TMI Blog2022 (2) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... ng is not valid as the original scrutiny assessment was the subject-matter of appeal before Ld. CIT(A) and again appeal before Tribunal, moreover, the action of Assessing Officer is based on change of opinion on similar set of fact. Moreover, it was overreaching to the decisions of the superior authorities on the similar set of fact on similar issues. Therefore, the re-opening is held as invalid and subsequent action initiated thereof are void ab initio. Disallowance of 10% ad hoc expenses for earning income from other source (interest income) - There is no dispute on the fact that the AO disallowed ad hoc expense @ 10% by taking view that no nexus was proved in the setting aside proceedings and that the assessee again failed to prove the nexus with the expense qua the interest income earned. Before us the assessee could not substantiate the cross- examination made the submission that same expense is certainly incurred. In the absence of any nexus, we are unable to concur with the submission of Ld. Sr. counsel for the assessee. Therefore, we affirm the order of Ld. CIT(A). In the result of assessee s appeal is dismissed. Penalty levied u/s 271(1)(c) - HELD THAT:- As in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dfill Project 1 since it is not a new undertaking as per provisions of section 80IA(4) of the Act. 5. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating that once deduction under section 80IA was granted in the initial assessment year, it ought to be allowed in the subsequent years for the remaining period. 6. Without prejudice to the above grounds of appeal, it is submitted that where the conditions necessary for claiming the deduction are fulfilled at any date subsequent to date from which the undertaking is eligible to claim such deduction, the deduction shall be allowable from such subsequent date. 7. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO in levying interest under section 234B of the Act without appreciating the fact that as per the provisions section 234B(3) of the Act, interest is chargeable on the amount by which the tax on the total income determined on the basis of reassessment or recompilation exceeds the tax on total income determined on the basis of regular assessment. 8. On the facts and in the circumstances of the case an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant hereby reserves the right to add to, alter or amplify the above grounds of appeal, at any time before or at the time of appeal, so as to enable the Hon'ble Tribunal to decide the appeal in accordance with law. 2. Brief facts of the case are that the assessee company filed its return of income for the A.Y. 2006-07 on 22.12.2006 declaring income of Rs.37,19,360/- under the normal provision of Act and declaring book profit of Rs.2,32,77,346/- for the purpose of Minimum Alternative Tax [MAT] provision. The return of income was selected for scrutiny and assessment order was completed. In the computation of income, the assessee claimed deduction of Rs.2,04,06,890/- under section 80IA of the Act. The assessment was completed under section 143(3) on 26.12.2008 determining total income at Rs.68,53,460/-.The AO disallowed part of deduction with regard to the income earned on fixed deposit with bank. Aggrieved by the part disallowance of disallowance under section 80IA of the Act, the assessee filed appeal before the ld.CIT(A) wherein the disallowance of part deduction under section 80IA of the Act was upheld. 3. On further appeal before the Tribunal, the assessee was allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order. The assessee in its reply explained that they have started claiming deduction 80IA of the Act from A.Y. 2002-03 and the assessee started various projects on various dates for which deduction has been claimed from the A.Y. 2002-03. In A.Y. 2002-03, assessee claimed deduction under section 80IA of the Act for land fill project for Rs.2.04 crore. Though, its activity was commenced on 01.04.1998, but the assessee entered into agreement with GIDC on subsequent date i.e. 15.05.2002. The reply of assessee was not accepted by the AO by taking view that deduction under section 80IA of the Act can be claimed for new infrastructure facility only. For claiming deduction, the requirement of entering into agreement with the Government Authority implies that before incorporation of infrastructure facilities, the agreement should have been done. On the abovementioned observation, the AO disallowed entire disallowance claimed under section 80IA in assessment order passed under section 143(3) read with section 147 dated 31.01.2014. 5. Aggrieved by the disallowance of deduction under section 80IA of the Act as well as on the reopening, the assessee filed appeal before the ld.CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary preconditions for reopening were complied with. The assessee failed to submit any evidence regarding the fact that AO was alive or cognizant of issue of fulfilment of condition prescribed under section 80IA(4)(b) of the Act. During the course of original assessment proceedings, all that he had applied his mind over the issue before granting deduction under section 80IA of the Act. The assessee could not either pin-point any specific query by AO, nor could furnish any copy of specific reply to the AO on the issue of fulfilment of prescribed condition and upheld the order of AO in reopening. 6. On disallowance of deduction under section 80IA of the Act on landfill project, the assessee was held ineligible for deduction under section 80IA for landfill project No.-1 but held eligible for deduction for land fill project No.2 on the basis of decision of his predecessor in AY 2008-09. [para 7.4 to 7.6 of ld.CIT(A)]. Further aggrieved, the assessee has filed his present appeal before this Tribunal. 