mind on the return of income. The Hon'ble Delhi High Court in the case of CIT vs. Orient Craft Ltd. (supra) has erased the line of distinction between assessment made under section 143(1) and 143(3). Thus, in view of the law laid down in the case of CIT vs. Orient Craft Ltd. (supra) the contention of the Ld. DR does not hold ground. In view of .....

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to believe' that any income chargeable to tax has escaped assessment for any assessment year. For reopening the assessment within a period of four years from the end of the relevant assessment years, the test to be applied is whether there is a tangible material to do so. The Assessing Officer before invoking the jurisdiction under section 147 must have in his possession any tangible and/or fresh material which was not considered by him at the time of making assessment. The legislature has .....

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