TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 845
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....uction Uls 80HHC (a) The Ld. CIT (A) has grossly erred in law as well as on facts in adding the Excise and Countervailing Duty of Rs. 9,13,5151- while calculating the adjusted total turnover for the purpose of deduction u/s. 80 HHC. (b) The Ld. CIT (A) has grossly erred in law as well as on facts in giving the direction to the A.O. in reducing the 90% of gross interest instead of 90% of net interest while calculating the deduction under clause (baa) of sub-section (4) to section 80 HHC. (c) The Ld. CIT (A) has grossly erred in law as well as on facts in the confirming the action of the A.O. in reducing the profits calculated u/s. 80 IB from the profits of the business while calculating deduction u/s. 80 HHC. (d) The Ld. Cl T (A) has grossly erred in law as well as on facts in enhancing the Income of the Appellant, by way of direction to the A.O. to reduce the 90% of gross receipts of Rs. 36,07,1511- received from the job work business as against a net income of Rs. 85.042/- from job work activity as claimed by the Appellant. 4. Ground No.4 The Ld. CIT (A) has grossly erred in law as well as on facts in confirming the action of the A.O. of levying interest u/s. 2340 of the I.T....
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....es on this issue under question no. 18. The assessee replied the query of the AO vide its letter dated 10-6-2005 at page no. 49 of the paper book. Thus the Ld. AR has submitted that when the AO has raised the direct question on this issue which was duly replied and explained by the assessee then it cannot be said that there is a failure on the part of the assessee to disclose fully and truly all the relevant facts necessary for assessment of the income/allowance of deduction u/s 80HHC. The Ld. AR has then referred the notice u/s 143(2) and submitted that the AO has again raised the query on this issue which was duly replied by the assessee vide letter dated 9-1-2006 at page 56 of the paper book. Thus the Ld. AR has submitted that the reopening is based on change of opinion because in the original assessment passed u/s 143(3), the AO has examined the issue and then allowed deduction which cannot be reviewed by invoking the provisions of section 147 r.w.s 148 of the Income Tax Act. Moreover, there is no tangible material on the basis of which the AO could form an opinion that the icnome assessable to tax has escaped assessment and reopened the assessment after expiry of four years. I....
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....xpiry of four years. The AO has reopened the assessment vide notice u/s 148 issued on 31st March 2010 by recording the reasons for reopening as under:- "During the assessment proceedings for A. Y.2004*05, it is held that the nature of activity carried out by the assessee is not tantamount to manufacture or production to qualify for deduction uls.801B and accordingly, the deduction claimed for A. Y.2004-05 amounting to Rs.24,03,110/- was disallowed by the Assessing Officer. As per Sec..80IB(3), an assessee is entitled for deduction of profits derived from an eligible unit at a specified percentage for the specified period subject to fulfillment of prescribed conditions. As it is held in the A. Y.2004-05, the undertaking is held to be not eligible for deduction u/s.801B and also considering that Form 10CCB was not furnished by the assessee along with the return of income, the claim of the assessee for deduction uls.801B amounting to Rs.29,l0,649/- for the year under consideration also liable to be disallowed. Therefore, have reason to believe that the assessee company has wrongly been allowed the deduction uls.80IB of Rs.29,1 0,649/- resulting in excess allowance of deduction. Fur....
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....eason of the failure on the part of the Assessee to make a return under Section 139 or in response to a notice issued under Sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year." 9. In case where the original assessment is completed u/s 143(3) then the assessment cannot be reopened after expiry of four years from the end of the relevant assessment year unless the income chargeable to tax has escaped assessment by the reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. As it is clear from the reasons recorded that there is no such allegation by the AO in the reasons that the income assessable to tax has escaped assessment by the reason of failure on the part of the assessee to disclose fully and truly all material facts relevant for assessment. Further we note that on the issue of reduction of the profit of 80IB unit from the business profits for the purpose of computing the deduction u/s 80HHC in terms of section 80IA(9), the AO had raised the specific queries vide notice u/s 142(1) dated 21.02.2005 and the question no....
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....he AO has conducted the enquiry on this issue in the original assessment proceedings and after considering the reply of the assessee the claim of the assessee was allowed. It is not the case of the revenue that the claim of deduction u/s 80HHC and 80IB exceeds 100% of the gross profit. Once the issue was examined by the AO and took a particular view in the original assessment by applying its mind then the assessment cannot be reopened after expiry of four years in the absence of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. There is no such allegation by the AO that the income has escaped assessment by allowing the excess deduction u/s 80HHC by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. When the AO was satisfied with the reply of the assessee that overall deduction in this respect does not exceed 100% of the profits then the reopening on this issue is nothing but based on change of opinion as there was no tangible material or information came to the notice of the AO to show that the income assesseable to tax has escaped assessment. The objection....
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....re must be a failure on the part of the assessee to truly and fully disclose all material facts necessary for assessment. Further, the obligation of an assessee is only to disclose fully and truly all material facts necessary for assessment. It is not the job of the asessee to disclose the legal inferences to de drawn from those facts as held by the Apex Court in CIT V/s Calcutta Discount Company 41 ITR 191. At the stage of issuing of a notice to reopen the only question to be considered is whether there is relevant material to form the reasonable belief that income has escaped assessment and not whether the material is sufficient to prove beyond doubt that income has in fact escaped assessment. 12. It is clear that for reopening the assessment the primary condidtion to be satisfied is that the AO must have reason to believe that the income chargeable to tax has escaped assessment and this reason to believe must be based on some tangible material and cannot be a mere assertion of the AO. It was further observed by the Hon'ble High Court that in cases where the assessment has been reopened after expiry of four years. One additional requirement to be satisfied is that there must be ....