TaxTMI 
TaxTMI 
2022 (1) TMI 536
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....rcle (1), Thane (The AO) by invoking the provisions of Section 147 read with, 1961 (the act) is bad, illegal and void as, among other: (i) the case of the appellant did not fall within the parameters laid down by Section 147 read with Section 148 of the Act (ii) the necessary conditions for initiating and completion thereof are not satisfied 2. Denial of exemption respect of SEZ Unit at Pithampura /disallowance of deduction u/s 10 (10 AA) [ sic) of the Act 2.1 the learned CIT - A erred in confirming the action of the AO in making addition of Rs. 1,92,59,726/-by denying the claim of exemption/deduction referred by the appellant u/s 10 (10 AA) of the act 2.2 It is submitted that in the facts and circumstances of the case, and in law, no such denial of exemption was called for. 2.3 Without prejudice to the above, assuming - but not admitting - that some addition was called for, the computation made by the AO is not in accordance with the law, is arbitrary and excessive." 03 Briefly stated the facts of the case shows that that assessee is a public limited company engaged in the manufacture and supply of enzymes. It filed return o....
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....er ground number 1 of the appeal, learned authorised representative referred to the notice of reassessment issued u/s 148 of the act on 31st of March 2017 which is placed at page number 93 of the paper book. He also referred to page number 96 - 98 of the paper book where the reasons recorded for reopening of the assessment as supplied to the assessee on 21st of July 2017 are placed. He submitted that the original assessment has been completed u/s 143 (3) of the act for assessment year 2010 - 11 on 28th of March 2013 and the reassessment notice has been issued to the assessee on 31st of March 2017. Thus, case of the assessee is reopened beyond four years from the end of the assessment year in which the income was first assessable. Therefore, the basic condition is that there should be a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. He submitted that in the present case the reopening has been made despite the complete disclosure made before the learned assessing officer during the course of assessment proceedings u/s 143 (3) of the act. He referred to the letter dated 13 August 2012 and 8 February 2013 wherein the com....
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.... in law if the objections were disposed of in a cursory/mechanical manner without dealing with the various objections raised by the assessee. 09 He also submitted that the notice has been issued u/s 148 of the act without obtaining appropriate sanction of the concerned authority u/s 151 of the act and therefore the reassessment proceedings itself is invalid. He also challenged the approval granted u/s 151 of the act on the ground of non-application of the mind on part of the approving authority. For each of the proposition he submitted a detailed note supporting it by various judicial pronouncements. 10 On the merits of the disallowance, he also submitted a note stating that claim of the assessee is justified and correctly allowed. He first referred to the detailed note on the nature of enzymes, the business of the assessee and its verticals and explaining that the company has three plants, which were carrying out different activities. He further referred to the Manufacturing process and submitted that the basic concentrated material manufactured at Nasik plant because SE jet plant has no fermentation facility. Procured from Nasik plant about total quantity of 1,05,000 Liters....
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....o referred to the order of the learned CIT - A to show that the activities carried out by the assessee is not manufacturing activity but only a part of the whole process of converting seed preparations into any time. He also referred that that the activities carried out in the SEZ plant is a part of manufacturing process, which begin in a non-SEZ plant. The goods manufactured in non-SE jet plant are transferred to SE jet plant to make the finished product thus the assessee has nowhere shown in the document furnished or during the discussion before the learned CIT - A that such concentrated could also have been sold. The same has been transferred to Non SEZ plant and shown as a raw material of this plant by the appellant in its books of accounts and therefore the disallowance of exemption u/s 10 AA has been correctly made. 12 The learned authorised representative in rejoinder submitted that there is no argument of the learned departmental representative against the reopening of the assessment and further the claim of the assessee u/s 10 AA of the act supported by the certificate of the chartered accountant which has been placed before the learned assessing officer during the orig....
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....ted which is also placed at page number 68 of the paper book filed before us. As per letter dated 8 February 2013, the assessee explained the claim of deduction u/s 10 AA of the income tax act with respect to the provisions of income tax act. It was stated that assessee begin manufacturing of the specialty enzymes during the financial year 2008 - 09. Based on this letter assessee submitted that it has claimed deduction of Rs. 192,59,726 u/s 10 AA of the income tax act. It is also important to note that on 29th of September 2010 the assessee submitted a report furnished 10 AA of the act for the assessment year 2010 - 11. Thereafter when the assessment order u/s 143 (3) of the act was passed by the learned assessing officer in paragraph number 3 he has recorded the existence of the plant and also considered the turnover of the assessee company along with the net profit ratio on by it. Thus as the naturally assessing officer was satisfied with the claim of the assessee u/s 10 AA of the income tax act he did not disturb and allowed it. Subsequently notice u/s 148 of the income tax act was issued on 31st of March 2017 the reason recorded shows as under :- " (iii) excessive dedu....
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....d only if there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. 15 In the reasons recorded the learned assessing officer has used following information:- (i) statement of sales (statement of sales party when sales above Rs. 5 lakh) (ii) statement of purchases (statement of purchases above Rs. 5 lakhs unit/location -wise) 16 Both these information was submitted by the assessee before the learned assessing officer has per letter dated 13 August 2012. 17 It is not the case of the learned assessing officer that because of the inter-unit transfer of the goods and services does not correspond to the market rate of such goods and services. The learned assessing officer has recorded the reason merely to restrict the deduction in proportion of material purchased from outside parties other than inter-unit transfer. Even otherwise for doing this, the learned assessing officer did not have any tangible material. In the present case purchases worth Rs. 91,581,539/- are purchased from other units whereas the goods sold by the assessee as export is Rs. 150,865,122. It is not t....