TMI Blog2024 (3) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be an approval as required under Explanation 2 to Section 10B. It appears that later, the High Court of Delhi [ 2012 (9) TMI 627 - DELHI HIGH COURT] had held that the approval for the purpose of Section 10B can only be an approval granted by the Board constituted by the Central Government under the provisions of Industries (Development and Regulation) Act. This judgment of the Delhi High Court is the reason cited in respect of all the re-assessments. In WP it is additionally stated in the reasons that there was a failure on the part on the assessee to disclose fully and truly all relevant materials required for the assessment. However, neither in the notices or the assessment orders, nor in the counter affidavit is it stated that the assessee had failed to disclose any relevant information or had produced any fraudulent material during the assessment proceedings. The Apex Court in Parashuram Pottery Works Co. L.t.d v. Income Tax Officer [ 1976 (11) TMI 1 - SUPREME COURT] has specifically considered the issue and has held that the responsibility of the assessee is only to place the materials before the assessing officer and the assessee would not be responsible for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short) for a block of ten years. Their assessments had been completed accepting their claim for exemption by Exhibit P1 orders. In W.P.(C).No.4689/2015 Exhibit P1 is dated 10.12.2009 and exemption under Section 10B for income under the head business derived from export of software was allowed to the petitioner. However, it was found that the assessee had not excluded the interest income and had claimed exemption under Section 10B in respect of interest income also. The interest income received from Bank deposit and short term deposits was therefore assessed as income from other sources and the exemption under Section 10B was limited to profits from the export of software and tax was demanded for interest income. It is submitted that the demand was met by the petitioner. 3. In W.P.(C).No.4709/2015 also, the assessment was finalised by Exhibit P1 for the assessment year 2008-2009 on 13.12.2010. 4. In W.P.(C).No.7849/2014 an assessment order was passed, as evidenced by Exhibit P1 for the assessment year 2006-2007, which was a non-speaking order assessing a total income of 30,42,228/-. The 2nd respondent had thereafter initiated proceedings under Section 263 of the Act and set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 of the Act. 7. The petitioners filed their objections to the re-opening of the assessment on the specific ground that a subsequent decision rendered by the Delhi High Court cannot be a reason for reopening of an assessment, especially after four years has elapsed from the end of the assessment year in question, since from the material on record, there was no case that it was on account of any failure on the part of the assessee to disclose true and correct facts that the income escaped assessment. It was submitted that the assessees had produced all the relevant documents before the assessing officer and any error on the part of the assessing officer in drawing correct inferences cannot be a reason for re-opening the assessment, especially since admittedly, the period of four years had elapsed. However, without considering the said contentions, the re-assessment was finalised, which is under challenge in these writ petitions. 8. The learned counsel for the petitioner contends that the exemption under Section 10B was extended to the petitioners on their producing all the relevant records before the assessing officer and after conducting all due verification and following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that a reading of the provision would make it clear that it is only in a case where income has escaped assessment due to the failure on the part of the assessee to disclose fully and truly all material facts necessary for that assessment year that the re-opening can be attempted after four years at the relevant time. It is further contended that a re-opening of assessment under Section 147 cannot be on the basis of any change of opinion as to the position of law or facts and that the exercise is possible only if the conditions provided under the statutory mandate are satisfied. The learned counsel for the petitioner would place reliance on the decisions of the Apex Court in Magadh Sugar Energy Ltd. v. State of Bihar and others , reported in [(2021) 5 KLT 667], ACIT Mumbai Others v. ICICI Securities Primary Dealership Limited [(2012) 13 SCC 514], CIT Gujarat II v. Kurban Hussain Ibrahimhi Mithiborwala [1971 82 IT 821] Raza Textiles Ltd v. Income Tax Officer, Rampur [AIR 1973 SC 1362], GKN Driveshafts (India) Ltd. v. Income Tax Officer and Ors [(2003) 1 SCC 72], Calcutta Discount Co.Ltd v. Income Tax Officer, Companies District I Calcutta and another [AIR 1961 SC 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ari. Raza Textiles Ltd v. Income Tax Officer, Rampur [AIR 1973 SC 1362]. 5. An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily a writ petition should not be entertained when an efficacious alternate remedy is provided by law. Magadh Sugar Energy Ltd. vs. State of Bihar and others , [(2021) 5 KLT 667] is relied on. 6. So far as Income tax assessment orders are concerned, they cannot be reopened on the source of income escaping assessment under Section 147 of the Act after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of assesse to disclose fully and truly all material facts necessary for the assessment. Parashuram Pottery Works Co. L.t.d v. Income Tax Officer [(1977)106 ITR 0001], Commissioner of Income Tax v. P. Krishnakutty Menon [(1990) 18 ITR 237] and ACIT Mumbai Others v. ICICI Securities Primary Dealership Limited [(2012) 13 SCC 514]. 7. When a notice under S. 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment. It is stated that in the assessee s case, the assessee had been granted excessive relief under Section 10B where the assessee was not eligible for the same and therefore, the petitioner s case is not covered by the 1st proviso to Section 147, but by sub-clause (iii) of clause (c) of Explanation 2 to Section 147 read with the exemption provided in the 1st proviso to Section 147. 14. It is further stated that clause (b) of sub-section (1) of Section 149 as it existed at the time of reopening the assessment provided as follows:- If four years but not more than 6 years have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. 15. It is stated that the notice under Section 148 could have been issued till the end of 6 years from the close of the relevant assessment year and the notice was issued within the 6 years, it is well within the time as provided in clause (b) of subsection (1) to section 149. It is, therefore, contended that the income chargeable to tax had escaped assessment by reason of the failure on the part of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in response to a notice under sub-section (1) of Section 42 or Sub-Section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Plainly put, for re-opening an assessment after 4 years, the income ought to have escaped assessment for the reason of the failure on the part of the assessee to disclose fully and truly, all material facts relevant for the assessment. 20. In the instant case, the reason for the re-assessment is that the assessee was not entitled to the exemption under Section 10B of the IT Act by reason of it not having an approval from the relevant authority, as provided in the explanation to the section. There is no contention that the assessee had originally withheld any information from the assessing authority. It is not contended that the assessee had suppressed any material or had not made available the approvals during the assessment or had induced the assessing authority to come to a wrong conclusion by any failure on the part of the assessee to disclose the relevant details. Apparently, what has occurred was a mistake on the part of the assessing authority in accepting the approval produced by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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