TaxTMI 
TaxTMI 
2015 (1) TMI 831
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....n the sum of Rs. 23,83,380/- under Section 147 read with Section 143(3) of Income Tax was set aside. 2. The assessment order dated 21.12.2010 passed by the Assistant Commissioner, Income Tax Circle 10(1), New Delhi shows that the assessee had filed return of income for the assessment year 2003-2004 on 02.12.2003 declaring an income of Rs. 1,17,24,580/-. The return was processed under Section 143(1) of the Income Tax Act, 1961. The case was selected for scrutiny and notice under Section 143(2) of the Income Tax Act, 1961 was issued and later the assessment was completed at Rs. 1,32,03,670/- after making certain additions in the returned income of the assessee company. Subsequently, the income was revised at Rs. 1,17,24,580/- by order under Section 250/143(3) of the Income Tax Act dated 21.09.2007. 3. The case was re-opened under Section 147 of Income Tax Act leading to notice under Section 148 of Income Tax Act being issued on 22.03.2010 which action was resisted by the assessee through a response. In the course of re-assessment proceedings, the assessee was called upon to furnish details of Income Tax Return /bank account/profit and loss account/tax audit report etc. vide let....
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....d questioning the grounds on which the assessing authority had re-opened the case. The said application is pending consideration before the ITAT. 8. The CIT(A) exercises the jurisdiction of the first appellate authority following the procedure prescribed under Section 250 of the Income Tax Act. It is clear from Section 250(2) that at the hearing of such appeal both sides, i.e. the assessee and also the Assessing Officer, have a right to be heard, either in person or by a representative. A perusal of the order of CIT(A) in this case clearly shows that the Assessing Officer was never called upon by the said authority to assist at the hearing before the appeal of the assessee was allowed. 9. Technically speaking, the ground on which the matter has been remanded by the ITAT to CIT (A) cannot be questioned. Ordinarily, in such fact situation, this court would not interfere. But, having heard both sides, we find merit in the view taken by CIT (A) on the validity of the satisfaction on the basis of which the case of assessment for the assessment year in question was re-opened in the matter at hand. Since it is a jurisdictional error, we proceed to set out hereinafter the reasons why....
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.... Ordinarily, the assessment procedure stands concluded upon the assessment order being passed either under Section 143 or Section 144 of the Income Tax Act. But, the legislation provides for dealing with the cases of income escaping assessment and for such purposes the procedure is stipulated in Section 147 of Income Tax Act which, as amended by the Direct Tax Laws (Amendment) Act, 1989, brought in force with effect from 01.04.1989 (as is relevant for purposes), reads as under: "147. Income escaping assessment.- If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of....
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....of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed. (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012." (emphasis supplied) 16. The Supreme Court in Assistant Commissioner of Income-tax v. Rajesh Jhaveri Stock Brokers P. Ltd. (2007) 291 ITR 500 explained the law in the following words:- "The scope and effect of section 147 as substituted with effect from Apr....
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....se its power of judicial review to go into the sufficiency or adequacy of the material available. However, the present one is not a case of testing the sufficiency of material available. It is a case of absence of material and hence the absence of jurisdiction in the Assessing Officer to initiate the proceedings under section 147/148 of the Act." 19. The view taken by the Full Bench of this court in CIT v. Kelvinator was affirmed by Supreme Court of India in civil appeal vide judgment reported as (2010) 2 SCC 723. The observations of the Supreme Court in the said case (after noting the legislative changes) appearing in Para No. 6 of the report, to the following effect are germane to the issue raised here:- "On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1989, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer ha....
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....he part of the assessing authority to gather necessary information within the prescribed period or to make proper inquiry or subject the available material to proper scrutiny. 21. Thus, it emerges that generally the assessing authority is vested by the amended law in Section 147 to re-assess (re-compute etc.) if he has reasons to believe that income has escaped assessment but this he can do only within four year period. On elapse of such period, the matter must attain finality. Yet, if the Assessing Officer also finds material giving rise to reasons to believe that the escapement was due to default of assessee to truly disclose, the bar of limitation would get lifted. 22. Undoubtedly, explanation - 1 to Section 147 indicates that mere production of account books or other evidence before the Assessing Officer would not necessarily amount to disclosure of the material information by the assessee. But then, the explanation clarifies the said general refrain by the words "not necessarily". Therefore, the burden is equally placed on the Assessing Officer to exercise due diligence in examining the record (account books or evidence) produced before him in the light of declarations m....
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....ent order that came to be eventually passed by the assessing authority on 21.12.2010 needs to be extracted. It reads as under:- "The reply filed by the assessee company has been considered, however, no found to tenable. In the absence of any substantiating submissions filed by the assessee company it is presumed that it has nothing to say in the matter. On going through the P&L A/c submitted by the Assessee it appears that Net Sales was of Rs. 10,89,05,293/= and after adding back services and others total turnover comes to Rs. 13,16,12,262/= whereas on perusal of the Annexure-2 regarding deduction under chapter VI-A the assessee in computation of deduction under section 80HHE the total turnover claimed was Rs. 1,63,58,001/=. Thus details relating to the claim by the exporter computer software for deduction under section 80HHE of the I.T.Act, shows that as per Form No. 10CCAF the total turnover of the assessee company for the year under consideration has been taken at Rs. 1,63,58,001/- instead of Rs. 13,54,12,662/- (Sales Gross + Services). In view of the above, it is quite evident that the assessee company, while computing the deduction u/s 80HHE has adopted incorrect turnove....