TMI Blog2016 (9) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 148 of the Income Tax Act (for short 'the Act') dated 28.03.2011 and an order dated 01.07.2011 issued rejecting the objection filed by the petitioner. 2. The brief facts of the case are that the petitioner is a cooperative society engaged in the business of procuring and supplying processing and marketing of milk products, tea products. The petitioner had initially filed its return of income for assessment year 2002-03 declaring total income as 'Nil' and the gross total income declared was ₹ 1,11,87,254/- . The said return came up under scrutiny and vide order dated 07.12.2004, in exercise of powers under section 143(3), the assessment order came to be framed. Similarly, for another assessment year 2003-04, the petitioner has declared his income as again 'Nil' by declaring gross total income as ₹ 68,97,218/- and with respect to that year also, the scrutiny assessment was framed on 30.12.2005. In the next assessment year, 2004-05, the petitioner filed the return of income under section 139(1) of the Act declaring total income at ₹ 3,15,13,990/- after claiming deduction under section 80E(2)(c) as also under section 80P(2)(d) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the denial of deduction in respect of cattle feed which was originally claimed by the petitioner, whereas the Revenue filed an appeal against granting of deduction in respect of BanasII expansion claimed under section 80IB of the Act. Thus, both cross appeals came up for consideration before the Tribunal and on 07.11.2008, the Tribunal dismissed the appeal of the Revenue and so far as appeal filed by the petitioner, the deduction claimed under section 80IB of the Act in respect of industrial undertaking manufacturing cattle feed, the Tribunal held thus, the assessee is primarily entitled to claim deduction under section 80IB of the Act in respect of all units including the units earlier set up and by way of such common order, the Tribunal disposed of the appeals filed by both the sides. It is against this order passed by the Tribunal, the parties have approached the High Court of Gujarat by way of preferring the Tax Appeals. The Revenue has preferred an appeal being Tax Appeal No.1042 of 2009. The said appeal came up for consideration before this Court on 15.03.2011 and by a detailed order, the Tax Appeal came to be dismissed and similarly, the Tax Appeal No.1043 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80IA(5) of the Income Tax Act, 1961, the profit from the eligible business for the purpose of determination of the quantum of deduction Under Section 80IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years. Further the Hon'ble ITAT in the case of VODAFONE ESSAR GUJARAT LTD has confirmed the order of the A.O and reiterated: No doubt the question before the Mumbai Tribunal did not concern with whether while deducting such past losses, the assessee is entitled to ignore the fact that certain losses have actually lapsed in view of applicability of Section 79 of the Act. This proposition we have already answered that the losses will not lapse and the provisions of Section 79 will not apply in view of the provisions of Section 80IA(5) of the Act. We find that the lower authorities have rightly taken the view that in view of Section 80IA(5) of the Act which starts with non obstante clause, it is wide enough to override the provisions of Section 79 and thereby ignore the past losses. There is no doubt that Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le, more particularly, after a period of four years. The counsel has submitted that during the assessment proceedings, the representative who appeared on behalf of the petitioner has drawn the attention of this aspect about the claim which has been made for cattle feed as well as made for BanasII expansion project. Counsel while submitting has drawn attention to page 94 of the petition compilation wherein there is a clear reflection with respect to this issue which has been gone into. In addition there to, on page 98 of the petition compilation, the counsel submitted that on 15.12.2006, the Chartered Accountant who represented the petitioner, has attended the hearing before the Assessing Officer and has clearly pointed out during the course of assessment proceedings with respect to this claim made under section 80IB, both with respect to BanasII expansion as also cattle feed. Paragraph 3 of the said assessment order reflected on page 98 is also specifically referring to. In addition thereto, the counsel submitted that during the said assessment proceedings, after considering the material, even the conclusion also came to be arrived at by the Assessing Officer, which is reflected on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 2002-03, the authority has already considered and granted the said deduction and therefore, in similar set of circumstances, it is not open for the respondent authority to take a different view. Learned counsel has further contended that the power of reassessment cannot be exercised to correct mistake, nor is for the purpose of review of the opinion which has already been formulated and therefore, in the background of this fact, more particularly, when the nondisclosure is not an allegation contained in the reasons which have been recorded, the action on the part of the respondent authorities deserves to be quashed and set aside. 