7. We have heard the submission of Shri Sourabh Suparkar, learned Senior Advocate with Ms.Urvashi Shodhan, Advocate for the Assessee, hereinafter referred ld. Senior Counsel and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 09.02.2002 requested GIDC to execute agreement for obtaining income tax exemption for secured land filling site, accordingly, vide agreement dated 15.05.2002 with GIDC, assessee entered into agreement for carrying out aforesaid project and accordingly claimed deduction under section 80IA of the Act for eligible project in A.Y. 2002-03 and allowed the same deduction till A.Y. 2009-10. 8. The ld. Senior Counsel further submits that the assessee claimed deduction under section 80IA of the Act for the year under consideration and it was partly disallowed on one component, which was further examined on appeal by the ld.CIT(A) in its adjudication and on further appeal, it was allowed by the Tribunal. There was no failure on the part of assessee in making full disclosure and there is no failure on the part of assessee. The assessment was reopened beyond the Four Years from the end of relevant assessment year. The reopening is purely based on change of opinion. The AO has no jurisdiction to reopening the assessment which was a subject matter of appeal before the ld.CIT(A) and was further examined by the Tribunal. To support his submissions, the ld. Senior .Counsel of the assessee rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer are extracted in para-5.3 in the order of Ld. CIT(A). The main thrust of assessing officer in reasons recorded is that for claiming deduction under section 80IA, the assessee is required to enter into agreement with Central, State Government or with local authority for developing maintaining new infrastructure facilities. The assessee commenced its activity wef 01.04.1998 but entered into agreement with GIDC only on 15/05/2002 (after date of commencement) and that deduction should not have allowed to the assessee. 12. The Ld. Sr. counsel for the assessee vehemently argued that the claim of deduction under section 80IA was vehemently examined and one component of working of profit was partly allowed by Assessing Officer, thus, the reopening of concluded assessment under section 14(3), was nothing but mere a change of opinion. It was also submitted that that the claim of deduction under section 80IA was not only examined by Assessing Officer but was a subject-matter of appeal before Ld. CIT(A) and further before Tribunal and as per the principal of merger the assessing officer has no jurisdiction to reopen such assessment. 13. The Hon ble Gujarat High Court in CIT Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the confirmation, reversal or modification, but in any event, the order of the lower court or the forum does not have any independent existence thereafter. This would be a merger in a case where the reasoning of the subordinate forum is either expressly not approved, or a different reasoning is given by the Supreme Court or forum. However, in a case where the superior court either adopts or reiterates the reasoning, or records an express approval of the reasoning, the merger is in relation to both the operative part and the reasons(as per para 18). The net effect is that the order of the subordinate court or the forum merges with the order of the superior Court or forum and has no independent existence in relation to the issue which was carried before the appellate court or forum. If the merger is issue specific, there is fusion of the orders only to that limited extent. That is the reason why principle of merger is stated to be neither rigid nor of universal application. Therefore, it cannot be successfully contended that in the latter situation, i.e., where the appellate court or the forum merely accords approval to the reasoning of the lower court or forum, there is no dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. The Assessing Officer solely relied on the material information available on record. Further, we find that the assessment order passed by Assessing Officer was the subject-matter of appeal before Ld. CIT(A) and principle of merger would apply. Moreover, there is no tangible material before the assessing officer to reopen the assessment. 18. Thus, in view of the aforesaid factual and legal discussions, we hold that the action of Assessing Officer for re-opening is not valid as the original scrutiny assessment was the subject-matter of appeal before Ld. CIT(A) and again appeal before Tribunal, moreover, the action of Assessing Officer is based on change of opinion on similar set of fact. Moreover, it was overreaching to the decisions of the superior authorities on the similar set of fact on similar issues. Therefore, the re-opening is held as invalid and subsequent action initiated thereof are void ab initio. 19. Considering the fact, that we have allowed ground No. 1 2 of the appeal on the primary submissions of the learned Senior Counsel and held that the reopening under section 147/148 is not valid. Therefore, consideration on his other submissions on the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % of interest earned on fixed deposits, loan and income-tax refund aggregating to Rs.3,12,419/- ought to be deducted while excluding the interest income for the purpose of computing the deduction under section 80IA of the Act. 8. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not deleting the interest levied under section 234D by stating that it is consequential in nature. The appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal. 22. Brief facts of the case are that initially the assessment was completed under section 143(3) on 29.12.2009 determining total income of assessee at Rs.48,48,260/-. The assessee while filing return of income declared income of Rs.22,41,941/-. The assessee in the computation of income also claimed deduction under section 80IA of Rs. 1.15 Crore. The Assessing Officer while passing assessment order disallowed part of the deduction under section 80IA, thereby restricting it to Rs. 1.01 Crore. The assessing officer also disallowed sludge disposal charges of Rs. 696,574/- an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion on the same set of fact which was submitted during the course of original scrutiny