TaxTMI 
TaxTMI 
2016 (5) TMI 1126
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....etent person to care of the taxation matter. Being so, it has taken time to identify the counsel for filing the appeal and later this case was given to M/s.Subbaraya Aiyar Padmanabhan and Ramamani, Advocates and thus there was a delay of 124 days in filing the appeal before this Tribunal and delay has to be condoned. 3. We have carefully gone through the reasons advanced by the assessee, the petition as well as affidavit filed by the assessee. In our opinion, there exists reasonable cause for filing the appeal belatedly before this Tribunal. As the reason advanced by the assessee is bonafide, the delay in filing the appeal is condoned and the appeal is admitted for adjudication. 4. The first ground in this appeal is with regard to confirm the reopening of assessment u/s.147 of the Act. 5. The brief facts of the case are that the assessee company is engaged in the business of manufacture and sale of rubber contraceptives and filed its return of income on 29.10.2004 admitting a total income of Rs. 40,75,83,117/-. Subsequently, the return was selected for scrutiny under CASS and the assessment was completed u/s.143(3) of the Act on 21.12.2006. Thereafter, the assessment was reopene....
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....d. Reliance in this regard is also placed on the decision of the Hon'ble ITAT in the case of Cheminvest Ltd., Vs. ITO [2009] 121 lTD 318 (Delhi) (SB). Hence the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment within the meaning of section 147 of the Income Tax Act, 1961. Later the AO completed the assessment u/s.143(3) r.w.s.147 on 01.12.2011 wherein he made an addition not only with regard to Sec.14A disallowance, but also disallowed deduction u/s.80-IB of the Act of Rs. 3,75,58,838/-. During the course of reassessment, it was found that the claim of assessee is no sustainable u/s.80-IB of the Act and the same was withdrawn. Now, the contention of the assessee's counsel was that the re-opening was bad in law and there was no failure on the part of the assessee to disclose all material facts truly and fully for the purpose of assessment. In our opinion this argument cannot have any merit. 8. It is a settled law that on the basis of material, prima facie, available before the Assessing Officer, opined that income char....
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....ess relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed, the Assessing Officer would have valid cognizance u/s 147 of the Act. The reasons recorded by the Assessing Officer clearly speak for the under assessment of tax hence, the conditions laid above stand fulfilled in so far as re-assessment proceedings are concerned. In so far as the reasons recorded, extracted in the above portion of this order, we are satisfied that the Assessing Officer has 'reason to believe' that income has escaped assessment. This fact confers jurisdiction on him to reopen the assessment. The power to re-assess post 1st April, 1989 are much wider than these used to be before. But still the schematic interpretation of the words 'reason to believe' failing which section 147 would give arbitrarily powers to the Assessing Officer to reopen the assessment on the basis of mere change of opinion, which cannot be, per se a reason to reopen the case. The Act has not given power to the Assessing Officer to review but has only given power to re-assess. There is a conceptual difference between the two aspects as the Assessing Officer has no po....
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....hat facts are 'material' and 'necessary' for assessment will differ from case to case. The material should not only be full but also be true. If some material found in the evidence produced before the Assessing Officer which the Assessing Officer could have uncovered but did not, then it is the duty of the assessee to bring it to the notice of the assessing authority. This omission or failure may be either deliberate, or even inadvertent, that is immaterial, but in case there is omission to disclose the material facts then subject to the other conditions jurisdiction to reopen is attracted. 10. In the present case, there is an order of Special Bench in the case of Cheminvest Ltd.v. ITO New Delhi reported in [2009] 121 ITD 318 (Delhi) on the basis of which disallowance u/s.14A(1) of the Act is to be made. Neither of the parties aware of this decision and there was no discussion of whatsoever in the original assessment order on this issue. As such the AO reopened the concluded original assessment to disallow the expenditure in terms of Section 14A of the Act. Further, Explanation 1 to Section 147 of the Income Tax Act which reads as under: ''Production before the Assessing Officer....
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....confirmed the reasons to believe, had escaped assessment, as a matter of fact not escaped assessment, does not open to him independently to assess some other income. However, in the present case, it is not the case of assessee that the AO was not made any addition by invoking the provisions of the section 14A of the Act. Being so, the contention of the assessee was that there is no addition for which the assessment was reopened, is not correct. There is an addition by the AO on the reasons recorded that is by invoking the provisions of the section 14A of the Act and being so; the AO can travel beyond he reasons recorded for making the addition as disallowance in re-opening the assessment also. Accordingly, this ground of the assessee is rejected. 11. The next ground in this appeal is with regard to disallowance u/s.80IB of the Act in respect of Palavaram Unit. 12. After hearing both the parties, this issue is squarely covered by the order of the Tribunal in assessee's own case in ITA No.1791 to 1796/2011 dated 31.10.2012 for the assessment years 2002-03 to 2007-08. The relevant portion of the Tribunal order is reproduced below for ready reference:- "15. We have considered the i....
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....ng any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India : Provided that the condition in this clause shall, in relation to a small scale industrial undertaking or an industrial undertaking referred to in sub-section (4) shall apply as if the words "not being any article or thing specified in the list in the Eleventh Schedule" had been omitted. Explanation 1 : For the purposes of clause (ii), any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely :- (a) Such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India; (b) Such machinery or plant is imported into India from any country outside India; and (c) No deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant....
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....duction provision, that too unequivocally that 'other fittings of rubber' are included in the list of articles or things manufactured, in the absence of any other explanation or so, we see no reason to interfere in the well reasoned findings of CIT(A). We reiterate that whether or not a rubber product is an 'article or thing' covered by Eleventh Schedule depends on the nature and characteristic of the product manufactured and not on the case laws settling legal principles as there cannot be any straight jacket formula defining its purview. So far as to the case laws cited by the A.R is concerned, in our opinion, the products involved in the same were altogether different i.e. rubber stoppers, Cigarette filters, rubber compounds for utilization in rubber industries. Therefore, the same are not relevant qua adjudication of the instant issue. We also notice that in M/s.MRF Ltd case (supra), it had been observed as under:- "22. The last issue of this appeal is regarding withdrawal of 80IA benefits. The assessee has claimed deduction of `15,14,97,778/- under section 80IA of the Act. Initially, this was allowed but in re-assessment proceedings this deduction was withdrawn because the ....