8. To oppose the petition, learned counsel for the Revenue Mr.Nitin K. Mehta has submitted that there is specific element of non disclosure of primary facts while claiming deduction on the part of the petitioner. Learned counsel submitted that there was a nondisclosure of unabsorbed loss of previous year and the nature of allowance was not substantiated by any cogent material. Learned counsel further submitted that what was scrutinized was an issue of disallowance, whereas, computation with respect to such claim was never the subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of four years from the relevant assessment year. 10. In the background of the aforesaid facts which are reflecting from the record, two situations are emerging that one; the reopening attempt is made by the department after a period of more than four years, and secondly; in the entire proceedings, there appears to be no allegation with respect to non disclosure of any material on the part of the petitioner. Keeping these circumstances in mind, the decisions which have been relied upon by the learned counsel for the petitioner are worth to be taken into consideration. 11. First decision which has been relied upon and canvassed by the petitioner is the decision reported in case of Austin Engineering Co. Ltd. v. Joint Commissioner of Incometax, reported in [2009] 312 ITR 70 (Guj), wherein, in the said decision it has been clearly held that merely because subsequently, the higher Court pronounced the law to be otherwise, on the date of filing of the return of the income when the assessee made a claim for deduction, the claim could be termed to be neither lacking in material particulars nor could be termed to be untrue so as to justify reopening of assessment on basis of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, relevant assessment years are 200304 and 200405. The notice under section 148 of the Act relating to assessment year 2003-04 has been issued on 29.03.2010, whereas the notice under section 148 of the Act relating to assessment year 200405 has been issued on 29.4.2010. Computing the period between the end of the relevant assessment years and the date of issuance of the notices under section 148, it is evident that both the notices have been issued beyond a period of four years from the end of the relevant assessment years. The first proviso to section 147 of the Act, lays down that where an assessment under subsection (3) of section 143 or the said section has been made for the relevant assessment year, no action shall be taken under the section after expiry of four 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 make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment. Thus, for the purpose of invoking section 147 after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in disclosing fully and truly all material facts necessary for his assessment, is a matter of fact and there can be no deemed failure as is sought to be contended on behalf of the respondents. In the circumstances, in absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment years under consideration, the notices under section 148 of the Act having been issued after the expiry of a period of four years from the end of the relevant assessment years, the very initiation of proceedings under section 147 of the Act stand vitiated and as such cannot be sustained. 13. Learned counsel for the petitioner has yet relied upon another decision of the Apex Court, in case of Commissioner of Incometax, Delhi v. Kelvinator of India Ltd. , reported in [2010] 187 TAXMAN 312 (SC) and conveyed with respect to a concept of change of opinion it was submitted on the basis of said decision, that after 01.04.1989, the Assessing Officer has no power to reopen provided there is a tangible material to come to the conclusion of escapement of income and therefore, it appears from the record that the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justify the imposition of the burden of tax on the assessee beyond the prescribed period of limitation, especially as none of the conditions mentioned in the proviso to Section 147 of the Act exist. In our view, therefore, the assessment for the year in question cannot be permitted to be reopened in the absence of fulfillment of the prerequisite conditions,as contained in the proviso to Section 147 of the Act. 10. The objections raised by the petitioner have been rejected by order dated 28082008. A perusal of the said order discloses that the respondent has relied upon Explanation 1 to Section 147, stating that the assessee has not disclosed details and other related facts as to the volume of transaction, buying and selling of shares/securities, which would enable the Assessing Officer to ascertain and determine the real nature and character of the transactions and in the absence of such primary details, which should have been furnished by the petitionerassessee, it cannot be said that there is a full and true disclosure of all material particulars relating to the assessment year under consideration. This, clearly, is nothing but an attempt to supplement and improve upon the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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