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2014 (7) TMI 1240 - BOMBAY HIGH COURT

2014 (7) TMI 1240 - BOMBAY HIGH COURT - TMI - Reopening of assessment - Deduction claim under Section 80 HHC - Held that:- Jurisdictional requirement of having reason to believe that income chargeable to tax has escaped assessment was not satisfied, as the applicable facts were not considered. The order disposing of the objections records that the effect was given to the order dated 29 December 2013 by him on 15 February 2005. This was undisputedly much after the impugned notice. Therefore, admi .....

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ddition of fifth proviso thereto with retrospective effect will work to the benefit of the petitioner. In the above view of the matter, allowing reassessment proceedings would be a mere academic exercise only because the Assessing officer would bound by the orders of the Tribunal. Moreover, the very basis of the impugned notice dated 10 January 2005 will not be sustainable. In view of all the above reasons, we set aside the impugned notice dated 10 January 2005. - Writ Petition No. 802 of 2005 - .....

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his petition was admitted on 20 June 2005 and a stay of the impugned notice was granted. 3) On 29 November 2000, the petitioner filed its return of income for A.Y. 2000-01. In its return the petition had declared an income of ₹ 2.04 crores after having claimed deduction of ₹ 6.45 crores under Section 80HHC of the Act. 4) During the course of assessment proceedings by letter dated 15 November 2002 under Section 143(3) of the Act, the Assessing officer called upon the petitioners' .....

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ver, the petitioner's claim to the benefit of Section 80 HHC of the Act was reduced from ₹ 6.45 crores as claimed by the petitioner to ₹ 5.93 crores on account of export manufacture loss and disallowance of interest income attributable to the petitioner's export business. 5) Being aggrieved, the petitioner filed an appeal to the CIT(A) challenging the assessment order under Section 143(3) dated 30 December 2002 for A.Y. 2000-01. On 29 December 2003, by an order the CIT(A) uph .....

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he Assessing Officer to give effect to the order dated 29 December 2003 of the CIT(A). This giving effect to the order of the CIT(A) according to the petitioner would result in the petitioner's being entitled to deduction under Section 80HHC of the Act to the extent of ₹ 6.64 crores. 6) In the mean time, before giving effect to the order of the CIT(A) dated 29 December 2003, the Assessing officer issued impugned notice dated 10 January 2005 under Section 148 of the Act seeking to reope .....

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lable at the time completion of assessment u/s. 143(3). The decision of ITAT Mumbai has been endorsed by the Hon'ble Bombay High Court in the case of Rohan Dyes and Intermediates Ltd. vs. CIT dated 9/8/2004. In view of these judgments the deduction u/s.80HHC would not available on the balance incentives, even where the 90% of the incentives exceeds the (Net) loss from the exports. As per the Judgment of IPCA Laboratories Limited of Supreme Court (266 ITR 521) and the losses in export of trad .....

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2,56,110/. Since the assessee do not have profit from exports, the deduction on incentives is not available in view of the decision of Rohan Dyes and Intermediates Ltd. cited above. Therefore, I have reason to believe that income has escaped assessment. Approval has been granted by CIRI Mumbai vide letter dated 6/1/2005 for reopening assessment u/s.147 of the Act. Therefore, assessment proceedings are reopened u/s.147. Issue notice u/s.148 of the I. T. Act. 7) On 7 February 2005, the petitioner .....

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er of consideration by the Assessing officer while passing assessment order on 30 December 2002 under Section 143(3) of the Act as specific queries in that regard were raised. Thus, the proposed reopening notice is based on mere change of opinion; (iii) The issue viz. method of Section 80 HHC computation is now settled by virtue of the observations in the decision of this Court in IPCA Laboratories Ltd. vs. Dy. CIT (2001)251 ITR 401 (Bombay) and the same has been followed. On the above grounds t .....

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d to reopen the assessment as the same is being done within four years from the end of the relevant assessment year. 9) It was only on 18 March 2005 that the petitioner was served with the copy of the order dated 15 February 2005 of the Assessing officer giving effect to the order dated 29 December 2003 of the CIT(A). However, while giving effect to the order of CIT(A), the Assessing Officer completely ignored the interest income which had to be taken into account. This resulted in the petitione .....

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respondentRevenue being aggrieved by the order dated 30 May 2005 of the CIT(A) allowing the petitioner's appeal preferred an appeal before the Income Tax Appellate Tribunal (Tribunal). 10) Thereafter, during the pendency of this petition the Tribunal disposed of the appeals filed by the petitioner and the respondent revenue against the order dated 29 December 2003 of the CIT(A) on merits. The Tribunal by an order dated 22 November 2006 dismissed the petitioner's appeal with regard to the .....

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ght on record by amendment. 12) Mr. Rafiq Dada, learned Senior Counsel for the petitioner in support of the petition submits as under: a) The entire basis for reopening was without jurisdiction as while issuing impugned notice dated 10 January 2005 the Assessing officer had completely ignored and had not given effect to the order dated 29 December 2003 of the CIT(A). Consequently the foundational facts leading to the issue of impugned notice was erroneous and therefore, without jurisdiction; b) .....

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ing notice; c) The impugned notice is without jurisdiction as it is a result of change of opinion on the part of the Assessing officer. During the course of the assessment proceeding the Assessing Officer had specifically made queries with regard to claim for deduction under Section 80HHC of the Act and had considered the petitioner's response to the same while passing the order dated 30 December 2002; and d) Subsequent amendment to Section 80HHC of the Act by introduction of the fifth provi .....

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edings and the same would be disposed of in accordance with law. 14) We have considered the rival submissions. It is well settled that a notice to reopen the assessment under Section148 of the Act can only be issued if the Assessing officer has reason to believe that income chargeable to tax has escaped assessment. This reason to believe on the part of the Assessing Officer has not to be on the basis of change of opinion i.e. where Assessing Officer has had occasion to consider an issue during t .....

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n the part of the Assessing Officer. Therefore, on the aforesaid ground alone impugned notice is not sustainable. 15) Moreover, it is pertinent to note that the order dated 30 December 2002 passed by the Assessing officer has been modified by order dated 29 December 2003 of CIT(A) to the extent it directed to the Assessing Officer to consider the interest income while computing the petitioner's claim for deduction under Section 80HHC of the Act. Thus the order dated 30 December 2002 of the A .....

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