assessment. The Assessing Officer examined the claim of deduction under section 80IA and passing assessment order and allowed deduction under section 80IA at Rs.1.01 crores. Accordingly, the re-opening of assessment is mere change of opinion and same set of fact. Ld. Sr. counsel for the assessee further submits that action of Assessing Officer is that assessee has not developed any new infrastructure facilities on the basis of agreement as required under section 80IA(4)(i)(b) and has only operated old infrastructure facilities and provision of section 80IA(4) does not stipulate that the agreement should have been entered into on or before a particular date and even otherwise. There is enough evidence in the form of correspondence with the Gujarat Industrial Development Corporation ( GIDC in short) and the assessee that a clear agreement exist right from the inception the Central Board of Direct Taxes ( CBDT in short) in its Circular No.1/2006 dated 12.01.2006 clarified that effluents treatment facilities as developed, operate and maintain by assessee is eligible for deduction under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest income. On appeal before Ld. CIT(A), the action of Assessing Officer was upheld and on further appeal before Tribunal, the order was restored back to file of Assessing Officer in ITA No.2223/AHD/2010 for AY 2007-08 dated 27.02.2017. 28. The Assessing Officer re-opened the assessment for this year by recording the reasons that in case of assessee for AY 2009-10, the assessment under section 143(3) was completed on 30.12.2011. As per the same, deduction claimed under section 80IA was disallowed and assessee did not fulfil the perquisite the claiming of deduction under section 80IA in this year also and the assessee has claimed deduction of Rs.1.01 crores which was not allowable. On receipt of reasons recorded, the assessee filed objection dated 18.12.2012 against re-opening and said objection of assessee was rejected. The Assessing Officer after rejecting the objection for re-assessment, Assessing Officer recorded that for eligible claim of deduction under section 80IA, the assessee was required to enter into an agreement with government, local authority or statutory body. Before developing or operating and maintaining a new infrastructure facilities, the claim of assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a change of opinion on the part of Assessing Officer. We find that notice under section 148 of the Act in the present case was issued on 28.03.2012 i.e., within the period of four years from the end of relevant assessment year. Therefore, no tangible material has come to the notice of Assessing Officer. The Assessing Officer solely relied on the material information available on record. Further, we find that the assessment order passed by Assessing Officer was the subject-matter of appeal before Ld. CIT(A) and principle of natural justice would apply. Therefore, we hold that the action of Assessing Officer for re-opening is not valid as the original scrutiny assessment was the subject-matter of appeal before Ld. CIT(A) and again appeal before Tribunal, moreover, the action of Assessing Officer is based on change of opinion on similar set of fact. Our view is also fortified by our finding in para 13 to 15 of this order (supra). Considering the aforesaid factual and legal discussions, the re-opening is held as invalid and subsequent action initiated thereof are void ab initio. In the result, ground No.1 of assessee s appeal is allowed. 30. Considering the fact that we have allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of CIT vs. Asian Star Co. Ltd. in TA No. 200 of 2009 dated 19.03.2010. Accordingly, the assessment order repeated the addition. On appeal before Ld. CIT(A) the action of Assessing Officer was upheld on similar lines. Further, aggrieved assessee has filed the present appeal before this Tribunal. 34. We have heard the submissions of the parties and have gone through the orders of the lower authorities. The Ld. Senior counsel for the assessee submits that the case relates to AY 2007-08 and no specific evidence or details is not available at present. The Bench may take lenient view and may decide the issue of appeal. 35. On the other hand, Ld. Sr.DR for the Revenue supported the order of authorities below. 36. We have considered the rival submission of both the parties and have gone through the order of authorities below. There is no dispute on the fact that the Assessing Officer disallowed ad hoc expense @ 10% by taking view that no nexus was proved in the setting aside proceedings and that the assessee again failed to prove the nexus with the expense qua the interest income earned. Before us the assessee could not substantiate the cross- examination made the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the Assessing Officer in levying penalty on the ground that the claim of deduction under section 80-IA was not substantiated by evidences and the same leads to the conclusion that no accurate particulars were filed by the appellant without appreciating the fact that appellant had furnished / submitted full details during the course of the assessment, reassessment and appellate proceedings. 7. On the facts and in the circumstances of the case and in law, the Commissioner of income-tax (Appeals) erred in holding that the penalty is leviable since the assessment was reopened under section 147 on the ground that the income has escaped assessment because of false / wrong claim of deduction under section 80-IA ignoring the fact that penalty proceedings were initiated not for concealment of income but for furnishing inaccurate particulars. The appellant hereby reserves the right to add to, alter or amplify the above grounds of appeal, at any time before or at the time of appeal, so as to enable the Hon'ble Tribunal to decide the appeal in accordance with law. 38. Brief facts of the case are that initially the assessment for the year under consideration for A.Y 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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