TaxTMI 
TaxTMI 
2012 (10) TMI 528
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....) ought to have held that the entire reopening of assessment is bad in law and much so he assessment made. 4. The ld. CIT (A) failed to note that the satisfaction of CIT (A) to accord permission to the reassessment proceedings has been given in a mechanical manner and therefore ought to have held that the reassessment proceedings are bad in law and therefore ought to have quashed the order passed by the DCIT, Hyderabad. 5. The order of the ld. CIT (A) in restricting the claim for deduction u/s 80HHC at Rs.4,77,099/- as against Rs.18,27,687 claimed by the assessee is unsustainable in law. 6. The ld. CIT (A) erred in confirming the disallowance of interest at Rs.22,10,408 u/s 14A of the I T Act, 1961. 7. The order of the ld. CIT (A) in confirming the disallowance of car depreciation at Rs.56,408 u/s 14A of the Act. 8. Any other ground or grounds that may be urged at the time of hearing." 3. Ground Nos. 1 and 8 are general in nature and they do not require any adjudication. 4. In ground nos. 2,3 and 4, the assessee has raised legal issue concerning validity of proceedings u/s 147 of Income-tax Act. The assessee has challenged the initiation of proceedings u/s 147 beyond ....
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....3)(b) which is applicable to trader, since the assessee is manufacturer of gold ornaments which are exported. The AO also disallowed expenditure claimed towards interest payment of Rs.22,10,408 and also 1/4th for depreciation on the motor car for personal use of the assessee. 6. The assessee being aggrieved of the assessment order, filed an appeal before the CIT (A). Before CIT (A) also, the assessee challenged the validity of proceedings initiated u/s 147. The CIT (A) negated assessee's contention on the validity of reassessment proceedings on the ground that the AO while completing assessment u/s 143(2) has not discussed in detail various issues involved. The CIT (A) held that as per Explanation-1 to section 147 of the Act mere production of account books and material would not tantamount to disclosure as per section 147 of the Act. The CIT (A) further held that it is also a case of escapement of assessment in view of Explanation (2) to section 147. 7. The learned AR contended before us that as per proviso to section 147 action for reopening of assessment has to be taken within four years from the end of relevant assessment year unless the income chargeable to tax has escaped ....
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....r earlier assessment years consistently, it cannot take a different view for the assessment year under consideration. 8. The learned DR while supporting the orders passed by the CIT (A) contended that the assessment u/s 143(3) having completed without proper application of mind and there being failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, the reopening of assessment beyond four years was justified. 9. We have heard rival contentions of the parties and perused the material available on record. Before dealing with this issue, it is very much necessary to bear in mind the following dates and events:- 1) 1-10-2004 return of income filed by the assessee 2) 11-12-2006 - assessment ofder uu/s 143(3) was passed 3) 22-03-2010- Notice u/s 148 was issued 4) 23-3-2010 Notice u/s 148 served on tahe assessee As per proviso to section 147 of the Act, in a case where an assessment u/s 143(3) has been made, no action can be taken after expiry of four years from the end of assessment year unless the escapement of income is attributable to failure on the part of the assessee to disclose truly and fully all material facts necessary ....
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.... which appears to be erroneous, subsequently mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. In case of CIT vs. Kelvinatgor of India 320 ITR 561, the Hon'ble Supreme Court held that there must be some new and tangible material before the AO to come to a conclusion that there is escapement of income from assessment. Otherwise, it will amount to change of opinion. 11. In case of GB Brothers & Konda Rajagopala Chetty Beedi Factory Pvt. Ltd. Vs. ITO (267 ITR 774), the Hon'ble High Court of A.P held in the following manner:- "In the present case, the ITO failed to draw an inference that because of the entrustment f the initial manufacturing activity to contractors, the income derived from the industrial undertaking with reference to the backward area could be inflated and to that extent the income has to be estimated for confining the deduction to that profit which could be said to have derived only from the backward area. Failing to draw that inference, blame cannot be put on the assessee, when at the time of assessment the list of contractors, the quantity of Beedies manufactured and the amount paid has bee....