TMI Blog2021 (6) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... ER S.S.GODARA, J.M. : This Revenue s appeal ITA No.1721/Hyd/2019 and the assessee s cross-objection No.5/Hyd/2020 for AY.2008-09 arise from the CIT(A)-3, Hyderabad s order dated 04-09-2019 passed in case No.0160/DCIT-3(1)/CIT(A)-3/2016-17, in proceedings u/s.143(3) r.w.s.147 of the Income Tax Act, 1961 [in short, the Act ]. Heard both the parties. Case file(s) perused. 2. Coming to Revenue s sole substantive grievance in its appeal ITA No.1721/Hyd/2019 that the CIT(A) has erred in law and on facts in quashing the impugned re-opening, both the learned representatives took us to the corresponding lower appellate discussion reading as under: VII) Ground Nos. 1, 2 and 3 in appeal relate to reopening of the assessment u/s.147. The appellant further contended these grounds that the initiation of proceedings u/s.147 was wrong as there was no omission or failure on the part of the appellant in disclosing fully and truly all material facts. It was also contended that the initiation of proceedings of Section 147 was erroneous as it involved resorting to looking at a new issue of disallowance u/s.10AA in contravention of the settled principles. Facts of the case, grounds of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 39,54,048/- needs to be reduced from opening stock of ₹ 4,27,31,552/- 3. Subsequently, the assessment was reopened after obtaining the approval from the Commissioner of income Tax. During the course of reassessment proceedings, the assessee has submitted clarification in this regard. 4. With regard to exemption u/s.10A, it is submitted that the exemption mentioned in the assessment order under sec.10A is a typographical mistake. It should be under sec. 10AA. The assessee is 100% EOU located in SEZ and entitled for deduction U/s.10AA. Therefore, payment of MAT is not applicable to it. 4.1 With regard to opening and closing stock/ it was submitted by the assessee that the factory started its commercial production from 1.4.2007. The raw material for manufacturing polished granite slabs is granite blocks. To meet the requirement of raw material, the company is transferring granite slabs from its captive mines to factory. While preparing the financial statements of mine as on 31.3.2007 the material marked for factory i.e. ₹ 39,54,058/- was shown in the Closing stock schedule as raw materials in mine. Since the factory is 100% EOU separate books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast year amounting to ₹ 4,27,31,552/- was debited to as a opening stock for the year under consideration for the unit of Mine HO as against same needs to be distributed between Mine H.O. and Processing unit (eligible unit for exemption). As per schedule 16 of processing unit(eligible unit) related from cost of goods sold which was debited to Profit Loss Account [or the year under consideration an amount of ₹ 3954048/- was debited as a unit transfer. Hence ₹ 39,54,048/- needs to be reduced from opening stock of ₹ 4,27,31,552/- debited to Mine H.O. (non eligible unit). The omission resulted in short computation of income ₹ 39,54,048/-. 3. The case was reopened u/s 147 and order u/s 143(3) r:w.s. 147 was passed on 31.03.2016. During the course of assessment proceedings, the objections raised by audit were looked into and the clarifications of AO are as under: 1. With regard to exemption u/s.10A, the exemption mentioned in the assessment order under sec.10A is a typographical mistake. It should be under section 10AA. The assessee is 100% EOU located in SEZ and entitled for deduction u/s 10AA. Therefore, payment of MAT is not required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 147, read with section 148. Accordingly, the assessment is quashed. DCIT vs Lee Pharma (P) Ltd (2012) 20 ITR(T) 409 (Hyd, Trib.) In the instant case, the Assessing Officer in the course of original assessment proceedings had called for the particulars regarding various items of income going into the computation of deduction under section 80HHC, for which the assessee 'had given the requisite details and particulars. Now the Assessing Officer has reopened the assessment to hold that the very same items of receipt has to be excluded In computing relief under section 80HHC. In other words, the Assessing Officer, on a reappraisal of the very same details, which was called for by him and furnished by the assessee, would like to come to a different conclusion. This clearly tantamounts to that reopening is merely on a change of opinion. Thus the reopening is merely on a change of opinion of the Assessing Officer and he should have tangible material for forming an opinion that there has been an escapement of income. 'Reason to believe' will not include mere change of opinion. Respectfully following the ratio laid down by the Delhi High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassessment based on opinion of audit party was not valid. On perusal of the decision of the Hon'ble Madras High Court in the case of CIT vs. Lucas TVS Ltd., [234 ITR 296] It Is seen that the decision of the Hon'ble Supreme Court in Indian and Eastern Newspaper Society vs, CIT [119 ITR 996] was applied. On perusal of the land mark decision in the case of Indian and Eastern Newspaper Society vs. CIT [119 ITR 996] It was held in para 11 as under: Under that section, the audit by the Comptroller and Auditor General is principally intended for the purposes of satisfying him with regard to the sufficiency of the rules and procedures prescribed for the purpose of securing an effective check on the assessment, collection and proper allocation of revenue. He is entitled to examine the accounts in order to ascertain whether the rules and procedures are being duly observed and he is required/ upon such examination, to submit a report. His power in respect of the audit of income-tax receipts and refunds are outlined in the Board's Circular No. 14/19/56-11, dated 28-7-1960. [Internal Audit Manual, Vol.II, p.39J. Paragraph 2 of the circular repeats the provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being taken, to file appeals, and raised fantastic tax demand initiated proceedings for recovery of such taxes. The result was that, this court was flooded with innumerable writ petitions: We need hardly observe that ail this is totally irregular and should have been avoided. We cannot help putting on notice ail the authorities concerned that this court would not hesitate to take stem action for contempt if decisions of this court are disregarded unless, the operation of the judgments of this court is suspended by the Supreme Court. The ratio of the division bench decision of the Bombay High Court [S.H.Kapadia V.C.Daga, 33.] in the case of Bank of Baroda vs H.C. Shrivatsava (256 ITR 385) as brought out in Para 16 of the judgement/findings are brought to note as they are on the issue judicial discipline. Para 16 of the judgement reads as follows: ''At this juncture, we cannot resist from observing that the judgement delivered by the Tribunal was very much binding on the assessing officer. The assessing officer was bound to follow the judgments in its letter and spirit. It was necessary for the judicial unity and discipline that all the authorities below the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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