AI Drafter 
TaxTMI 
TaxTMI 
2018 (10) TMI 442
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....f test kits used for checking iodized salt. The petitioner was granted permanent Registration Certificate by the Director of Industries and Commerce dated 31.05.2000. The petitioner commenced its business of production on 25.05.2000. The petitioner filed its return of income for the Assessment Year 2010-11 on 24.09.2010, claiming deduction under Section 10B of the said Act to the tune of Rs. 97,34,667/-. After scrutiny, an order of assessment under Section 143(3) was passed on 28.01.2013, accepting the claim of deduction under Section 10B, however by making minor additions. The petitioner filed an appeal as against the additions and the Appellate Authority, through his order dated 30.06.2016, deleted the additions and allowed the appeal. Thereafter, a notice under Section 148 dated 03.01.2017 was served on the petitioner for reopening of the assessment, on the reason that the income of the petitioner chargeable to tax for the assessment year 2010-11 has escaped assessment. The petitioner filed its return on 19.01.2017, declaring its taxable income at nil, as was declared in original return. The petitioner through the letter dated 19.01.2017, also sought reasons for reopening the....
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...., since the relevant assessment year 2010-11 happens to be the eleventh year from the date of commencement of production, while the tax holiday is permissible to 10 assessment years at the maximum. Therefore, the benefit of deduction under Section 10B could not be extended. The Assessing Officer, while completing the original assessment, had failed to take cognizance about the date of commencement of manufacture incorporated in Form No.56G. The petitioner in all the Audit Reports under Section 56G had mentioned the date of commencement of production to be 28.03.2000. Therefore, the respondent had ample reason to believe that the income of the petitioner had escaped assessment. The respondent had not relied on any external material but based on the records available in the form of Annexure to Form No.56G. The correctness of the claim of the date of manufacture can only be ascertained if the process of reassessment is allowed to go further. Such process of enquiry cannot be undertaken in writ proceedings, more particularly, when the feature as expressed in Form No.56G is not in dispute. The qualified Chartered Accountant of the petitioner had incorporated the date of manufacture in t....
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....essing Officer had disallowed exemption under Section 10B only to the extent of Rs. 1,01,819/- and thus, allowed exemption in respect of the balance claim. This clearly shows that the Assessing Officer had applied his mind to the allowability of exemption under Section 10B. Therefore, there cannot be a reassessment on the issue of exemption. Therefore, there is no case for reason to believe that the income had escaped assessment, that too, when there is no default or failure on the part of the assessee to disclose the material facts. In this connection, the following decisions are relied on: 1. (2010) 320 ITR 561 SC, CIT v. Kelvinator of India Ltd. 2. (2008) 11 DTR (Chen) 73, CIT vs Tube Investments of India Ltd. 3. (2018) 404 ITR 10 (SC), ITO vs Techspan India P. Ltd. = (2018) 6 SCC 685. b) The respondent relied on column No.7, wherein the date of commencement of production was stated as 28th March 2000 to reopen the assessment without noting column No.8, therein showing the year where the deduction claimed as "tenth year". If the petitioner commenced its manufacturing activities on 28.03.2000, then in Form 56G for the Assessment Year 2001-02 wo....
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....eassessment after the period of four years as well and within the period of six years from the relevant assessment year. The contention of the petitioner that a mistake has been crept in, while filling Column 7, cannot be treated simply as a mistake, especially when such mistake continued repeatedly for ten years. In any event, the contention of the petitioner with regard to the date of manufacture based on all documents, has not been decided till this date by the respondent. There has been escapement of income inasmuch as if the deduction under Section 10B of the Act is disallowed, then the amount will be added to the taxable income. The respondent had only called upon the petitioner to file further reply and the merits of the issue will be decided thereafter. 6.Heard both sides and perused the materials placed before this Court. 7.The petitioner is aggrieved against the reopening of the assessment in respect of the Assessment Year 2010-11. I have already narrated in detail, the facts warranting the petitioner to file the present writ petition and the rival contention of the parties for and against the reopening of the assessment. Therefore, I am not reiterating the same onc....
