TMI Blog2016 (5) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act along with copy of accountant’s report in form No.10CCB in respect of its claim of deduction under section 80IB of the Act. The Assessing Officer accepted the contention of assessee and observed that it was a mistake apparent from the record and passed rectification order under section 154 of the Act, dated 28.02.2007 granting deduction under section 80IB of the Act. These proceedings reflect that a mistake which had crept in the order of assessment was acknowledged by the Assessing Officer while passing rectification order. Accordingly, we hold the reassessment proceedings to be invalid both on account of being beyond four years and also on account of change of opinion. Since after adjustment of brought forward losses, the income in the hands of assessee is reduced to Nil, and where the assessee would not be entitled to the benefit of deduction under section 80IB of the Act in the absence of any profits, there is no merit in reassessment proceedings initiated against the assessee. Accordingly, we cancel the same holding the relevant proceedings to be invalid and beyond limitation period prescribed in the Act.- Decided in favour of assessee - ITA No.1780/PN/2013 - - - D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome to the tune of ₹ 2.59 crores had escaped the assessment. Thereafter, notice under section 148 of the Act was issued and served upon the assessee. The assessee requested for the reasons for issue of notice under section 148 of the Act and the same were made available to the assessee. Subsequently, the assessee filed a letter, according to which, the deduction under section 80IB of the Act was correctly allowed. It was also pointed out by the assessee that in view of the decision of Tribunal relating to assessment year 1999-2000, effect for which is yet to be given, there would be brought forward losses to the assessee. The Assessing Officer observed that in view of the assessee having not filed audit report in form No.10CCB, which was mandatory, the assessee was not eligible for deduction under section 80IB of the Act for the year under consideration. The Assessing Officer further held that however, sub sequent to giving effect to Tribunal s order, allowable deduction under section 80IB of the Act would be nil as there was loss. 5. The CIT(A) rejected the objections raised by the assessee against invoking of jurisdiction under section 147 / 148 of the Act and also held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder is placed at pages 24 to 26 of the Paper Book. Thereafter, notice under section 148 of the Act was issued for withdrawal of deduction under section 80IB of the Act, which is placed at page 29 of the Paper Book, which in turn, is supported by the reasons for initiating re-assessment proceedings, which are placed at pages 30 and 31 of the Paper Book. The first objection raised by the assessee was that the notice was issued beyond four years i.e. for the year ending 31.03.2003, the notice could be issued up to 31.03.2008 in view of provisions of section 148 of the Act, whereas the notice was issued on 31.03.2009. Our attention was drawn to the order of CIT(A) at para 6, where while upholding the re-assessment proceedings under section 147 of the Act, the CIT(A) looks at the initial assessment year as assessment year 1995-96. The second objection raised by the learned Authorized Representative for the assessee was that where deduction has been considered and allowed by the Assessing Officer and all material facts in this regard were disclosed by the assessee and available before the Assessing Officer, then the re -assessment proceedings initiated in the case amounts to change of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 24-28 of the Paper Book 5 Second notice under section 148 of the Act initiating re-assessment for withdrawal of deduction under section 80-IB of the Act 31-Mar-09 Page 29 of the Paper Book 6 Submission filed with AO in response to notice under section 148 of the Act requesting to treat revised return filed on 27 April 2007 pursuant to first notice under section 148 of the Act as return filed in response to the said notice 30-Apr-09 - 7 Reasons for initiating reassessment provided to the Appellant 15-Dec-09 Page 30-31 of the Paper Book 8 Submission filed with the AO in response to reasons provided for initiating reassessment 22-Dec-09 Page 49-50 of the Paper Book 9 Second reassessment order passed under section 147 of the Act disallowing deduction under section 80-IB of the Act due to nonsubmission of audit report in Form 10CCB along with the return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification of record, it was found that the assessee was eligible for deduction under section 80IB of the Act and since the mistake was apparent from the record, the assessee s plea of grant of deduction under section 80IB of the Act was allowed. Thereafter, notice under section 148 of the Act, dated 31.03.2009 initiating second reassessment proceedings for withdrawing deduction under section 80IB of the Act was issued, copy of which is placed at page 29 of the Paper Book and copy of reasons recorded for reopening assessment is placed at pages 30-31 of the Paper Book, in which it is admitted that original assessment was completed on 30.03.2006 and thereafter, order under section 154 of the Act was passed. During the year under consideration, the assessee was found not to have submitted any audit report in form No.10CCB, which was mandatory for all the assessees including commercial assessees. In view of non-submission of audit report, it was observed that the deduction allowed under section 80IB of the Act amounting to ₹ 2.59 crores had escaped the assessment within meaning of section 147 of the Act. The assessee participated in re-assessment proceedings, sought reasons for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case, where the income computed in the hands of assessee, because of adjustment of brought forward losses was Nil, the assessee made disclosure to the effect in its return of income and also submitted that in case any positive income was determined in his hands, then it should be allowed an opportunity to furnish audit report. Merely because, the audit report has not been filed along with return of income cannot be the basis for rejection of claim of deduction under section 80IB of the Act as held by the Hon ble Madhya Pradesh High Court in CIT Vs. Medicaps Limited (2010) 323 ITR 554 (MP) and other decisions as relied upon by the learned Authorized Representative for the assessee. In this regard, we hold that where the assessee had fully and truly disclosed all the material facts vis- -vis computation of income in its hands, the reassessment proceedings, if any, could be initiated against the assessee within four years from the end of relevant year and where the reassessment proceedings are initiated beyond the period of four years, the same is to be held to be invalid. 12. We find support from the ratio laid down by the Hon ble Bombay High Court in Anil Radhakrishna Wani Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 143(3) of the Act, dated 30.03.2006, the assessee moved rectification application under section 154 of the Act along with copy of accountant s report in form No.10CCB in respect of its claim of deduction under section 80IB of the Act. The Assessing Officer accepted the contention of assessee and observed that it was a mistake apparent from the record and passed rectification order under section 154 of the Act, dated 28.02.2007 granting deduction under section 80IB of the Act. These proceedings reflect that a mistake which had crept in the order of assessment was acknowledged by the Assessing Officer while passing rectification order. 14. Now, we come to the second objection raised by the assessee that in such circumstances, the reassessment proceedings initiated against the assessee were change of opinion. We find merit in the claim of assessee in this regard, in view of the facts narrated above. Accordingly, we hold the reassessment proceedings to be invalid both on account of being beyond four years and also on account of change of opinion. 15. Another aspect to be noted in the case is that after adjustment of brought forward losses, the income determined in the hand ..... 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