TMI Blog2017 (7) TMI 1294X X X X Extracts X X X X X X X X Extracts X X X X ..... CA, enclosed the calculations for the deductions claimed. The assessment order also shows that the AO had applied its mind to the issues and after considering the explanation submitted by the Assessee, allowed the deduction. There was no fresh tangible material available with the AO which would justify the formation of the reasons to believe that income had escaped assessment. The mere conclusion that the deduction under Section 10A and 80HHE was wrongly claimed , without anything more, would not satisfy the statutory requirement or be a sufficient justification for reopening the assessment. Alleged failure by the Assessee to add back to its income comprising the provision for doubtful debts, the Court finds that the computation in that regard was furnished by the Assessee as is evident from the documents placed on record in the original assessment proceedings. In the letter addressed by the AO to the Assessee, this aspect was specifically adverted to. The reply by the Assessee also dealt with it. Not possible to accept the Revenue s case that on this aspect there was any failure by the Assessee to make a full and true disclosure of all material facts relevant to the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 under Section 142(1) of the Act. Specific queries and details/information was sought by the AO in respect of the deductions claimed under Section 10A and 80HHE of the Act. A detailed reply was furnished by the Assessee on 4th December, 2006. The assessment was completed by the AO by passing an assessment order dated 25th December, 2006 under Section 143(3) of the Act making the following adjustments: S No. Rupees 1. Excess claim of deduction under Section 80HHE 87,50,303 2. Excess claim of deduction under Section 10A in respect of BPO Unit 8,60,750 3. Excess claim of deduction under Section 10A in respect of GNR Unit 4,03,10,294 4. Disallowance of expenses under Section 14A 6,83,473 6. More than four years later by the impugned notice dated 30th March, 2010 issued by the AO to the Assessee under Section 148 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 147 of the Act there was no deemed disclosure only because the Assessee had produced the balance sheets and books of account etc. during the assessment proceedings. 12. At the outset, the Court would like to observe that Explanation I does not relieve the Revenue of having to show that there was a failure by the Assessee to disclose, fully and truly, all the relevant particulars necessary for the assessment. All that Explanation I does is to clarify that the mere production of balance-sheet and books of account should not be deemed to be a disclosure. Nevertheless, the Revenue still have to show in what manner there was a failure by the Assessee to make a full and true disclosure of materials relevant to the assessment. 13. The first reason for the reopening of the assessment is that while computing the deduction allowable under Section 10A, the profits which the Assessee had earned from its foreign unit branch situated in UK, USA and Singapore were wrongly considered and as a result of the deduction under Section 10A wrongly claimed in respect of the said branch profits . It was stated that while calculating the profits under the head P/G/B/P after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITAT, the Assessee in fact succeeded to the extent that the AO had made the addition on this score. In terms of the fourth proviso to Section 147 of the Act, this was an additional reason why the assessment could not have been reopened. 16. There was no fresh tangible material available with the AO which would justify the formation of the reasons to believe that income had escaped assessment. The mere conclusion that the deduction under Section 10A and 80HHE was wrongly claimed , without anything more, would not satisfy the statutory requirement or be a sufficient justification for reopening the assessment. 17. Mr. Chaudhary sought to submit that where there was a wrong claim for deduction, then it would not be true disclosure by the Assessee. The Court is unable to accept this submission. An AO, when coming across an earlier assessment order, might feel that although the previous incumbent AO had framed the assessment under Section 143(3) of the Act, he should not have allowed a claim or deduction. Where this is not based on any fresh tangible material, it would be a mere review of the earlier assessment order. That is not what is envisaged by the first pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee company has also provided the break up of the expenses on telecommunication and incurred in foreign exchange and is as under in respect of Units where deduction u/s 80HHE and 10A has been claimed. 20. The AO then discussed the issue at length and concluded: Hence the definition of total turnover given in section 80HHC cannot be adopted for the purpose of section 10A. Accordingly, the specified deductions made from the export turnover cannot be reduced from the total turnover. Hence the total turnover is to be adopted without reducing the expenditure i.e. telecommunication charges incurred for the actual delivery of software outside India. 21. Thereafter, as already noted, when the matter travelled to the ITAT, the deduction claimed was said to be allowable and the view of the AO was reversed in part. In the circumstances, this was an instance where the AO who finalised the assessment under Section 143 examined the issue and came to a conclusion which was disagreed with by the ITAT. There had to be some fresh tangible material for the assessment to be thereafter reopened. There is none in this case. 22. As regards the alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X
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