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M/s. Peacock Apparels (P) Ltd. Versus The Income-Tax Officer And Others

2015 (12) TMI 834 - MADRAS HIGH COURT

Reopening of assessment - Held that:- This Court does not find any tangible material warranting the Assessing Officer to reopen the assessment.

As far as the first respondent has no power to reopen the assessment year after a period of four years and the same is hit by limitation, the judgment relied by the petitioner reported Fenner (India) Ltd [1998 (11) TMI 66 - MADRAS High Court ] holds the field. - Decided in favour of assessee. - W. P. (MD)No. 2951 of 2015, W. P. (MD)No. 2953 of .....

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ner Company and consequential rejection orders dated 18.02.2015 and quash the same. 2. All the three Writ Petitions have been filed for each of the different assessment year. The case of the petitioner is that the petitioner is a Private Limited Company (for short 'the Company') registered under the Companies Act, 1956 carrying on business in the manufacture and sale of ready-made garments and export the same. The said Company is an approved 100% (Export Oriented Unit) EOU with Green Car .....

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s filed after admitting a total income of ₹ 32,98,240/- and after claiming exemption of ₹ 1,92,42,955/- under Section 10B of the Income Tax Act,1961 for the seventh year. Likewise, for the accounting year March 2009, the return was filed after admitting a total income of ₹ 49,70,350/- after claiming exemption of ₹ 3,73,49,456/- under Section 10B of the Income Tax Act,1961 for the eighth year. The same were accepted under Section 143(1)(a) of the I.T.Act, 1961. Thereafter, .....

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9 and 2009-2010, under Section 148 of the Income-tax Act, 1961 requiring the petitioner to submit a return of income in the prescribed form within 30 days of receipt of the said notice on the ground that the Assessing Officer has reason to believe that the income of the petitioner company chargeable to tax as it had escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961. By a letter dated 17.04.2014, the Company responded to the respondents stating that the return alrea .....

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ording to the said letter, the Assessing Officer has mentioned the following reasons which prompted him to believe that income of the Company has escaped assessment:- Deduction under Section 10B has been claimed and allowed for ₹ 2,40,45,743/-. However, it is noticed that assess's EOU had not been approved by the Specified Authority as required as clause (iv) of Explanation 2 to s.10B. Therefore, the assessee-company is not eligible for deduction under Section 10B. 3. Thereupon, the Co .....

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ed that in all the Writ Petitions the petitioner company is a manufacturer of ready-made garments and they are 100% Export Oriented Company. As per Section 10B of the Income Tax Act, it gives 100% exemption on total profit for Export Oriented Company. According to the respondents, the Company has not been approved by a Specified Authority as required under Explanation 2 under Section 10B. Therefore, the respondent is of the view that the petitioner company is not eligible for deduction under Sec .....

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anted by the second respondent for EOU at a latter point of time, it will be considered valid once such an approval is ratified by the Board of Approval for EOU Scheme. Therefore, the reason assigned by the first respondent for reopening the assessment for the years 2007-2008, 2008-2009 and 2009-2010 of the petitioner Company is not proper. 4.2. Further, the learned counsel for the petitioner submitted that the first respondent has no power to reopen the assessment orders, for the Writ Petitions .....

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that under Section 147 of the Act, the first respondent cannot exercise his power beyond a period of four years in the case of first two Writ Petitions since the same is hit by limitation. For this purpose, he relied upon a judgment reported in (2000) 241 ITR 672 (Mad) Fenner (India) Ltd. He also drew the attention of this Court with regard to the relevant portion found in the said judgment which reads as follows:- The pre-condition for the exercise of the power under Section 147 in cases where .....

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stay petitions in all the Writ Petitions and submitted that in all the Writ Petitions, the reassessment was done on the basis of a judgment reported in Regency Creations Ltd & Valiant Communications Ltd, wherein it is held that there is no notification or official document suggesting that either the Inter Ministerial Committee or any other officer or agency was nominated to perform the duties of the Board (constituted under Section 14 of the IDR Act) for the purpose of approval under Sectio .....

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s Novopan India Ltd (AP) 236 ITR 746 to substantiate the contentions. In the case on hand, proper show cause notice was issued to the petitioner as to why the exemption claimed under Section 10B should not be disallowed as the petitioner's company 100% EOU was not approved by the Specified Authority as required under clause (iv) of Explanation 2 to Sec.10B and posted the hearing on 05.03.2015. After considering their explanations, it was rejected by the first respondent and posted the matter .....

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pleaded as a party in this Writ Petition, who in turn, has submitted his counter affidavit. 7. The second respondent in his counter affidavit stated that a Letter of Permission was already granted to the Company to function as a 100% Export Oriented Unit vide this office letter No.A/2001/029/EoU/TN dated 15.05.2001, issued by the second respondent herein for the purpose of manufacturing and to export ready-made garments. The Ministry of Commerce and Industry notified the Board of Approval (BOA) .....

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. Moreover, the petitioner company has been granted with Green Card bearing No.2171, which is valid upto 13.11.2016. The Central Board of Direct Taxes which is controlling Body for the Income Tax Department has also issued an instruction No.2/2009 dated 9.3.2009 and in the Corrigendum F.No.178/19/2008-ITA-1 dated 08.05.2009 wherein, it is stated that an approval granted by the Development Commissioner in the case of a hundred percent Export Oriented Unit will be considered valid once such an app .....

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e petitioner unit is considered valid once such an approval is ratified by the Board of Approval for the Export Oriented Unit Scheme. Further, as per the instruction No.2/2009 dated 9.3.2009 and in the Corrigendum F.No.178/19/2008-ITA-1 dated 08.05.2009 approval granted by the Development Commissioner in the case of a hundred percent export oriented unit will be considered valid once such an approval is ratified by the BOA for the EOU Scheme. Therefore, I am of the opinion that the reason assign .....

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learned counsel for the petitioner, there is no tangible evidence available against the petitioner so as to come the conclusion that there is an escapement of income of assessment and therefore, the first respondent cannot review his own order merely for the sake of reviewing. In this regard, the petitioner has relied upon a judgment reported in Commissioner of Income Tax Vs. Schwing Stetter India P.Ltd, (2015) 93 CCH 0112 ChenHC, wherein, in paragraph No.19, it has been held as follows:- .... A .....

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