TMI Blog2018 (12) TMI 1692X X X X Extracts X X X X X X X X Extracts X X X X ..... was properly disclosed in the tax audit report, the deduction was supported by the audit report in Form 10 CCB, moreover the detailed submissions on eligibility / merits and quantum of the claims were made before the Assessing Officer during the course of original assessment proceedings. Claim of deduction are allowed to the assessee since A. Y. 2000-01 in the assessment framed u/s 143 (3) of the Act. Without disturbing the initial assessment years of the claim of deduction denying the claim in the middle by reopening the assessment is nothing but change of opinion. No new tangible material has came into existence which is accepted by the Assessing Officer himself who in the reasons recorded has accepted this as he states that a perusal of the assessment records reveals . This issue is well settled in favour of the assessee and against the revenue by the decision of the Hon ble Supreme Court in the case of Kelvinator of India Limited [2002 (4) TMI 37 - DELHI HIGH COURT ] Disallowance were made including the issue of 80 IA and 80IB deduction. This assessment order was challenged before the CIT (A) who vide order dated 01.07.2011 partly allowed appeal. This means that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 27.12.2010. The said assessment order was revised by the PCIT u/s 263 of the Act and pursuant to the order framed u/s 263 of the assessment was made vide order dated 19.09.2013. 5. Despite repeated examination / verification of the return of income and the books of accounts, reassessment proceedings were initiated notice u/s 148 of the Act was issued on 24.03.2015. With this notice the Assessing Officer sought to reopen the assessment framed vide order dated 19.09.2013 the reasons recorded by the Assessing Officer for reopening assessment reads as under :- Name and address of the assessee M's Jindai Steel and Power Limited. O P Jindai Mary,Delhi Road.Hisar Status Company PAN AAACJ7G97D Asst. Year . 2008-09 Reasons for initiation of the proceedings u/s 147 of the Income Tax Act. 1961. Assessment in this case was completed at an income of ₹ 9,09,65,19,%/- vide order u/s 143(3)/263 passed on 19 09.2013 A perusal of the assessment records, reveals the following i) Sub-clause-25(J) relating to expenditure in foreign exchange of Schedule 20 (significant accounting policies and notes on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable to a unit or new unit unless the unit is in the nature of an undertaking and your Captive Power Plant does not qualify, for. an undertaking . Section 801A(7) specifically provides for audit of books of accounts to deri ve the profit gains of an undertaking. But, during the proceedings in respect of A Y. 2005-06 u/s 263 and during -assessment proceedings for AY 2011-12, the counsels of the assessee admitted (in writing) before the Commissioner of Income Tax, Hisar and before the AO, respectively, that the assessee company does not maintain separate unit-wise books of accounts in conventional forum say cash book, bank book, party ledger, stock register etc. Rather, the assessee .keeps consolidated books of account on SAP Computer System. It, in-itself, is evidence that condition of separate books of- accounts is not fulfilled by the company. Hence,' the balance sheet- . P L. etc of the units claiming 801A and 80IB are made on estimated basis only. It is also beyond understanding how the auditors audited the transactions of the-units, separately when no separate record is maintained and no separate details are kept. You do not maintain separate cash book for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the issues raised in clause-III of the notice. It would be pertinent to mention here that the reason for initiation of the proceeding is undated. This means that either the reasons have been recorded on the same date as the date of notice which is 24.03.2015 or at the most they were recorded prior to 24.03.2015. 7. A perusal of the aforestated reasons clearly show that the Assessing Officer was influenced by the findings given during assessment proceeding for A. Y. 2005-06 and 2011-12. In the reasons mentioned here in above the Assessing Officer has categorically mentioned it is worth mentioning that the worthy CIT, Hissar and the Assessing Officer in A.Y. 2005-06 and A. Y. 2011-12 respectively conducted detailed enquiries and reached the conclusion that the assessee is not entitled to deduction u/s 80 IA and 80IB of the Act. Therefore, the claim of the assessee is required to be disallowed . 8. It is worth mentioning that the CIT framed order u/s 263 of the Act for A. Y. 2005-06 on 27.03.2015 and the assessment order of A. Y.2011-12 is dated 30.03.2015. As mentioned elsewhere the notice u/s 148 of the Act is dated 24.03.2015 this means that the reasons fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form central stores in anticipation because it is a continuous process and it may not be practicable to get these items issued after its requirement has actually arisen. It was also informed that as far as central store, is concerned, these hems are taken as consumed (as soon as these are issued). These are having very short life. Certain items like pieces of conveyer belt (rubber) have been prepared out of scrap. 