TaxTMI 
TaxTMI 
2017 (7) TMI 962
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....es. The Petitioner filed its return of income for AY 2003-04 on 28th November, 2003 declaring an income of Rs. 47,43,47,000. In the original return, the Petitioner claimed deduction of Rs. 2,35,63,91,105 under Section 10A of the Act. This claim was supported by a certificate issued by a Chartered Accountant ('CA') in Form 56F. It is stated that on 31st March, 2005, the Assessee filed a revised return declaring an income of Rs. 47,20,54,224. A deduction in the sum of Rs. 12,93,67,448 under Section 80HHE of the Act was further claimed by the Assessee. 3. In the course of the assessment proceedings under Section 143(3) of the Act, the AO by a notice dated 6th December, 2005 under Section 142(1) of the Act, sought answers to specific queries inter alia in respect of the deductions claimed under Section 10A/80HHE of the Act. The Petitioner replied to the said queries on 21st December, 2005 and 28th December, 2005. 4. The AO after examining the return, the audited accounts and other documents accompanying them in the light of the replies furnished by the Assessee accepted the deductions claimed under Sections 10A and 80HHE of the Act. Thereafter, on 31st January, 2006 the AO passed the....
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....ctions, the AO placed reliance on the decision of this Court in Consolidated Photo & Finvest Ltd. v. ACIT (2006) 281 ITR 394, which has been expressly overruled by this Court subsequently in KLM Royal Dutch Airlines v. ACIT (2007) 292 ITR 49 (Del) which fact was noted by the Full Bench of this Court in Commissioner of Income Tax v. Usha International Ltd. (2012) 348 ITR 485 (Del). 10. Mr. Rahul Chaudhary, learned Senior Standing Counsel for the Revenue, began by referring to Explanation 2(c) to Section 147 of the Act which states that where income chargeable to tax has been under-assessed; or such income has been assessed at too low a rate; or such income has been made the subject of excessive relief under this Act; or excessive loss or depreciation allowance or any other allowance under this Act has been computed; then that should also be deemed to be case where "income chargeable to tax has escaped assessment." 11. Mr. Chaudhary submitted that while computing the deduction under Section 10A of the Act, the Assessee excluded telecommunication charges both from the export turnover as well as total turnover whereas it should not have been excluded from the total turnover. This wro....
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....he course of assessment proceedings. The Petitioner has simply stated that such details were voluminous in nature. The Petitioner has failed to disclose the nature of expenses claimed by not furnishing details of expenses claimed exceeding Rs. 1,00,000. 13. There are two jurisdictional requirements as far as the first proviso to Section 147 of the Act is concerned. One is the satisfaction that income chargeable to tax has escaped assessment. For this purpose, Explanation 2 (c) to Section 147 of the Act states that where any assessment has been made but the income chargeable to tax has been under-assessed [clause (i)]; or assessed at too low a rate [clause (ii)] ; or has been made the subject of excessive relief [clause (iii)]; or excessive loss or depreciation allowance or any other allowance [clause (iv)] then it shall be deemed that income chargeable to tax has escaped assessment. 14. However, this begs the question whether it will straightaway be presumed that there has been an underassessment of tax and therefore an escapement of income without there being any tangible material to come to such a conclusion. Therefore, while it might be enough for the AO to show that one of th....
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....eproduction of the language of the provision will not suffice. Also, although making such an averment either in the order rejecting the objections of the Assessee or subsequently in the counter-affidavit in the answer to a writ petition will not satisfy the requirement of the law. The reasons will have to speak for themselves. For complying with the jurisdictional requirement under the first proviso to Section 147 of the Act, the reasons would have to show in what manner the Assessee had failed to make a full and true disclosure of all the material facts necessary for the assessment. The failure to do so would not be a mere irregularity. It would render the reopening of the assessment after four years vulnerable to invalidation. 17. Even while Explanation 1 to Section 147 of the Act states that the production before the AO of the account books or other evidence will not "necessarily amount to disclosure within the meaning of the foregoing proviso", it still does not relieve the AO of the burden of having to record in the reasons that there was a failure by the Assessee to make a full and true disclosure of all material facts. The deeming provision does not lead to a presumption ab....
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....f the Act. The only reason given by the AO is that the Assessee did not make a similar deduction for the earlier two AYs i.e., 2001-02 and 2002-03. As explained by Mr. Vohra, it is not the case of the Revenue that the Assessee was not eligible to claim the deduction under Section 35D of the Act. The mere fact that the Assessee may not have claimed such deduction for two of the five years it was entitled to, cannot deprive it of its legitimate claim for such deduction in the AY in question. In an answer to a query raised by the AO in this behalf, the Assessee has explained how in the revised return it included a claim for the said deduction which was inadvertently left out while filing the original return. This was permissible for the Assessee to do. Consequently, even this reason appears to be untenable in law. 22. The fourth reason pertains to the payment made by the Assessee for software licence. The AO formed the opinion contrary to what was formed when the original assessment was framed that the deduction claimed was capital expenditure and not revenue expenditure. This was the very ground on which in Commissioner of Income Tax-II v. Maruti Suzuki India Ltd. (supra) a re-openi....