TMI Blog2009 (10) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... which is engaged in manufacturing of biological pesticides since financial year 1994-95 relevant to assessment year 1995-96. 2. However, against the returned income, the AO by an order of assessment dt. 3rd March, 2004 under section 143(3) of the Act computed the total income of the petitioner company at ₹ 79,99,709 by disallowing the claim of deduction under section 80-IA of the Act of ₹ 49,56,683. The petitioner company, being aggrieved, filed an appeal before the CIT(A) and challenged the disallowance of the claim of deduction of ₹ 49,56,683 under section 80-IA. Apart from the grounds on merits, the petitioner company took additional grounds of appeal challenging that the assessment is without jurisdiction since no notice under section 143(2)(i) of the Act was served on the petitioner company within twelve months from the end of the month of the filing return of income. 3. On 2nd March, 2005, the CIT(A) confirmed the disallowance made by the AO of the claim of deduction of ₹ 49,56,683 under section 80-IA of the Act. He further refused to admit the additional grounds of appeal challenging that the assessment is without jurisdiction since no notice un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g aside the assessment was that the mandatory requirement regarding service of notice under section 143(2) within a period of one year from the date of filing of the return had not been satisfied. In this backdrop, the reason for reopening was as under : Reasons for initiating proceedings under section 148 in the case of M/s Biotech International Ltd. for assessment year 2001-02 Brief facts of the case is that the assessee company is engaged in the business of manufacturing and trading of biological pesticides, mosquito nets, etc. It filed its return of income on 29th Oct., 2001 declaring income of ₹ 30,43,030. The case was taken up in scrutiny and assessment under section 143(3) was completed on 3rd March, 2004 at assessed income of ₹ 79,99,709. During the course of assessment proceedings the AO noted that the assessee was wrongly claiming the benefit of deduction under section 80-IA (now section 80-IB) for its Agra unit and the same was disallowed. The assessee went in appeal and learned CIT(A) in its order dt. 2nd March, 2005 confirmed this addition, observing that the assessee company was not fulfilling the required conditions as laid down in section 80-IA. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gular/illegal or it would be nullity in the eyes of law. 9. Learned counsel for the respondent referred to the judgments of this Court in CIT v. Tulika Mishra 223 CTR 469 [sic-CIT v . Pawan Gupta Ors. [2009] 223 CTR (Del.)487-Ed.] and CIT v . Lunar Diamonds Ltd. [2006] 281 ITR 1 (Del.),wherein it has been held that such assessments which are made violating the fundamental procedure would be nullity in law. We may point out at this stage that Mr. Aggarwal, learned counsel for the petitioner, could not dispute that the assessment order passed under section 143(3) of the Act would be nullity. Once we look at this aspect the course of action does not become apparent. Notice in this case has been issued under section 147 of the Act by the AO. The petitioner has sought to take a reassessment under the proviso to the said Act and on that basis it is argued that since there was an assessment under sub-section (3) of section 143 of the Act and notice in question has been issued four years after the assessment. It was incumbent upon the AO to show on record that the assessee did not disclose fully and truly all material facts necessary for the assessment. His submissions was that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied firstly the AO must have reason to believe that income profits or gains chargeable to income-tax have escaped., assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the AO could have jurisdiction to issue notice under section 148 r/w section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the AO for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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