TaxTMI 
TaxTMI 
2011 (5) TMI 608
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....vide letter dated 2-8-2010, read as under :- "Reasons for reopening the case under section 148.-Return of income was filed on 2-12-2003 declaring an income of Rs. 14,72,90,755 under section 115JB of the Act. Assessment was completed under section 143(3) on 20-3-2006 determining an income of Rs. 14,72,90,756 under section 115JB of the Act and Rs. 2,52,08,776 under normal provision after following deduction of Rs. 12,57,29,939 under section 80-IB of the Act. As per the provisions of section 80-IB(13) of the Income-tax Act, 1961 read with Rule 18BBB of Income-tax Rule, in order to claim deduction under section 80-IB, a separate report is to be furnished by each undertaking or, enterprise of the assessee claiming deduction under section 80-IB and shall be accompanied by the Profit & Loss account and balance sheet of the undertaking or enterprise as if the undertaking or enterprise were a distinct entity. It has now been noticed that in the instant case the assessee had four units, out of which, two units were eligible for deduction under section 80-IB. The assessee was required to furnish separate Profit and Loss Account and Balance Sheet in respect of each unit eligible for deducti....
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....he disallowance stands restored. 8. It is well settled that an Assessing Officer cannot reopen or re-examine under section 147, aspects and questions that had arisen and were considered for decision in the original proceedings. The power to reopen cannot be exercised on the basis of change of opinion. It is not the power to review or reassess aspects and questions that have been considered at the time of first/original assessment See CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561/187 Taxman 312 (SC). 9. However, the contention of the Revenue is that the Assessing Officer in the original assessment proceedings had not examined and considered sub-section 13 of section 80-IB of the Act read with Rule 18BBB of the Income-tax Rules. It is submitted by the that as per the said provisions to claim deduction under section 80-IB, a separate report is to be furnished in respect of each undertaking or enterprise of the assessee and should be accompanied with the profit and loss account and balance-sheet of the undertaking or enterprise as if the undertaking or enterprise is a distinct entity. 10. It is lucid from the assessment order itself that the Assessing Officer specifically exami....
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....he assessee to disclose full and true all necessary material facts for assessment under section 147 of the Act, proceedings are without jurisdiction. The assessee has further stated that there is no such allegation even in the purported reasons recorded under section 147 of the Act. It is an admitted fact that the assessee had failed to get the accounts of its undertakings audited separately and prepare balance sheet and profit and loss account separately for these undertakings which it was required as per section 80-IB(13) read with section 80-IA(7) of the Income-tax Act and Rule 18BBB. The failure to submit these documents during assessment proceedings amounted to failure on its part to submit truly and correctly all material facts. Regarding the objection that there is no such allegation even in the purported reasons recorded under section 147 of the Act, para 4 of the reasons recorded under section 148 of the Income-tax Act on 26-2-2010 is reproduced hereunder : Return of income was filed on 2-12-2003 declaring an income of Rs. 14,72,90,755 under section l15JB of the Act. Assessment was completed under section 143(3) on 20-3-2006 determining an income of Rs. 14,72,90,756 unde....
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....er had failed to disclose fully and truly all material facts. It is incorrectly recorded and stated that it was "now" noticed that the petitioner had 4 units and the deduction under section 80-IB was claimed in respect of two units. The fact that two units out of four were eligible for deduction under section 80-IB is recorded in the first/original assessment order. This is not a new revelation or a fact discovered or known after the first/original order. It may be noted here that it has been stated and accepted that in respect of the units I and II, the petitioner assessee has been claiming deduction for the last 6 and 4 years respectively. The sentence "however the assessee had not maintained/furnished the separate account" shows a lack of clarity and considerable ambiguity with which the Assessing Officer has proceeded. What was furnished by the petitioner was on record and not unknown. It was ex facie apparent. The petitioner had filed the documents/accounts in support of the claim before the Assessing Officer along with the return and had furnished further details during the course of the assessment proceedings. Accounts and details related to computation and the method of com....
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....t EOU Unit 81,577,256.00 Total Sales of the company, is computed as under 2,137,152,057.05 Business income attributable to Silvassa Unit In the ratio of sales is worked out as under : 139,099,406.12 x 26,287,287.00 = 17,10,943.30 2,137,152,057.05 Deduction under section 80-IB in respect of Silvasia unit-II @ 25 per cent of Rs. 17,10,943.30 = 4,27,735.83 Business income attributable to Silvassa Unit-II in the ratio of sales is worked out as under : 139,099,406.12 x 1,925,168,985.00 = 12,53,02,203.75 2,137,152,057.05 Deduction under section 80-IB in respect of Silvassa Unit-II @ 100 per cent of Rs. 12,53,02,203.75 = 12,53,02,203.75 Total Deduction under section 80-IB 12,57,29,939.58." 16. It is clear from all the doubt that the petitioner assessee had made full and true disclosure of all material facts necessary for the assessment and there was no concealment. The fact that the petitioner had not submitted a separate profit & loss account or furnished/maintained separate accounts was known as without knowing these facts, the computation or quantification under section 8....
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....and full material facts and these were within the knowledge of the Assessing Officer. The failure alleged by the Revenue is an alleged error in applying the law to the facts on record. This is not covered by Explanation 1. 19. Reliance placed by the Revenue on our decision, Honda Siel Powers Products Ltd. v. Dy. CIT [2011] 197 Taxman 415/10 taxmann.com 2 (Delhi) is inappropriate and misconceived. In the said case, the contention of the assessee was that they were required to disclose facts as when they had filed the return. This contention of the assessee was rejected as disclosure is not only restricted to the Income-tax return but also relates to the assessment proceedings. 20. Way back in 1961, the Supreme Court in the case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 had observed as under :- "......It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else-far less the assessee-to tell the assessing authority what inferences, whether of facts or law, should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from g....
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....inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. 8. The grounds or reasons which lead to the formation of the belief contemplated by section 147(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income-tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the Court to investigate. The sufficiency of grounds which induce the Income-tax Officer to act is, therefore, not a justiciable issue. It is, of course, open to the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of reasons for the belief. The expression "reason to believe" does not mean a purely subjective satisfaction on the part of the Income-tax Office....
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....he case would fall outside the ambit of section 147." 23. The Supreme court in Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 has expounded and explained :- "The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied: firstly the Assessing Officer must have reason to believe that income, profits or gains chargeable to Income-tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notic....
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....d have been taken after the four year period indicated above. So, the key question is whether or not the petitioner had made a full and true disclosure of all material facts. In the reasons supplied to the petitioner, there is no whisper, what to speak of any allegation, that the petitioner had failed to disclose fully and truly all material facts necessary for assessment and that because of this failure there has been an escapement of income chargeable to tax. Merely having a reason to believe that income had escaped assessment, is not sufficient to reopen assessments beyond the four year period indicated above. The escapement of income from assessment must also be occasioned by the failure on the part of the assessee to disclose material facts, fully and truly. This is a necessary condition for overcoming the bar set up by the proviso to section 147. If this condition is not satisfied, the bar would operate and no action under section 147 could be taken. We have already mentioned above that the reasons supplied to the petitioner does not contain any such allegation. Consequently, one of the conditions precedent for removing the bar against taking action after the said four year ....