TaxTMI 
TaxTMI 
2014 (4) TMI 423
X X X X Extracts X X X X
X X X X Extracts X X X X
...., as they appear in the appeal in ITA no. 4892/Mum./2011, for assessment year 2002-03. In the appeal for assessment year 2002-03, following grounds have been raised:- Grounds for the A.Y. 2002-03 1. The learned CIT(A) erred in dismissing the appellant's ground on re-opening and further erred in holding that the re-opening of the assessment by issue of notice u/s 148 was validly done by the Assessing Officer. 2. The learned CIT(A) erred in upholding the disallowance of the appellant's claim for deduction 10A of the Act amounting to Rs.30,32,96,418. 3. Facts in brief, qua the legal issue arising out of ground no.1, are that the assessee company is engaged in the business of providing media, I.T. enabled services, finance, investment activity and consulting services. During the relevant year, the assessee's I.T./I.T.E.S. business had three units viz., Unit-I, from where the assessee was doing software development services; Unit-II, from where the insurance claim processing services were undertaken; and Uni....
X X X X Extracts X X X X
X X X X Extracts X X X X
....P authorities, it is revealed that there was no new registration certificate has been obtained at the time of setting up of the above two new units in the year 2000. STPI Authorities further clarified that the so called new units set up in 2000 are the expansion of the old units set up in the STPI Park in the year 1992. As per the Registration Certificate, the new unit is eligible for deduction u/s 10A upto 1996 itself, as per law prevailing in the year 1991. In view of the above, the assessee company is claiming the deduction u/s 10A without any registration for its new industrial undertakings set up at HTMT House, Bangalore, which is a condition for claiming for deduction u/s 10A. Therefore, I have reasons to believe that the assessee has claimed deduction u/s 10A, which is not allowable to it and thus, the income chargeable to tax to the extent of deduction allowed u/s 10A has escaped assessment. Further during the course of assessment proceedings for A.Y. 2005-06, it is observed that the assessee is having both export turnover and the domestic sales. However, the assessee company as well as the auditors in their certificate have claimed deduction under section 10A on the prof....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the assessee, along with the return of income has filed all the necessary details and audit report in Form no.56F with the return of income. Besides this, submissions were also given before the Assessing Officer with regard to the claim of deduction / exemption under section 10A. It was only after proper scrutiny and examination of the claim, the deduction under section 10A was allowed by the Assessing Officer, vide order passed under section 143(3). Now the assessment has been re-opened beyond the period of four years, without ascribing any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. He drew our attention to the copy of the "reasons recorded" which has been placed in the paper book at Page-143 and 144 of the paper book and submitted that nowhere the Assessing Officer has spelt out or has given any cogent reasons as to what was the failure on the part of the assessee to disclose fully and truly all material facts. Once that has not been done, then the re-opening of the case under section 148, beyond the period of four years from the end of the relevant assessment year, where the assessment has been completed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(Del) iii) Yuvraj v/s Union of India, [2009] 315 ITR 84 (Bom.); iv) Amin's Pathology Laboratories v/s JCIT, 252 ITR 67. (Bom.); and Export Credit Guarantee Corp. of India Ltd. v/s ACIT, [2013] 350 ITR 651 (Bom.) 8. The learned Departmental Representative thus submitted that the Assessing Officer has rightly acquired the jurisdiction for re-opening the case under section 148 on these "reasons" and the facts and circumstances of the case. On merits, he submitted that this issue in the assessment year 2005-06, has been set aside by the Tribunal to the file of the Assessing Officer for examining it afresh. Therefore, in this year also, the matter should also be restored back to the file of the learned Commissioner (Appeals), because in set aside proceedings, the matter is already pending with the learned Commissioner (Appeals). 9. We have carefully considered the rival contentions, qua the validity of re-opening of assessment under section 147 and also, perused the orders of the authorities below and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he notice under section 143(1) and secondly, there is failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that assessment year. If these twin conditions are not fulfilled, then any proceedings initiated by issuing notice under section 148 are void ab initio. Whether there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment, has to be clearly spelt out by the Assessing Officer in the "reasons" recorded itself. Such an assignment of failure in the "reasons" recorded is mandatory and cannot be inferred from anywhere else. Once the "reasons recorded" clearly discloses as to what is the failure on the part of the assessee, then only the Courts can examine, whether there was any such failure on the part of the assessee or not, because the "reasons recorded" alone gives jurisdiction to the Assessing Officer under the statute to re-open the completed assessment. This proposition of law that it is mandatory for the Assessing Officer to ascribe the failure of the assessee in the "reasons recorded" had been settled by the numerous Courts, some of them, which were ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....R 420 (Guj) In the above case, the Gujarat High court has held that in the objections filed by the assessee against the notice under section 148, it was the specific case of the assessee that it had not defaulted in disclosing fully and truly all material facts necessary for the assessment. However, the order disposing of the objections was totally silent in respect of the same. Thus, neither the reasons for reopening the assessment nor the order disposing of the objections indicate that there was any failure on the part of the assessee to disclose fully and truly all material facts relevant for its assessment. 