Tribunal Invalidates Reassessment Order: Lack of Opportunity, Natural Justice Violation

The Tribunal invalidated the reassessment order due to lack of providing adequate opportunity and violating principles of natural justice. It found the reassessment without jurisdiction and based on incorrect premises. The disallowance of exemptions under Sections 10A and 10AA was deemed unjustified. The requirement to file Form 56F was considered directory, and the approval for reopening lacked reasoning. Consequently, the reassessment order was set aside, and exemptions under Sections 10A and 10AA were reinstated.

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Issues Involved:
1. Adequate opportunity and principles of natural justice.
2. Jurisdiction and validity of reassessment under Section 147.
3. Disallowance of exemption under Sections 10A and 10AA.
4. Filing and consideration of Form 56F.
5. Reopening of assessment without new material and on change of opinion.
6. Directory versus mandatory nature of Form 56F requirement.
7. Approval and satisfaction under Section 151.

Issue-wise Detailed Analysis:

1. Adequate Opportunity and Principles of Natural Justice:
The assessee contended that the CIT(A) erred in upholding the reassessment order without providing adequate opportunity to furnish details, submissions, or evidence, violating the principles of natural justice. The Tribunal noted that the CIT(A) passed the order ex parte despite several opportunities given to the assessee, which justified the reassessment order's invalidation on this ground.

2. Jurisdiction and Validity of Reassessment under Section 147:
The assessee argued that the reassessment order dated 28 January 2016 was without jurisdiction and bad in law. The Tribunal examined whether the reassessment was based on valid reasons and found that the reopening was based on the incorrect premise that Form 56F was not filed, which was factually incorrect as the form was submitted during reassessment proceedings.

3. Disallowance of Exemption under Sections 10A and 10AA:
The CIT(A) upheld the reassessment order disallowing exemptions under Sections 10A and 10AA totaling Rs. 5,09,83,214/-. The Tribunal found that the original assessment under Section 143(3) allowed these exemptions after detailed scrutiny. The reassessment disallowing these exemptions solely on the ground that Form 56F was not filed was deemed unjustified.

4. Filing and Consideration of Form 56F:
The Tribunal noted that the assessee claimed to have submitted Form 56F during the original assessment proceedings, supported by an affidavit. The reassessment proceedings also saw the submission of Form 56F. The Tribunal referred to various judicial decisions, including the case of G.S. Pharmbutor Pvt. Ltd., where it was held that the requirement of filing the audit report is directory and not mandatory, and filing during reassessment suffices.

5. Reopening of Assessment without New Material and on Change of Opinion:
The Tribunal found that the reopening was based on a change of opinion without any new tangible material, which is not permissible. The original assessment under Section 143(3) had already scrutinized and allowed the exemptions. The Tribunal cited several judicial decisions supporting the view that reassessment on the same set of facts constitutes a change of opinion and is invalid.

6. Directory versus Mandatory Nature of Form 56F Requirement:
The Tribunal held that the requirement to file Form 56F is directory and not mandatory. Judicial decisions, including those from the High Courts of Delhi, Punjab & Haryana, and others, supported this view. Thus, the disallowance of exemptions under Sections 10A and 10AA based on the non-filing of Form 56F along with the return was unjustified.

7. Approval and Satisfaction under Section 151:
The Tribunal observed that the approval for reopening under Section 151 was mechanical, merely stating "Approved" without any reasoning. Judicial precedents, including those from the Delhi High Court, emphasized that such mechanical approval does not meet the legal requirement of satisfaction under Section 151, rendering the reassessment invalid.

Conclusion:
The Tribunal, relying on the decision in G.S. Pharmbutor Pvt. Ltd. and other judicial precedents, concluded that the reassessment order was not sustainable. The appeal was allowed, and the reassessment order was set aside, reinstating the exemptions under Sections 10A and 10AA.

Order Pronounced:
The appeal was allowed, and the order was pronounced in the open court on 18th April 2018.

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