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2016 (5) TMI 1159 - ITAT PUNE

2016 (5) TMI 1159 - ITAT PUNE - TMI - Reopening of assessment - delayed payment of PF and claim of deduction u/s.80IB without furnishing the full certificate of Form 10CCB along with return of income - Held that:- Since admittedly in the instant case the notice u/s.148 has been issued beyond a period of 4 years from the end of the relevant assessment year and there is no allegation by the AO in the reasons recorded for such reopening that there is any failure on the part of the assessee to discl .....

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athak For The Revenue : Shri Hitendra Ninawe ORDER PER R.K.PANDA, AM : This appeal filed by the assessee is directed against the order dated 07-05-2014 of the CIT(A)-V, Pune relating to Assessment Year 2003-04. 2. Facts of the case, in brief, are that the assessee is a company engaged in the business of manufacture of PU Foam, automobile seat assembly etc. It filed its return of income on 29- 11-2003 declaring total income of ₹ 7,22,636/-. Original assessment u/s.143(3) in this case was co .....

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ncome of ₹ 7,22,636/-. The assessment was completed u/s.143(3) of the Income Tax Act, 1961 on 30/03/2006 determining total income of ₹ 8,32,640/-. On verification of the case record from the statement No.II of Clause of Tax Audit Report, it is seen that there has been delay in the payment of P.F. Contribution as under : Month Amount Due date Date of payment June 2002 36,370 15/07/2002 26/07/2002 August 2002 38,960 15/09/2002 24/09/2002 November 38,622 15/12/2002 20/12/2002 Total 1,13 .....

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s per Form No.10CCB. Full Certificate in Form 10CCB was not furnished with the return of income as required under Rule. In absence of the full certificate containing the details of entire claim of deduction u/s.80IB at ₹ 3,04,867/- should have been disallowed which was not done, which resulted into under assessment of income and short levy of tax of ₹ 1,12,038/-. On the above fact, I have reason to believe that the income has escaped assessment within the meaning of Sec.147 of the In .....

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the AO. However, the CIT(A) was not satisfied with the arguments advanced by the assessee and dismissed the appeal filed by the assessee. 5. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : The following grounds are taken without prejudice to each other - On facts and in law, 1] The learned CIT(A) erred in holding that the reasst. u/s 147 r.w.s. 143(3) was valid without appreciating that the reopening was made after a period of four years .....

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s not justified in law. 3] The learned CIT(A) erred in supplementing the reasons supplied by the A.O. which is not justified and accordingly, the reasst. u/s 147 r.w.s. 143(3) may be declared as void in law. 4] The learned CIT(A) erred in holding that the assessee had not furnished the complete copy of the Audit Report in Form No. 10CCB at the time of filing the return of income and as per the said audit report, the value of plant and machinery was in excess of the limit of ₹ 3 Crs. allowa .....

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, the reopening u/s 148 on the ground that the said report was not filed at the time of filing the return of income is not justified. b. Even assuming that the complete copy of the audit report in Form 10CCB was not filed along with the return of income, the fact that the value of plant and machinery exceeded the maximum limit for claiming the deduction uls 80IB(3) was evident from the balance sheet filed along with the return of income and therefore, there was no failure on the part of the asse .....

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preciate that the said amount was paid before the due date of filing return u/s 139(1) and hence, the disallowance made u/s 36(1)(va) was not justified in law. 7] The learned CIT(A) erred in denying the deduction u/s 80IB(3) of ₹ 3,04,687/- without appreciating that the assessee had duly complied with the conditions laid down u/s 80IB and hence, the assessee was eligible to claim the said deduction. 8] The appellant craves leave to add, alter, amend or delete any of the above grounds of ap .....

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re the AO has allowed the claim of deduction u/s.80IB at ₹ 3,04,867/- . Referring to the copy of the reasons for reopening u/s.148, which is placed at page 3 of the paper book, he submitted that the AO has reopened the assessment on two counts, i.e. (a) delayed payment of PF contribution and (b) claim of deduction u/s.80IB at ₹ 3,04,867/- without furnishing the full certificate in Form 10CCB along with the return of income. 7. So far as the first issue is concerned he submitted that .....