10. Further, the duty of the assessee is only to make full and true disclosure of all material facts necessary for the assessment, however, this act does not required that the assessee should inform the Assessing Officer as to what legal inference should be drawn from the facts disclosed by him. The assessee cannot give advise to the Assessing Officer on question of law. Thus, in the facts of the present case and from the "reasons" recorded, the implicit conclusion is that the Assessing Officer has completely failed to ascribe any failure on the part of the assessee to dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....I Authorities, it is revealed that there was no new registration certificate has been obtained at the time of setting up of the above two new units in the year 2000. STPI Authorities further clarified that the so called new units set up in 2000 are the expansion of the old units set up in the STPI Park in the year 1992. A per the Registration Certificate, the new unit is eligible for deduction u/s 10A upto 1996 itself, as per law prevailing in the year 1991. In view of the above, the assessee company is claiming the deduction u/s 10A without any registration for its new industrial undertakings set up at HTMT House, Bangalore, which is a condition for claiming for deduction u/s 10A. Therefore, I have reason to believe that the assessee has claimed deduction u/s 10A, which is not allowable to it and thus, the income chargeable to tax to the extent of deduction allowed u/s 10A has escaped assessment. Further, during the course of assessment proceedings for A.Y. 2005-06, it is observed that the assessee is having both export turnover and also domestic sales. However, the assessee company as well as the auditors in their certificate have claimed deduction u/s 10A on the profits earned....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fficer for strictly complying with the direction given by the Tribunal. 18. The learned Senior Counsel also filed copy of Circular no.1 of 2013 issued by the CBDT on 17th January 2013 and also Instruction no.3 of 2014 dated 14th March 2014, wherein the CBDT has given guidelines which the Assessing Officer is bound to follow, the clarification given by the CBDT in respect of the claim of exemption under section 10A. The Assessing Officer, while adjudicating the issue should also take into consideration the said CBDT circular. 19. The learned Departmental Representative submitted that the matter should be restored to the file of the learned Commissioner (Appeals) as the learned Commissioner (Appeals) has also called for the remand report from the Assessing Officer. In this year also, he can decide the issue on the basis of the remand report given by the Assessing Officer and such an exercise will save lot of time. On the issue of re-opening, he reiterated his submissions and the case laws as was submitted by him in the course of argument for the assessment year 2002-03. 20. We have carefully considered the rival contentions, perused the orders of the authorities below and the mate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see company is claiming the deduction uls.10A without any registration for its new industrial undertakings set up at HTMT House, Bangalore, which is a condition for claiming for deduction uls.10A. Therefore, 1 have reason to believe that the assessee has claimed deduction uls.l0A, which is not allowable to it and thus, the income chargeable to tax to the extent of deduction allowed uls.l0A has escaped assessment. Further, during the course of assessment proceedings for A.Y. 2005-06, it is observed that the assessee is having both Export Turnover and also Domestic Sales. However, the assessee company as 'well as the Auditors in their Certificate have claimed deduction uls. 10A on the profits earned both on the domestic and the export turnover. As per Sec. 10A(4), the profit earned on domestic turnover should be excluded for claiming deduction u/s.10A. Without prejudice to the above, further, it is observed from the case records, that the assessee company has been allowed deduction uls.10A of Rs.66,63,24,606/- in respect of three units of IT Division by the assessing officer vide its order dated 9.12.2006 and the taxable income was computed at Rs.11,70,12,950/- after setting off....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... file of the Assessing Officer for deciding the issue afresh in view of the direction is given by the Tribunal in assessee's own case for the assessment year 2005-06 which for the sake of ready reference is reproduced below:- "13. We have carefully considered facts of the case and orders of authorities below in the light of submissions of Ld. Representatives of the parties. We fine substance in the submission of Ld. AR that has not examined as to whether Unit Nos. II & III set up by assessee are independent units or expansion of existing undertaking of assessee. We observe that AO has considered the correspondence and documents of assessee with STPI and also information sought by AO from Director STPI and has held that both these units are merely an expansion of existing unit and not independent undertakings. Therefore, we consider it prudent to set aside the orders of authorities below and restore the matter to file of AO for the limited purpose to re-examine as to whether Unit Nos. II & III set up by assessee are independent units to the existing undertaking or merely an expansion of the existing undertaking in the light of principles l....