TaxTMI 
TaxTMI 
2018 (12) TMI 1692
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....d. Counsel we have carefully considered the relevant documentary evidences brought on record in the form of paper books in the light of Rule 18(6) of the ITAT Rules. 4. Briefly stated the facts of the case are the return of income was filed on 29.09.2009 which was subsequently revised on 29.03.2010. The return was selected for scrutiny assessment and accordingly assessment was framed u/s 143 (3) of the Act vide order dated 27.12.2010. The said assessment order was revised by the PCIT u/s 263 of the Act and pursuant to the order framed u/s 263 of the assessment was made vide order dated 19.09.2013. 5. Despite repeated examination / verification of the return of income and the books of accounts, reassessment proceedings were initiated notice u/s 148 of the Act was issued on 24.03.2015. With this notice the Assessing Officer sought to reopen the assessment framed vide order dated 19.09.2013 the reasons recorded by the Assessing Officer for reopening assessment reads as under :- Name and address of the assessee M's Jindai Steel and Power Limited. O P Jindai Mary,Delhi Road.Hisar Status Company PAN AAACJ7G97D Asst. Year . 2008....
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....no intent ion of earning profits from the captive power plant This fact has been ascertained from the applications filed-by the assessee to the Chhatisgarh State Govt. for taking exemption from electricity duty etc "Even, the Auditor of the assessee does not consider it a profit oriented enterprise. It must be noted that deduction u/s 80-1A is not available to a unit or new unit unless the unit is in the nature of an undertaking' and your Captive Power Plant does not qualify, for. an undertaking . Section 801A(7) specifically provides for audit of books of accounts to deri ve the profit & gains of an undertaking. But, during the proceedings in respect of A Y. 2005-06 u/s 263 and during" -assessment proceedings for AY 2011-12, the counsels of the assessee admitted (in writing) before the Commissioner of Income Tax, Hisar and before the AO, respectively, that the assessee company does not maintain separate unit-wise books of accounts in conventional forum say cash book, bank book, party ledger, stock register etc. Rather, the assessee .keeps consolidated books of account on SAP Computer System. It, in-itself, is evidence that condition of separate books of- accounts....
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.... 428,04.98,566/- and Rs. 62,99,55,219/- is chargeable to lax and any other income which, may be detected" during the course of re-assessment proceedings has escaped assessment lor the assessment year 2008-09 6. The issues raised vide clause-I and II in the aforestated notice did not result into any addition. The bone of contention is the issues raised in clause-III of the notice. It would be pertinent to mention here that the reason for initiation of the proceeding is undated. This means that either the reasons have been recorded on the same date as the date of notice which is 24.03.2015 or at the most they were recorded prior to 24.03.2015. 7. A perusal of the aforestated reasons clearly show that the Assessing Officer was influenced by the findings given during assessment proceeding for A. Y. 2005-06 and 2011-12. In the reasons mentioned here in above the Assessing Officer has categorically mentioned "it is worth mentioning that the worthy CIT, Hissar and the Assessing Officer in A.Y. 2005-06 and A. Y. 2011-12 respectively conducted detailed enquiries and reached the conclusion that the assessee is not entitled to deduction u/s 80 IA and 80IB of the Act. Therefore, th....
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....g the visit of MBF on 23.12.201.3, the following was recorded: - 2. The raw material, is fed into the MBF via 'Stock House'. It tons. observed that some of the items like sieve of various sizes, pieces of conveyer belt (rubber) etc. were lying. On enquiry, it was explained that store items have to be got issued form central stores in anticipation because it is a continuous process and it may not be practicable to get these items issued after its requirement has actually arisen. It was also informed that as far as central store, is concerned, these hems are taken as consumed (as soon as these are issued). These are having very short life. Certain items like pieces of conveyer belt (rubber) have been prepared out of scrap. 14.3.2 It indicates that the inventory produced by the assessee does not show the extact state of affairs. 15.1 During the visit of MBF on 23.12.2013, the following was recorded :- "................. 7. The power of MBF is drawn from PP-II (2x55MW). On perusal of log book of PP-II, it was seen that half of the power consumed by stacker/ reclaimer is added to the figure of consumption of power of MBF. It....
