Tribunal upholds reassessment, rejects 80G disallowance, directs 80IB deduction verification.

The Tribunal upheld the validity of the reassessment proceedings under Section 148 of the Income Tax Act, rejected the disallowance of deduction under Section 80G due to lack of evidence, and directed the Assessing Officer to allow the deduction under Section 80IB after verifying the claim. The Tribunal's decision was pronounced on 28th February 2018.

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Issues Involved:
1. Validity of the reassessment proceedings under Section 148 of the Income Tax Act.
2. Disallowance of deduction under Section 80IB of the Income Tax Act.
3. Disallowance of deduction under Section 80G of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Validity of the reassessment proceedings under Section 148 of the Income Tax Act:
The assessee contended that the reassessment was invalid as it was based on issues not mentioned in the original reasons for reopening. The Tribunal noted that the Assessing Officer (AO) had called for information before issuing the notice under Section 148. The AO's letter dated 13.06.2008 was not specified under any particular section, and the proceedings initiated with this letter were not concluded before issuing the notice under Section 148. The Tribunal held that the letter dated 13.06.2008 could not be considered a notice under Sections 143(2) or 142(1) as the time for issuing such notices had expired. The Tribunal also found that the reassessment was valid as the AO disallowed the deduction under Section 80IB(5)(ii) during the reassessment proceedings, which was one of the reasons for reopening the assessment. Therefore, the Tribunal rejected the assessee's contention that the reassessment proceedings were invalid.

2. Disallowance of deduction under Section 80IB of the Income Tax Act:
The assessee claimed a deduction under Section 80IB for its Midnapore Unit, which started production in the financial year relevant to the assessment year 2003-04 but claimed the deduction for the first time in the assessment year 2005-06. The Tribunal noted that the Supreme Court had held that the initial assessment year for claiming deduction under Section 80IA (and by extension, 80IB) could be chosen by the assessee and did not have to be the year of commencement of production. Therefore, the assessee's claim for the deduction in the assessment year 2005-06 was valid.

Regarding the computation of the deduction, the Tribunal referred to the Supreme Court's decision, which held that unabsorbed losses and depreciation from earlier years, already set off against other business income, could not be notionally brought forward and set off against the income of the eligible unit in the year the deduction was first claimed. Thus, the Tribunal held that the assessee was eligible to claim the deduction without setting off the unabsorbed losses and depreciation of earlier years.

The AO had also disallowed the deduction on the ground that the Profit & Loss Account (P&L A/c) and balance sheet of the Midnapore Unit were not certified by a Chartered Accountant (CA). The Tribunal found that while the P&L A/c and balance sheet were signed by the authorized signatory and not the CA, there was no variation in the claim of deduction in Form 10CCB and the P&L A/c and balance sheet filed during the reassessment proceedings. The Tribunal held that the AO's objection was technical and directed the AO to allow the deduction after verifying the claim.

3. Disallowance of deduction under Section 80G of the Income Tax Act:
The AO disallowed a sum of Rs. 65,000 claimed as a deduction under Section 80G on the ground that the assessee could not furnish receipts for payments to various institutions. The Tribunal upheld the AO's disallowance as the assessee failed to provide evidence supporting the payment of Rs. 65,000 to institutions registered under Section 80G.

Conclusion:
The Tribunal partly allowed the assessee's appeal. It upheld the validity of the reassessment proceedings and the disallowance under Section 80G but directed the AO to allow the deduction under Section 80IB after verifying the claim. The order was pronounced in the open court on 28th February 2018.

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