TaxTMI 
TaxTMI 
2013 (12) TMI 1004
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....ncome Tax Act, 1961, w.e.f. 01.04.1989." "The appellant prays that the order of Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored." 2. From the grounds of appeal raised above it is evident that the revenue has only challenged the quashing of the assessment order passed under 143(3) read with Section 147 and not on merits, even though the CIT(A) has decided the issue on merits in favour of the assessee. 3. Brief facts of the case, appopos the validity of the proceedings under Section 147, are that the assessee has filed its return of income on 01.12.2003, declaring total income at Rs. 17,36,587/-. Thereafter, the assessment was completed under scrutiny proceedings under Section 143(3) and income was determined at Rs. 21,18,730/-, after allowing the deduction under Section 80HHC at Rs. 8,92,659/-, vide order dated 28.02.2006. Later on rectification proceedings under Section 154, was also carried out vide order dated 13.03.2006, wherein the total income was determined at Rs. 17,43,950/-, after allowing the deduction under Section 80HHC at Rs. 12,67,441/- by considering the export incentives at Rs. 98,12,527/-, as against Rs. 88,31,275/- adop....
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....ible profit works out of a negative figure and, therefore, not entitled to any deduction u/s 80HHC. The incorrect allowance has resulted in underassessment of Rs. 12,67,441/-. In view of the above, I have reason to believe that the assessee has been granted excess allowance of deduction of Rs. 12,67,441/-, in this case for A.Y. 2003-04, which was charged to be taxed. I am satisfied that this is a fit case to be re-opened u/s 147 under explanation 2 sub clause C, of the I.T. Act, 1961. As the assessment involved in this case is A.Y. 2003-04 and the quantum is more than Rs. 1 lac, the approval of Ld Commissioner of Income Tax is solicited for the issuance of notice 148 in this case, if approved Sd/- (S.S.NEGI) A.C.I.T. Cir. 21(3), Mumbai. 5. In compliance of notice under Section 148, objections were raised by the assessee that initiation of proceedings under Section 148 has wrongly been initiated, as all the material facts and information have been disclosed and were available on record and reopening after the expiry of four years from the end of the relevant assessment year cannot be done in view of the proviso to Section 147. The relevant objections of the assessee, as have b....
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....void ab-initio. In view of the aforesaid facts of the case, before proceedings into the re-assessment proceeding you are requested to pleas consider this submission against the re-opening of assessment." 6. The Assessing Officer rejected the assessee's objection on the ground that notice under Section 148 has been served upon the assessee, within the time limit prescribed, and all the condition prescribed in proviso to Section 147, Section 148(1), 148(2), 149(1)(b) and proviso to Section 151(1) of the Act are fulfilled. Thereafter he proceeded to disallow the deduction under Section 80HHC to the extent of Rs. 12,67,441/-, as per his findings given in para 8 and 9 of the assessment order. 7. Before the CIT(A), the assessee reiterated its objections regarding the validity of the reopening under Section 147 and submitted that the assessee has disclosed all the material facts in return of income under Section 139 (1), which was duly accompanied by balance sheet, profit and loss account, form 10CCAC, wherein working of deduction under Section 80HHC and other relevant documents were furnished. It was after the verification of the documents, accompanying the return and submissions made....
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....rt incentives of Rs. 98,12,527/- which resulted in computation of deduction at Rs. 12,67,441/-. So once the facts and figures were actively considered during original and in rectification proceedings, it is clear that the necessary facts and figures of export incentives in the form of DEPB and excise credit were on records of AO and duly considered by the AO and hence there was no failure also on the part of the assessee to disclose fully and truly all material acts necessary for his assessment. In Hindustan Lever Ltd 268 ITR 332 (bom) the court observed that it is needless to mention that the reasons are required to be read as they were recorded by the A O. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the AO to disclose or open his mind through reasons recorded by him. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. Reasons recorded must disclose his mind, should be self explanatory and should not keep the assessee guessing for reasons. He must disclose in reasons as to which material fact was not disclosed by th....
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.... the findings of the Assessing Officer, submitted that the Assessing Officer has wrongly allowed the deduction under Section 80HHC based on the figures given by the assessee, which was noticed by the Assessing Officer subsequently. Therefore, reopening under Section 147 has been validly done by him. Excess deduction or wrong claim can empower the Assessing Officer to reopen the case under Section 147 and he referred to the various observations made by the Assessing Officer in the reasons recorded and also the findings given in the assessment order. 11. On the other hand, learned counsel reiterated the same submissions which were raised before the CIT(A) and relied upon the ultimate findings of the CIT(A). He also referred to the various decisions as have been considered by the learned CIT(A). As regards applicability of decision of Hon'ble Delhi High Court in the case of Bawa Abhai Singh v/s DCIT (2001) 117 Taxman 12, as taken by the department in grounds of appeal, he submitted that the said judgement will not be applicable as in that case the notice was issued within three years and therefore, the decision did not pertain to proviso to Section 147. 12. We have heard the rival c....
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....ly in the cases where assessment has been completed under Section 143(3) and such an assessment is sought to be reopened beyond the period of four years from the end of the relevant assessment year, the Assessing Officer has to categorically spell out the failure on the part of the assessee that he did not disclose fully and truly all material facts. This has to be specifically put in words in the 'reasons recorded', which herein this case has not been done. The tenor of 'reasons recorded' indicates that the earlier Assessing Officer was not correct in allowing the deduction under Section 80HHC. This is not permissible under proviso to Section 147, which clearly lays down the limitation as discussed above for initiating such an action for reopening the assessment after certain period. The duty of the assessee is limited to make full and true disclosure of all material facts necessary for his assessment. He is not required to inform the Assessing Officer as to what legal inference should be drawn from the facts disclosed by him. Once all the primary facts are disclosed before the Assessing Officer, it is for him to determine actual taxable income and compute the deduction which is a....