TaxTMI 
TaxTMI 
2015 (1) TMI 99
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....nt order, all the relevant facts and applying his mind allowed the exemption U/s. 10B, as stated in Para 4 of the original Assessment Order dated 27.12.2009. Various Courts have stated that the A.O. cannot revise or reopen the assessment (already completed U/s. 143(3) on the basis of change of opinion. 2. The facts which are revealed form the records as under. The assessee company is a 100% Export Oriented Unit (EOU) engaged in manufacturing of steel forging for export. It is stated that the assessee company is exporting its 100% of production to USA, UK and also supplying to another EOU. The assessee's assessment for the A.Y. 2007- 08 has been completed u/s. 143(3) of the Act vide assessment order dated 31-12-2009. The assessee had claimed the deduction u/s. 10B of Rs. 66,07,760/- and the same was allowed in original assessment. The relevant part of the original assessment order where the Assessing Officer has discussed the claim made by the assessee u/s. 10B is as under: 4. The assessee has computed business income Rs. 69,83,154/- and claimed deduction u/s. 10B Rs. 66,07,760/-. The assessee has made direct export of Rs. 17,06,02,280/- and export to EOU of Rs. 33,10,27,414/- an....
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....10A itself. Therefore the assessee was not entitled to exemption u/s. 10B in respect of sales within India. In view of the above, the deduction u/s. 10B has been wrongly allowed on direct exports as well as deemed exports. The allowable deduction on direct exports amounts to Rs. 21,28,293/-. Hence, for the above reasons the order u/s. 143(3) dated - 30/12/2009 is erroneous being prejudicial to the interest of revenue. I have therefore reasons to believe that income of Rs. 66,07,760/- has escaped assessment for A. Y. 2007-08, on account of deduction u/s. 108 claimed by the assessee. The case satisfies conditions laid down in sections 149(1)(a) and 151(2) of the Income-tax Act, 1961. Issue notice u/s. 148 for A. Y. 2007-08." 4. The Assessing Officer completed the assessment u/s. 143 r.w.s. 147 vide order dated 07-12-2011 withdrawing the deduction originally allowed to the assessee which was claimed u/s. 10B of the Act to the extent of Rs. 66,07,760/-. The assessee challenged the action of the Assessing Officer before the Ld. CIT(A) by taking the plea that the reopening of the assessment of the assessee is merely on the change of the opinion. It was further pleaded before Ld. CIT(....
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....ssessee has made direct export of Rs. 40,53,728/- and export to EOU of Rs. 10,12,61,099/- and deduction u/s. 10B of Rs. 4,26,30,184/- has been claimed on Rs. 10,35,06,894/- (total export turnover after excluding freight and insurance) received in foreign exchange. It is claimed that the sale from the EOU to another EOU are deemed to be exports. As per chapter 8 of the foreign trade policy. As per sec. 8.2 - Categories of supply of goods to EOU shall deemed to be exports, payment for which is received either in Indian Rupees or in Foreign Exchange. The equivalent invoice value of foreign exchange in US-S 22,04,611.75/- has been realized within due dates, as per Bank Realization Certificates. As regards direct export the equivalent value is US-$ 89,422/- has been realized within due dates, as per Bank Realization Certificates. Copies of bills, shipping bills and airway bills are furnished by assessee." 8. Hence, it cannot be said that the Assessing Officer has not made an enquiry or applied his mind to the issue which was the subject matter of the reassessment proceedings and issuance of the notice u/s. 148 of the Act. In this case the assessee is not protected by the proviso to Sec....
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....ecessary for his assessment, for that assessment year. 10. As per the history of Sec. 147 which is recasted section, brought on stature book w.e.f. 01-08-1989, the initial words the "reason to believe" have been retained by the Parliament even if in the Bill words "in the opinion" of the Assessing Officer were proposed for the consideration. The entire scheme of Sec. 147 of the Act contemplates to bring to tax escaped income. It is true that there may be occasion in which the assessee has claimed the deduction and there may be two different decisions, one is in favour & another against the assessee, whether that can be the ground for reopening as in present case if the Assessing Officer has not considered the decision which is against the assessee. In this case in the reasons itself the Assessing Officer has recorded that the decision of the ITAT, Bangalore was not considered and in our opinion cannot be the reason to reopen completed assessment by taking shelter of Sec. 147 to withdraw the deduction. 11. In the case of Parveen P. Bharucha (supra) it is held as under: 10 Further the reasons recorded by Respondent No.1 for reopening the assessment do not state that the deduction ....
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....t this stage quash the proceedings as the only obligation of the Revenue is to establish that prima facie material exists to show that income has escaped assessment and the party can thereafter establish in reassessment proceedings that the deductions as allowed in the original assessment proceedings are valid. 12 The issue here is one of jurisdiction to issue notice and not sufficiency of reasons in issuing a notice for reassessment. We are considering the jurisdiction to issue a notice under Section 148 to reopen proceedings. In view of what is stated earlier, we do not find any merit in this contention. 12. In the case of NYK Line (India) Ltd. (supra) it is held as under: 12. The reopening of the assessment in the present case has taken place within a period of four years of the end of the relevant assessment year. The power of the AO to reopen an assessment within a period of four years of the relevant assessment year is undoubtedly wider than where a period of four years has elapsed. Once a period of four years has elapsed, the proviso to s. 147 stipulates that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for a....
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.... 147 of the Act. However, on receipt of representations from the companies against omission of the words 'reason to believe', Parliament reintroduced the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the AO. ......" 14. Now, undoubtedly an order of assessment which has been passed for a subsequent assessment year may furnish a foundation to reopen an assessment for an earlier assessment year. However, there must be some new facts which come to light in the course of assessment for the subsequent assessment year which emerge in the order of assessment. Otherwise, a mere change of opinion on the part of the AO in the course of assessment for a subsequent assessment year would not by itself legitimise the reopening of an assessment for an earlier year. 15. In Raymond Woollen Mills Ltd. vs. ITO (1999) 152 CTR (SC) 418 : (1999) 236 ITR 34 (SC), the case of the Revenue was that the assessee was charging to its P&L a/c, fiscal duties paid during the year as well as labour charges, power, fuel, wages, chemicals etc. However, while valuing its closing stock, the elements of fiscal duty and the other direct manufacturing....
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....cular issued by the RBI, the assessee was not permitted to remit a certain proportion equivalent to US $ 1.5 for each container. The statutory auditors had also included a note in the report. During the course of assessment proceedings, the assessee addressed a comprehensive letter dt. 18th Nov., 2009 making a full disclosure of facts. Now it is in this background that the order of assessment under s. 143(3) must be considered. The AO specifically discussed in the course of the assessment order the matters in respect of which he has made a disallowance either fully or in part. Since the AO did not find any justification to reject the claim of the assessee in respect of the issue of CDC, there was no specific discussion in the course of order. In this regard the following observations of a Division Bench of this Court in Idea Cellular Ltd. vs. Dy. CIT (2008) 215 CTR (Bom) 288 : (2008) 3 DTR (Bom) 179 : (2008) 301 ITR 407 (Bom) have relevance : "9. It was also sought to be contended that since the AO had not expressed any opinion regarding this matter in his original assessment order, it could not be said that there was any change of opinion in this case. In our view, once all the m....