TMI Blog2021 (2) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... here the Tribunal after considering relevant facts had held that reopening of assessment without satisfying second condition is invalid and liable to be quashed. Thus we quash notice issued u/s.148 of the Act and consequent assessment framed u/s.143(3) r.w.s.147 - Decided in favour of assessee. - ITA No.: 1175/CHNY/2019 - - - Dated:- 28-1-2021 - Shri Mahavir Singh, Vice President And Shri G. Manjunatha, Accountant Member For the Appellant : Shri Vikram Vijayaraghavan, Advocate For the Respondent : Shri Suresh Periasamy,JCIT ORDER PER G. MANJUNATHA, AM: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-9, Chennai, dated 28.02.2019 and pertains to the assessment year 2009-10. 2. The assessee has raised the following grounds in its appeal:- 1. The order of the Commissioner of Income tax (Appeals) is contrary to law, facts and in the circumstances of the case. 2. The Commissioner of Income tax (Appeals), erred in confirming the reopening of the assessment u/s 147 beyond the period of four years from the end of the assessment year. 2.1. The Commissioner of Income tax (Appeals), ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice u/s.148 of the Act dated 30.03.2016 issued. In response to notice, the assessee filed return on 12.04.2016 and simultaneously requested reasons for reopening of assessment and such reasons were furnished to the assessee. The assessee filed objections for reopening assessment and the same has been disposed off vide speaking order dated 28.11.2016. The assessment have been completed u/s.143(3) r.w.s. 147 of the Act on 28.12.2017 and determined total income at ₹ 66,45,78,250/- after making addition towards disallowance of excess claim of deduction u/s.80JJAA of the Act, for ₹ 72,36,875/-. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the ld.CIT(A), the assessee has challenged reopening of assessment on the ground that reopening of assessment is invalid because the original assessment was completed u/s.143(3) of the Act and assessment has been reopened after a period of 4 years without making an allegation on the part of the assessee that there is a failure to disclose fully and truly all material facts necessary for assessment. The assessee has also relied plethora of judicial decisions including the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion to commence reassessment proceedings. It was also argued that when a regular order of assessment was passed in terms of S. 143(3) of the Act, a presumption can be raised that such an order has been passed on application of mind and therefore to initiate reassessment would amount to change of opinion. 5.3.3 In this case, an assessment u/s. 143(3) of the Act was completed on 19.03.2011. Subsequently, a notice u/s. 148 of the Act was issued on 30.03.2016 and the assessment was reopened to withdraw the excess claim of deduction made u/s 80J4JAA by the appellant. Admittedly, this is a case of reopening after a period of four years from the end of the relevant assessment year where an assessment u/s. 143(3) of the Act was already completed. 5.3.4 In accordance with the provisions of section 147 of the Act, in a case where an assessment has been completed u/s. 143(3), no notice u/s. 148 can be issued after a period of four years from the end of the relevant assessment year unless the income has escaped assessment due to the failure on the part of the appellant to disclose fully and truly all material facts necessary for the assessment. Therefore, the crucial issue to be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en there is no true and full disclosure by the appellant; Reliance is placed on the following judgements: The Hon ble Bombay High court in the case of Indian Hume Pipe Co. Ltd 348 ITR 439had held that where reopening was beyond a period of four years from the end of the relevant Assessment Year, the assessee cannot merely rely upon the fact that if the AO had followed an enquiry with due diligence on the basis of the account books or other evidence produced by the assessee, he could have discovered the same. Mere production of account books or other evidence from which material evidence could with due diligence have been discovered by the assessing officer does not necessarily amount to a disclosure within the meaning of the first proviso to section 147. The ITAT, Mumbai in the case of Manubhai Sons Co., 18 SOT 297 also held that even if it is assumed that, from the documents produced, the assessing Officer, if he had been circumspect, could have found out the truth, he is not on that account precluded from exercising the power to assess income, which has escaped assessment. Therefore, mere disclosure in books of account or in other evidence does not necessarily mean that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the AS does not have power of review, but has the power to reassess, The question of power of review comes only if the AS applied his mind to the facts of the case and took a course of action which he cannot subsequently change without any tangible material as that would amount to power of review. 5.3.12 In the case of the appellant, there is no information that the AO examined the issue in the original assessment order. The AR of the appellant was also unable to furnish that any questionnaire was issued by the AO on the said issue or that any submissions were furnished by the appellant during the course of original assessment proceedings inviting the attention of the AO on the said issue. No case is thus made out to show that there was an opinion already expressed by the AO on the matter which is now sought to be reviewed under the reassessment proceedings. 5.3.13 On similar facts, it has been held judicially that the reopening of assessment is valid under such circumstances in the following cases: The Bombay High Court in the case of Export Credit Guarantee corporation of India Ltd., 350 ITR 651 held that failure of AO to apply his mind during the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase which was not the case in the ruling relied upon by the appellant. This distinguishing feature renders the decision relied upon by the appellant as not applicable to the facts of AY under consideration. 5.3.18 In the light of the detailed facts and circumstances of the case as discussed above, it is therefore held that the reopening beyond four years from the end of the relevant assessment year is valid. (Grounds: Dismissed) 5.3.19 On merits of the case it is seen that AO had disallowed the appellant s claim of wages paid to new workmen in excess of 185 workmen who were found to be employed for less than 300 days during the year. In this regard it is to state that on similar facts, the Hon ble Delhi Tribunal in the case of LG Electronics India P.Ltd 33 taxmann.com 465had held while confirming the disallowance, that the argument taken by assessee that employees employed in the preceding year who had not completed 300 days in that year should be taken in the current year when he completes 300 days, was of no force. 5.3.20 Further, it is also to state that the jurisdictional Tribunal in the appellant s own case in ITA Nos. 641 to 645/Chny/2018 for the AY s20 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken after the expiry of 4 years from the end of relevant assessment year unless any income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for that assessment year. In a case where assessment was reopened after 4 years, for invoking proper jurisdiction, the AO has to record the reason to believe that any income chargeable to tax had escaped by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. In this case, on perusal of reasons recorded for reopening of assessment, we find that there is no allegation by the AO on failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Therefore, we are of the considered view that reopening of assessment is not based on sound footing and hence the impugned assessment order framed u/s.143(3) r.w.s. 147 of the Act, is illegal and liable to be quashed. Further, the issue is fully covered in favour of the assessee by the decision of ITAT, Chennai Benches in assessee s own case for assessment year 2008-09 in IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that in the case of an existing [factory], the additional wages shall be nil if the increase in the number of regular workmen employed during the year Is less than 10% of existing number of workmen employed in such (factory] as on the last day of the preceding year; Since, if F. Y. 2006-07 less than 10% of the new workmen employed Is employed for more than 300 days, the assessee is not eligible for deduction u/s. 80JJAA for additional wages paid in F.Y. 2006-07. Accordingly, the assessee is not eligible for the entire claim of ₹ 13,55,082 u/s. 80JJAA. 15.2 Inviting our attention to the above, the AR pointed out that no where the AO recorded that there is a failure on the part of assessee to disclose fully and truly all material facts necessary for its assessment in that assessment year. Hence, he pleaded that the re-opening of the assessment needs to be quashed. Per contra, the DR supported the order of the AO and the CIT(A) 15.3 We heard the rival submissions. It is clear from the reasons disclosed by the AO, supra, that the AO has not recorded the failure, if any, on the part of the assessee. The assessment is re-opened after four years from the end of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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