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f the relevant assessment year. Referring to the second proviso to section 147 he submitted that as per the said provision where an assessment u/s.143(3) has been made for the relevant assessment year no action shall be taken under this section after the expiry of 4 years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for an assess .....

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rt of the assessee to disclose fully and truly all material facts necessary for the purpose of completion of assessment the Tribunal has quashed the notice u/s.148. He accordingly submitted that this being a covered matter in favour of the assessee by the decision of the Tribunal in assessee s own case, which inturn has followed various decisions of the Hon ble Bombay High Court, therefore, the reopening should he held as void ab-initio. 9. The Ld. Departmental Representative on the other hand h .....

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original assessment u/s.143(3) was completed on 30-03- 2006 determining the total income at ₹ 8,32,640/- after allowing deduction u/s.80IB at ₹ 3,04,867/-. We find the AO issued notice u/s.148 on 26-03-2010 after recording the reasons for reopening which is beyond a period of 4 years from the end of the relevant assessment year. The reasons recorded for such reopening u/s.147 are already reproduced in the para 2 of this order. From the reasons recorded, we find the AO has reopened t .....

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he AO in the original assessment has allowed the claim of deduction while computing the total income. A perusal of the notice issued u/s.148 nowhere says that there is any failure on the part of the assessee to fully and truly disclose all material facts necessary for completion of the assessment. Under these circumstances, we have to decide the validity of the notice issued u/s.148 beyond a period of 4 years from the end of the relevant assessment year when there is no allegation by the AO in t .....

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cessary for completion of the assessment and the notice issued u/s.148 is beyond a period of 4 years from the end of the relevant assessment year, then such notice is void ab-initio. The relevant observation of the Tribunal from para Nos.18 to 23 read as under : 18. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the ass .....

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the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment, therefore, the reopening of the assessment after a period of 4 years from the end of the relevant assessment year, where the assessment earlier was completed u/s.143(3), is invalid. It is an admitted fact that the AO in the original assessment order after discussing the allowability of deduction u/s.80IB(3) has allowed deduction of ₹ 33,03,374/- as against ₹ 10,09,019/ .....

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orrect. At the same time a perusal of the notice issued u/s.148 shows that there is no mention by the AO regarding any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. Under these circumstances we have to see as to whether the notice issued u/s.148 is a valid one or not ? 20. We find the Hon ble Bombay High Court in the case of Hindustan Lever Ltd. (Supra) while deciding the issue of notice after expiry of 4 years wher .....

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oner has contended that the notice issued under section 148 is without jurisdiction being hit by the proviso to section 147 of the Act as such not within the prescribed period provided under the proviso to section 147 of the Act. In the circumstances, it would be necessary to turn to section 147 of the Act, which reads as under : 147. Income escaping assessment.- If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he ma .....

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ere an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or .....

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n the course of the proceedings under section 147, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the concerned assessment year. However, where an assessment under subsection (3) of section 143 has been made for the relevant assessment year, no action can be taken under section 147 after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by .....

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stances, the notice is clearly beyond the period of four years. 20. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can b .....

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record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. The reasons are the manifestation of the mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide the link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challeng .....

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t or making an oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches the court, on the strength of the affidavit or oral submissions advanced. 21. Having recorded our finding that the impugned notice itself is beyond the period of four years from the end of the assessment year 1996-97 and does not comply with the requirements of the proviso to section 147 of the Act, the Assessing Officer had no jurisdiction .....

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he relevant assessment year i.e. 2007-08. In such circumstances, the proviso to Section 147 of the Act is clearly not applicable. Therefore, it is not necessary for the revenue to prima facie establish that there has been a "failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment, while issuing a notice reopening a completed assessment. However, even in case of reopening of assessment within a period of four years from the end of the rel .....