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....the time of issue of notice u/s 148 of the Act. arises. 9. This conclusively proves that the notice u/s 148 was issued without recording any reasons for reopening the assessment. This is contradictory to the provisions of section 148 (2) of the Act which makes it mandatory for the Assessing Officer to record reasons before serving a notice u/s 148 and if this mandatory requirement of law is not fulfilled entire proceedings become without jurisdiction which deserve to be struck down. For this proposition we draw support from the judgment of the Hon'ble High court of Delhi in the case of Prabhat Aggarwal Vs. DCIT in WP(C) 8907/2008. 10. The undisputed fact is that the reopening has been done after four years which means that the first proviso to section 147 of the Act is applicable which reads as under :- "Provided that where an assessment under sub-section (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 failur....
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....assessment. Absence of this finding, which is a "sine qua non" for assuming jurisdiction under section 147 of the Act in a case falling under the proviso thereto, makes the action taken by the Assessing Officer wholly without jurisdiction. As already observed, the learned counsel for the Revenue has conceded that neither in the reasons recorded nor in the order dated 13-3-2003, has the assessee been charged with failure to disclose fully and truly all material facts necessary for his assessment. In Fenner (India) Ltd. v. Dy. CIT [2000] 241 ITR 6721. similar matter had come up for consideration before the Madras High Court and it has been held as under :- "The pre-condition for the exercise of the power under section 147 in cases where power is exercised within a period of four years from the end of the relevant assessment year is the belief reasonably entertained by the Assessing Officer that any income chargeable to tax has escaped assessment for that assessment year. However, when the power is invoked after the expiry of the period of four years from the end of the assessment year, a further pre-condition for such exercise is imposed by the proviso namely, that there has....
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....come from assessment with non-disclosure of any material fact necessary for his assessment at the time of original assessment but is due to an erroneous decision on the question of law by the Assessing Officer. Thus, the case is squarely covered by the proviso to section 147 and not section 149. Initiation of proceedings under the proviso being clearly barred by time, the Assessing Officer could not have assumed jurisdiction by issuing notice under section 148 in respect of the assessment year 1982-83." (p. 176) In the case of Mercury Travels Ltd. {supra), the proceedings under section 147 were initiated for assessment years 1989-90, 1990-91 and 1991- 92 vide issue of notices under section 148 in September, 1996, which was after the expiry of four years. The reassessment proceedings had been initiated almost on identical grounds as in the present case. In the reasons re-corded, it was mentioned that the deduction under section 80HHD was allowable on total profit of the business by multiplying by ratio of total receipt of convertible foreign exchange to total receipt of whole business carried on by the assessee. However, to calculate total receipt of the business, the asses....
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....in the course of assessment proceeding for Year 2007-08 would not justify the Revenue in reopening the assessment for Assessment Year 20006-07 though the reopening of the assessment had taken place within a period of four years. The power to reopen assessment is structured by law. The guiding principles which have been laid down by the Supreme Court in Kelvinator of India Ltd. (supra) must be fulfilled. In the present case there was no tangible material, no new information and no fresh material which came before the Revenue in the course of assessment for Assessment Year 2007-08 which can justify the reopening of the assessment for Assessment Year 2006-07." 15. It would not be out of place to mention here that the claim of deduction are allowed to the assessee since A. Y. 2000-01 in the assessment framed u/s 143 (3) of the Act. Without disturbing the initial assessment years of the claim of deduction denying the claim in the middle by reopening the assessment is nothing but change of opinion. No new tangible material has came into existence which is accepted by the Assessing Officer himself who in the reasons recorded has accepted this as he states that " a perusal of the assess....