TaxTMI 
TaxTMI 
2012 (3) TMI 211
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....summed up thus: 1. On 24th December 2006, the petitioner-Company filed a return of income electronically and subsequently, submitted the same physically on 29th December 2006 along with statement of income and the necessary annexure, like Profit and Loss Account, Balance Sheet, Audit Report in Form 3CA and 3CD. 2. After the filing of the said Return, a notice for scrutiny assessment was given and the petitioner replied to the same wherein the issue of the relief under section 80IB (10) of the Act was thoroughly scrutinized in the original assessment. 3. On 30th December 2008, the scrutiny assessment order under section 143(3) of the Act was passed after considering the contentions and documentary evidence on record for which various details were called for by the Assessing Officer. 4. On 1st March 2011, a notice under section 148 of the Act was issued by the respondent along with the reasons for initiating the proceedings under section 147 of the Act. 5. On 31st March 2011, the writ-petitioner filed a return of income pursuant to the said notice under section 148 of the Act and subsequently on 29th September 2011, the petitioner submitted written objections ag....
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....three-judge-bench decision of the Supreme Court in the case of KELVINATOR OF INDIA LTD reported in 320 ITR 561. 8. At the time of initial assessment finalized under section 143 (3) of the Act, the total income of the petitioner was duly assessed without making disallowance of the claim under section 80IB(10) of the Act after taking into due consideration of the computation of the total income, Tax Audit Report in Form 3CD and Report in Form No. 10CCB. The Tax Audit Report in Form 3CD clearly declared the details of amount inadmissible under the provisions of the Act and duly certified by the Chartered Accountants. 9. At the time of initial assessment finalized under section 143(3) of the Act, the deduction of Rs.11,38,83,650/- under section 80IB(10) of the Act was duly supported by the Audit of the Chartered Accountants. Such claim was allowed after thorough scrutiny and verification of the concerned Assessing Officer and after due consideration of all material facts as disclosed by the petitioner and as available on the records. 4. The writ-application is opposed by the Revenue by filing affidavit-in-reply thereby opposing the prayer of the writ-petitioner and the defence....
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....no separate and distinct accounts have been furnished by the assessee during the course of original assessment proceedings. The only annexure submitted during the course of original assessment proceedings was the above-referred Exhibit-II, which only gives a summary of net sales, closing stock and direct expenses. 5. Mr. Patel, the learned advocate appearing on behalf of the petitioner, has strongly relied upon the decision of the Supreme Court in the case of KELVINATOR OF INDIA LTD reported in [2010] 2 SCC 723 and contended that in the case before us, no 'tangible materials' have been disclosed in coming to a conclusion that there was escapement of income from assessment. Mr. Patel, in this connection, had drawn our attention to the reasons for initiation of proceedings and has contended that the reasons itself indicate that this is a case of mere 'change of opinion'. 6. Mr. Bhatt, the learned senior advocate appearing on behalf of the Revenue, has, on the hand, opposed the aforesaid contention of Mr. Patel and also relied upon the selfsame decision of KELVINATOR OF INDIA LTD (supra) in support of his contention that after the amendment of the Act in the year 1989, th....
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....he year, the assessee had booked part of the profit of the housing project following Accounting Standard 9 claiming 80% work done of Rs.18,11,29,280/- on the total sale value of Rs.22,61,44,600/- pertaining to 59 units and deduction of profit of Rs.11,38,83,650/- was claimed after adjustment of expenditure u/s 80IB(10) of the Act. [vii]. As per the provisions of Section 801A(5) of the Act separate accounts are to be maintained as if such eligible business were the only source of income of the assessee for which deduction are claimed. But not such separate accounts were maintained in absence of which the exact amount of deduction u/s 101A (5) of the Act 801B (1) of the Act could not be ascertained. [viii]. In respect of allocation of expenditure between the two projects, the C.A. in his 3CD report (item No.3) in Notes on Accounts) has stated that "the company follows the policy of transferring its revenue expenses up to 30% for six months to housing project Shangri La and 10% to Industrial park (IPBP) and the remaining 60% expenses are debited to P&L account. This indicated that no separate and distinct accounts were maintained for each eligible business. Thus, the assessee ha....
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....her income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned [hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year]: Provided that where an assessment under sub-section [3] of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection [1] of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is ....
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....n an earlier decision of that court taken by a bench of five judges: "4. It was held by this Court in Calcutta Discount Co. Ltd. v. Income-tax Officer, (1961) 41 ITR 191 = (AIR 1961 SC 372) that the High Court in appropriate cases has power to issue an order prohibiting the Income-tax Officer from proceeding to reassess the income when the conditions precedent do not exist. At p. 207, K. C. Das Gupta, J., delivering the majority judgment of the Court observed: "It is well settled however that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well settled will issue appropriate orders or directions to prevent such consequences. The High Court may, therefore, issue a high prerogative writ prohibiting the Income-tax Officer from proceeding with reassessment when it appears that the Income-tax Officer had no jurisdiction to comm....
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....power to administer the Act; if he has information from which it may be said prima facie, that he had reason to believe that income chargeable to tax had escaped assessment, it is not open to the High Court, exercising powers under Article 226 of the Constitution, to set aside or vacate the notice for reassessment on a reappraisal of the evidence. 7. The High Court in this case was apparently of the view that the information in consequence of which proceedings for reassessment were intended to be started, could have been gathered by the Income-tax Officer in charge of the assessment in the previous years from the disclosures made by the two Hindu undivided families. But that, in our judgment, is wholly irrelevant. Jurisdiction of the Income-tax Officer to reassess income arises if he has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment. That information must, it is true, have come into possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the....
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....on to reopen the assessments for the four years in question. Having second thoughts on the same material does not warrant the initiation of a proceeding under Section 147 of the Income-tax Act 1961." (Emphasis supplied). 14. At this stage, we may rather aptly refer to a latest three-judge-bench decision of the Supreme Court in the case of COMMISSIONER OF INCOME TAX VS. KELVINATOR OF INDIA LTD. reported in (2010) 2 SCC 723 where the said court after taking into consideration the effect of Direct Tax Laws (Amendment) Act, 1987 on section 147 made the following observations while dismissing the appeals preferred by the Revenue: "5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in Section 147 of the Act (with effect from1-4-1989), they are given a go-by and only one condition has remained viz. that where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to r....
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....e fears, the Amending Act, 1989, has again amended Section 147 to reintroduce the expression 'has reason to believe' in the place of the words 'for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new Section 147, however, remain the same." (emphasis supplied) 9. For the aforestated reasons, we see no merit in these civil appeals filed by the Department, hence, dismissed with no order as to costs." (Emphasis given by us). 15. Bearing in mind the aforesaid principles, we now propose to consider the case before us. 16. After hearing the learned counsel for the parties and after going through the aforesaid materials on record, we find that the main reason for opening the assessment is that in the light of the Explanation inserted to Section 80-1B (10) by the Finance Act (No.2), Act 2009 with retrospective effect from 01.04.2000, deduction u/s 801B(10) shall not be admissible to a contractor in respect of works contract awarded by any person. 17. Apart from the above fact, the Assessing Officer has on the basis of the materials originally placed by Assessee held that the Assessing Officer in the assessment proceedings u/s 143(3) di....