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would give arbitrary powers to the Assessing officer to reopen assessment on the basis of "mere change of opinion" which cannot be per se reason to reopen. We must keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has power to reassess. But reassessment is to be based of fulfillment of certain preconditions and if the concept of 'change of opinion' is removed as contended by the department then .....

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y for determination of the income have been disclosed by the assessee and the Assessing officer has taken a particular view on those disclosed facts as reflected in the Assessment order passed in regular proceedings, then without anything more, it would not be open to reopen those assessment proceedings. For in such a case it is a clear case of change of opinion. In the present facts it is very clear that during the assessment proceedings leading to the assessment order dated 11/11/2009 the peti .....

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09 concluded that these payments on account of radiography charges and labour charges are tax deductible at source in terms of Section 194C of the Act. Further, the obligation on the part of the assessee is only to make a full disclosure of primary facts and the inferences to be drawn there from and the application of law thereon is the job of the Assessing officer. The petitioner has disclosed all primary facts and on consideration of those facts as reflected in the assessment order dated 11/12 .....

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d primary facts already on record that the Assessing officer has duly considered while passing the order dated 11/12/2003 for Assessment Year 2007-08. There is no fresh tangible material which would warrant taking a view different from the one taken during the regular assessment proceedings. In fact even the order dated 15/10/2012 disposing of the objections clearly records that radiography charges and labor charges were made to various persons like Senior Technicians, Senior Radiographer and Jr .....

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eedings for assessment year 2007-08 a completely new ground has been added. In its order dated 15/10/2012 the additional ground to reopen assessment is the lack of correlation between the payment received by the petitioner and the TDS Certificate issued by the persons making payment to it during the assessment year 2007-08. This according to order dated 15/10/2012 resulted in under assessment of income to the extent of ₹ 21.61 lacs. The aforesaid issue was not one of the grounds specified .....

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t be supplemented/ improved upon later. Therefore, the order dated 15/10/2012 disposing of the objection also cannot be sustained. So far as the ground urged by Ms. Khan that reopening of assessment has been done on the basis of audit objection, the same is not being examined. This is for the reason that even otherwise, the impugned notice is not sustainable. 22. We find the Hon ble Bombay High Court in the case of Titanor Components Ltd.(Supra) has also taken similar view and has observed as un .....

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pleaded by the respondents, it is the submission of the petitioner that the notice is wholly unwarranted and invalid since there is no allegation whatsoever that the petitioner has failed to disclose all material facts necessary for assessment. This submission can be considered only with reference to the reasons put forth by the respondents for issuing the notice. The letter dated January 27, 2005, inter alia, states that the Assessing Officer has reasons to believe that income has escaped asses .....

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material facts necessary for assessment. .... Having regard to the purpose of the section, we are of the view that the power conferred by section 147 does not provide a fresh opportunity to the Assessing Officer to correct an incorrect assessment made earlier unless the mistake in the assessment so made is the result of a failure of the assessee to fully and truly disclose all material facts necessary for assessment. Indeed, where the assessee has fully disclosed all the material facts, it is no .....

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ved earlier,' the Assessing Officer has not recorded the failure on the part of the petitioner to fully and truly disclose all material facts necessary for the assessment year 1997-98. What is recorded is that the petitioner has wrongly claimed certain deductions which he was not entitled to. There is a well known difference between a wrong claim made by an assessee after disclosing all the true and material facts and a wrong claim made by the assessee by withholding the material facts fully .....

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delete or add to those reasons and that the Assessing Officer must be able to justify the same based on material record. The Division Bench observed as follows (page 338) : "He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish the vital link between the reasons and evidence." We find in the circumstances that the impugned notice is not sustainable and is liabl .....

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ed March 18, 2004, the impugned satisfaction of respondent No.2 under section 151 of the Act, if any, and the impugned assessment proceedings of the petitioner for the assessment year 1997- 98 and after going through the same and examining the legality and validity thereof, to quash and cancel the same. (c) That this hon'ble court may be pleased to issue a writ of prohibition or a writ in the nature of prohibition or any other appropriate writ, order or direction under article 226 of the Con .....

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