TMI Blog2019 (1) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... material facts. Revenue however submitted that one of the issues raised by the Assessing Officer is that the activity carried on by the assessee does not amount to manufacturing activity. In the present petition, it is not necessary for us to comment on this aspect of the matter. What is important however is such belief also the Assessing Officer has formed on the basis of material already on record. Looked from any angle, the Assessing Officer cannot justify issuing the notice of reopening of assessment beyond the period of four years from the end of relevant assessment year. - decided against assessee - WRIT PETITION NO.3353 OF 2018 - - - Dated:- 21-12-2018 - AKIL KURESHI AND M.S. SANKLECHA, JJ. Mr. Nitesh Joshi with Mr. Atul Jasani with Mr. Ashok Boghani i/by M/s. Ashok Boghani Co. for the Petitioner. Mr. Akhileshwar Sharma for the Respondents. P.C.: 1. Heard learned counsel for the parties for final disposal of the petition. Petitioner is a limited company. The petitioner has challenged a notice of re opening of assessment dated 24th September, 2018 issued by the respondent No.1 Assessing Officer to re open the petitioner's assessment for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processed out of raw coconut oil procured by these units. As per definition of manufacture given in Section 2(29BA) of the IT Act, 1961 the deduction would not be available on sale of the edible coconut oil effected by these tow units, as only refining and packing are the only activity undertaken by them and no edible oil is manufactured as raw coconut is also edible oil and this activity do not amount to manufacturing or production. Similarly, in the case of the product called Hair Oil also, the activity does not amount to manufacture as per the definition of manufacture/produce given in the Act. Further, as per Clause 28 of Form 3CD, some part of the finished goods were produced from others and thus entire quantity of goods cannot be treated as eligible for deduction. It is also to be noted that as per Schedule Q appended to the P L account, volume of sale of edible oil is many times more than the sale of hair oil and other items. Considering the volume of sales of the assessee of different items, not even 25% of the volume of the sale effected in the above mentioned three units qualify for deduction u/s 80IB (4) or 80IC as claimed and allowed. However, adopting a very moderat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated by the assessing Officer by reallocating rent storage charges to undertakings and disallowing other income from the ambit of the claim in respect of the respective units. However, while reallocating rent storage charges, instead of reducing the these charges, the same was added to the income resulting in the assessee getting more eligible income and thereby was allowed more deduction in respect of Pondicherry, Dehradun 1 and Dehradun 2 undertakings as shown below. Name of undertaking Pondicherry Dehradun- 1 Dehradun -2 Income of the unit shown 2458652428 19204857 183131882 Rent Storage charges added by AO 39923130 2382310 2138101 Total income with rent storage charges 2498575558 21587166 185269983 Income on reducing the rent storage charges 2418729298 16822547 180993781 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualify to be reduced from business income out of ₹ 42.75 crore reduced by the assessee. Therefore I have a reasons to believe that an amount of ₹ 17,58,00,000/ on account of other income has been escaped from the assessment of income. (iv) Scrutiny of P L account for the A.Y. 2011 12 revealed that an amount of ₹ 65.47 crore under the head exceptional items was added to the profit before tax arrived at in the P L account and net profit was arrived 374.54 crore. The exception items of ₹ 65.47 crore was on account of reversal of provision for excise duty of ₹ 29.35 crore, profit on divestment of Sweekar brand ₹ 50.00 crore and provision for impairment of Finance trademark Rs.( )13.88 crore. Since the amount of Rs. (1)13.88 crore represents only a provision for impairment of Finance trademark, the same should not have been allowed to be adjusted out of the exceptional items otherwise would have amounted to ₹ 79.35 crore. Therefore I have a reason to believe that provision of ₹ 13,88,00,000/ has been escaped from the assessment of income. 4) Since 4 years from the end of the relevant year has expired in this case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ou have submitted that total amount of ₹ 8,79,24,950/ has been paid to Shri K G Paraman towards purchase of Copra, Labour charges, service charges and reimbursement charges. From these contradicting figures the undersigned has a belief that your purchase expenses are inflated to that extent. This issue also has been taken up for verification during the reassessment proceedings within the provisions of the explanation 3 to the section 147 of the IT Act. 10) You are, therefore, requested to furnish explanation on the above issues along with proper documentary evidences on or before 26/07/2018. Failure to furnish explanation or not furnishing satisfactory explanation adverse views shall be taken in respect of the above referred issues while passing order u/s 143(3) r w s 147 of the IT Act, 1961. 4. Upon being supplied the reasons recorded by the Assessing Officer, the petitioner objected to the notice of re opening under a letter dated 20th August, 2018. Such objections were rejected by the Assessing Officer by passing an order dated 24th September, 2018 upon which this petition has been filed. 5. Upon hearing learned counsel for the parties and upon perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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