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....e them, which includes Form 56G and have allowed such claim. In other words, it is evident that based on those documents filed by the Assessee including Form 56G, the Assessing Officer got satisfied with the material details stated therein and thus formed an opinion in favour of the petitioner on their entitlement for deduction under Section 10B. At this juncture, it is relevant to note that though Column 7 in the Form 56G submitted by the petitioner referred the date of commencement of manufacture or production only as 28.03.2000, the number of consecutive years for which the deduction claimed was referred as tenth year in Column 8. Based on those details, the Assessing Officer has chosen to form the opinion and granted the deduction. 9. While that being so, a notice under Section 148 of the said Act was issued on 03.01.2017 for reopening by stating that the Assessing Officer has reasons to believe that the income chargeable to tax for the Assessment Year 2010-11 had escaped assessment. On receipt of such notice, the petitioner filed their Nil return. They also sought for reasons for reopening the assessment. Accordingly, the respondent issued the impugned communication dated 2....
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....mes 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 subsection (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Issue of notice where income has escaped assessment. 148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such per....
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....ection 148 or failed to disclose fully and truly all material facts necessary for his assessment. 13. In this case, it is not in dispute that the petitioner has filed their original return and nil return in response to the notice issued under Section 148. Therefore, the first condition is not attracted to invoke the proviso to Section 147. 14. Whether the other condition is satisfied, is the next question. Admittedly, the petitioner has furnished the details in coloumn 7 and 8 of Form 56G. 15. According to the Revenue, if the date of commencement of manufacture or production referred to in the Column No.7 in Form No.56G as 28.03.2000 is taken as true, the deduction claimed was at the eleventh year and not at the tenth year. The petitioner seeks to explain that the entry made in Column No.7 of Form 56G was by mistake and on the other hand, the actual date of commencement of manufacture was only on 25.05.2000. At the same time, Column No.8, which deals with number of consecutive year for which the deduction claimed, was rightly stated as tenth year. Therefore, the question that arises for consideration, under the above stated circumstances, is as to whether these contradicto....
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....ure by the assessee. On the other hand, if the benefit, in this case the deduction, was granted or allowed inspite of such furnishing of incorrect particulars or facts, then it could, at the best, be called only as the escapement of income from the consideration of the Assessing Officer for being assessed and not the escapement of income by any of the act or omission by the assessee. At this juncture, the admission made by the respondent in the counter affidavit, more particularly, at paragraph No.10 is relevant to be quoted. He had admitted that while completing the original assessment, the Assessing Officer failed to take cognizance about the date of commencement of manufacture incorporated in Form No.56G. Thus, it is evident that it is by the mistake or fault of the Assessing Officer in not taking cognizance about the date of commencement of manufacture, according to the Revenue, the income escaped assessment. If that be the case, the Assessing Officer is entitled to reopen the assessment before the expiry of four years only and correct the mistake and make the addition. In other words, the term "any income chargeable to tax has escaped assessment" referred to under Section 1....
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....e find that, prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the AO to make a back assessment, but in S.147 of the Act (w.e.f. 1st April, 1989), they are given a go by and only one condition has remained, viz., that where the AO has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, s.147 would give arbitrary powers to the AO to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must trea....
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....ce of conferring arbitrary powers on the assessing officer who may even initiate such reassessment proceedings merely on his change of opinion on the basis of same facts and circumstances which has already been considered by him during the original assessment proceedings. Such could not be the intention of the legislature. The said provision was incorporated in the scheme of the IT Act so as to empower the Assessing Authorities to re-assess any income on the ground which was not brought on record during the original proceedings and escaped his knowledge; and the said fact would have material bearing on the outcome of the relevant assessment order. 15. Section 147 of the IT Act does not allow the reassessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to re-assess and not the power to review. 16. To check whether it is a case of change of opinion or not one has to see its....