14.3.2 It indicates that the inventory produced by the assessee does not show the extact state of affairs. 15.1 During the visit of MBF on 23.12.2013, the following was recorded :- .. 7. The power of MBF is drawn from PP-II (2x55MW). On perusal of log book of PP-II, it was seen that half of the power consumed by stacker/ reclaimer is added to the figure of consumption of power of MBF. It was informed that the stacker / reclaimer is common for PP-II (2x55MW) and MBF. Therefore, power consumption is shares, equally. 15.2 It is not possible that power consumption by stacker / reclaimer for PP-II and MBF is used in equal proportion for these two plants. Therefore, it is just an appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e serving a notice u/s 148 and if this mandatory requirement of law is not fulfilled entire proceedings become without jurisdiction which deserve to be struck down. For this proposition we draw support from the judgment of the Hon ble High court of Delhi in the case of Prabhat Aggarwal Vs. DCIT in WP(C) 8907/2008. 10. The undisputed fact is that the reopening has been done after four years which means that the first proviso to section 147 of the Act is applicable which reads as under :- Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. 11. The twin conditions to be fulfilled for the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conceded that neither in the reasons recorded nor in the order dated 13-3-2003, has the assessee been charged with failure to disclose fully and truly all material facts necessary for his assessment. In Fenner (India) Ltd. v. Dy. CIT [2000] 241 ITR 6721. similar matter had come up for consideration before the Madras High Court and it has been held as under :- The pre-condition for the exercise of the power under section 147 in cases where power is exercised within a period of four years from the end of the relevant assessment year is the belief reasonably entertained by the Assessing Officer that any income chargeable to tax has escaped assessment for that assessment year. However, when the power is invoked after the expiry of the period of four years from the end of the assessment year, a further pre-condition for such exercise is imposed by the proviso namely, that there has been a failure on the part of the assessee to make a return under section 139 or in response to a notice issued under section 142 or section 148 or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. Unless, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Initiation of proceedings under the proviso being clearly barred by time, the Assessing Officer could not have assumed jurisdiction by issuing notice under section 148 in respect of the assessment year 1982-83. (p. 176) In the case of Mercury Travels Ltd. {supra), the proceedings under section 147 were initiated for assessment years 1989-90, 1990-91 and 1991- 92 vide issue of notices under section 148 in September, 1996, which was after the expiry of four years. The reassessment proceedings had been initiated almost on identical grounds as in the present case. In the reasons re-corded, it was mentioned that the deduction under section 80HHD was allowable on total profit of the business by multiplying by ratio of total receipt of convertible foreign exchange to total receipt of whole business carried on by the assessee. However, to calculate total receipt of the business, the assessee had taken gross receipt of foreign exchange plus net receipt of domestic business in respect of commission/service charges. Thus, it was claimed that the assessee had claimed excess deduction under section 80HHD the High Court observed that where expressly deduction under section 80HHD was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng principles which have been laid down by the Supreme Court in Kelvinator of India Ltd. (supra) must be fulfilled. In the present case there was no tangible material, no new information and no fresh material which came before the Revenue in the course of assessment for Assessment Year 2007-08 which can justify the reopening of the assessment for Assessment Year 2006-07. 15. It would not be out of place to mention here that the claim of deduction are allowed to the assessee since A. Y. 2000-01 in the assessment framed u/s 143 (3) of the Act. Without disturbing the initial assessment years of the claim of deduction denying the claim in the middle by reopening the assessment is nothing but change of opinion. No new tangible material has came into existence which is accepted by the Assessing Officer himself who in the reasons recorded has accepted this as he states that a perusal of the assessment records reveals . This issue is well settled in favour of the assessee and against the revenue by the decision of the Hon ble Supreme Court in the case of Kelvinator of India Limited reported 256 ITR 1. 16. As mentioned elsewhere the notice issued u/s 148 of the Act da ..... X X X X Extracts X X X X X X X X Extracts X X X X
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