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Deputy Commissioner of Income Tax, Circle-2, Jaipur Versus M/s Goenka Diamond & Jewels Limited

Reopening of assessment - benefits U/s 10AA be disallowed - CIT(A)quashed the reopening orders - Held that:- It is undisputed fact that the ld Assessing Officer in first scrutiny assessment U/s 143(3) dated 10/12/2009 has considered all the purchases and sales of non-SEZ unit, SEZ unit and the fact of the Surat SEZ unit were also submitted by the assessee and considered by the Assessing Officer in his assessment. Thereafter on same facts and circumstances, he reopened the case U/s 147 even he di .....

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(2010 (1)11 - SUPREME COURT OF INDIA ) is squarely applicable. The ld DR had not controverted the finding given by the ld CIT(A) and the submissions made by the assessee before the lower authorities. Therefore, we uphold the order of the ld CIT(A). When the matter has been decided by this Bench on technical ground, we have not decided the revenue’s appeal on merit. - Decided against revenue - ITA No. 639/JP/2013, C.O. No. 51/JP/2013 - Dated:- 22-1-2016 - SHRI T.R.MEENA, AM & SHRI LALIET KUM .....

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nt order. 2. Relying on the irrelevant decisions cited by the assessee and ignoring the specific and relevant decisions cited by the A.O. in her order. 3. Holding that all material facts have been disclosed for obtaining the benefits U/s 10AA. 4. For quashing assessment on legal ground and thereafter discussing it on merits as well. Grounds in Cross Objection 1. The ld CIT(A) is correct in law in holding that proceedings initiated U/s 147/148 in case were bad in law and consequently the impugned .....

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e issue. 2. The assessee firm is engaged in the business of trading and manufacturing of precious and semi precious stones,. Diamond and studded gold jewellery. The assessee firm filed its return on 21/10/2007 declaring income of ₹ 35,73,020/-. The assessment U/s 143(3) of the Income Tax Act, 1961 (in short the Act) was completed by the Assessing Officer on 10/12/2009 at ₹ 43,69,520/-. The ld Assessing Officer observed that the assessee had claimed exemption of ₹ 2,55,79,596/- .....

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EZ unit. Since the assessee company was not engaged in manufacturing or producing articles of thins or providing any services and merely engaged in trading activity which was not eligible for exemption U/s 10AA of the Act. Accordingly, the ld Assessing Officer after recording the reasons in writing had issued notice U/s 148 of the Act on 30/3/2012. The assessee company in compliance to notice U/s 148 of the Act had filed return declaring income of ₹ 43,69,520/- on 24/4/2012. Copy of the re .....

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refore, he disallowed deduction U/s 10AA of the Act at ₹ 2,55,79,596/-. Alternatively, he also apportioned the expenses between the SEZ unit and non-SEZ unit on account of Director s remuneration. 3. All the grounds of the revenue s appeal are against quashing the reopening proceeding by the ld CIT(A) on the ground of change of opinion whereas the assessee s C.O. in support of the order of the ld CIT(A). In appeal, the ld CIT(A) had thoroughly examined the issue of reopening U/s 147 and he .....

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0/12/2009 on page 4 of her order. She further held that the ld Assessing Officer while finalizing the income initially U/s 143(3), the subsequent proceeding initiated U/s 147 are bad in law as laid down by the Hon ble Apex Court in the case of CIT Vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC), on the basis of change of opinion at the time of reopening the case, there was no tangible material with the Assessing Officer for reopening the case. She also discussed the various other High Court .....

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eviewing the earlier order particularly when there was no failure on the part of the assessee to fully and truly disclosed material fact for the assessment. In this case, the Assessing Officer has considered all the facts for allowability of deduction U/s 10AA and allowed deduction in scrutiny assessment by forming opinion, therefore, reopening by the Assessing Officer is review of the previous order, which is not permitted under the law. Accordingly she quashed the reopening proceeding. 4. Now .....

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submitted that proceedings u/s 147/148 has been initiated by Ld. A.O. is merely on change of opinion. It is clear from the original assessment order that the Assessing Officer was well aware about the primary facts, viz, the claim made by the assessee, the circumstances under which the claim was made, and the provision of law which could be applied while granting the deduction, and the Assessing Officer consciously considered the facts & submissions made by assessee in assessment proceeding .....

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opinion on the part of the Assessing Officer to reopen an assessment does not stand obliterated after the substitution of section 147 of the Income-tax Act, 1961, by the Direct Tax Laws (Amendment) Acts, 1987 and 1989. After the amendment, the Assessing Officer has to have reason to believe that income has escaped assessment, but this does not imply that the Assessing Officer can reopen an assessment on mere change of opinion. The concept of change of opinion must be treated as an in-built test .....

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proposes or wants to take a different view. The same view was held by Delhi High Court in CIT Vs. Eicher Ltd. (2007) 297 ITR 310 (Del). In a recent judgment the Hon'ble Gujarat High Court has adjudicated on similar facts in the case of M/s Ganesh Housing Corporation Ltd. Vs. DCIT (2013) 350 ITR 131 (Guj.) While adjudicating in favour of the assessee it held that the assessee had disclosed all the materials relevant for the purpose of getting the benefit under section 80-IB of the Income-tax .....

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without having any tangible material to exercise jurisdiction. The Ld. A.O. reopened assessment by issue of notice u/s 148 after 4 years from the end of relevant assessment year which is bad in law and therefore reliance is also placed on a recent judgment on similar facts by the Hon'ble Bombay High Court in case of OHM Stock Brokers Pvt. Ltd. V/s CIT (2013) 351 ITR 443 (Bom.) wherein the Hon'ble Court held that reassessment notice after 4 years in a case where the assessment had been co .....

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roceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opi .....

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