TMI Blog2006 (9) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... e and, therefore, to reopen the assessment is clearly an afterthought and something beyond the provisions of what section 147 provides. - In the facts of the present case, therefore, the reopening was not called for. The impugned notice was without jurisdiction and beyond the parameters of the provisions of section 147. - we quash and set aside the notice. - - - - - Dated:- 5-9-2006 - Judge(s) : H. L. GOKHALE., J. P. DEVADHAR. JUDGMENT The judgment of the court was delivered by H.L. Gokhale J.-Heard Mr. Irani with Mr. Jasani for the petitioner. Mr. Kotangale appears for the respondent. The petitioner herein is a private limited company engaged in the business of production, development and export of computer software. The petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was alleged in the audit objection that the deduction which had been allowed in respect of the Fort unit was erroneous. It was alleged that an excessive deduction had been worked out by taking a lesser total turnover of Rs. 9,85,43,319 and that it should have been Rs. 10,95,89,191. The petitioner filed their reply but that was without any effect and the objections were rejected. Accordingly, an order of rectification was passed on December 9, 2004 under section 154 of the Income-tax Act. Two corrections were directed, one was that as far as the retainer fees were concerned, the distribution of the amount of Rs. 8,76,011 was wrongly done by allocating 18.30% to the SEEPZ unit and that it should have been 8.86%. The second correction direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89,191 resulting thereby in excess allowance of deduction under section 80HHE of the Income-tax Act. (ii) Similarly, while working out the quantum of deduction under section 10B of the Income-tax Act, the expenses on account of retainer fees has been allocated between two units at 18.30 per cent, instead of correct ratio at 8.86 per cent, worked out in relation to export income." Thereafter, the objections have been rejected by a further order dated June 2, 2006. Mr. Irani, learned counsel appearing for the petitioner submitted that once the Department sought to rectify the alleged mistake by resorting to section 154 of the Income-tax Act and that order was set aside by the Commissioner of Income-tax (Appeals), that itself was suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He pointed out that this figure had been disclosed in the calculations which the petitioner had filed to claim deduction under section 80HHE. According to him, this figure should be Rs. 9,85,43,319 and not Rs. 9,85,49,390. That apart, all that the Department had done was to add the three figures with respect to the calculations under section 80HHE, i.e., (1) income from services (export), (2) domestic sales and (3) exchange fluctuations. These three figures were Rs. 10,75,64,683, Rs. 44,768 and Rs. 19,79,560. All these three figures were from the documents which the petitioner has supplied. Now, the Department was saying that the calculations had to be done for both the units together and, therefore, they arrived at a figure of Rs. 10,95,89 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderassessed or escaped assessment; the second is that he must have reason to believe that such escapement or underassessment was occasioned by reason, so far as relevant for the present purpose, to disclose fully and truly all material facts necessary for the assessment of that year. Both these conditions are conditions precedent to be satisfied. See, in this connection, the observations of this court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191." (b) On page 970 of 159 ITR: "As is well-settled now by the several authorities of this court and of several High Courts, there must be materials to come to the conclusion that there was 'omission or failure to disclose fully and truly all material facts necessary for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the figures which the Assessing Officer was relying upon were disclosed in the returns. The court held that when all the basic facts with material particulars were disclosed by the assessee in its return for the relevant assessment year and all the account books were also made available at the time of assessment, no failure on the part of the assessee to fully disclose the material facts could be alleged. Mr. Kotangale, learned counsel appearing for the respondent, on the other hand, submitted that the assessee was in error in applying the two sections 80HHE and 10B separately to the two units and that the Department was right in clubbing the two units and insisting that the total turnover ought to have been taken at Rs. 10,95,89,191. Sim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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