AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 1485
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....return of income for the year under consideration was filed by it on 29.11.2000 declaring total income at NIL after claiming deduction, inter alia, under section 80IA and 80HHC. In the assessment originally completed under section 143(3) vide an order dated 31.03.2003, the total income of the assessee was determined by the Assessing Officer at Rs.3,26,30,395/- after allowing the claim of the assessee for deduction under section 80IA to the extent of Rs.13,86,09,898/-. Subsequently it was noticed by the Assessing Officer from the records that the deduction allowed to the assessee under section 80IA in the assessment completed under section 143(3) has been computed after taking into consideration the sale price in respect of power sold by the Company to outsiders at Rs.3.42 per unit and in respect of the powers transferred to other unit of the Company at Rs.4.35 per unit. He also noted that as per sub-section 8 of section 80IA, deduction in case of goods transferred to other business carried out by the assessee was required to be computed considering such transfer at the market value of such goods on the date of transfer. He, therefore, was of the view that by taking into considerati....
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.... acceptable by Revenue, but nothing turns on its acceptance. Since the assessee did not disclose the above facts in the annual accounts and return of income that the transfer price adopted for captive consumption of power included an element of duty/tax which it in fact did not pay or bear, the same was overstated at least to this extent. Perusal of the assessment order Para 17 shows the total number of units of power for captive use at 4,97,95,700 units on which duty/tax element @ Rs 0.20 paise comes to Rs.99,59,140/-. Although this calculation was not given by the AO in the reasons nor did he quantify the amount of income in the reasons, he was prima facie convinced that the amount of under-assessment was of sufficiently large Income to be covered as per the provisions for issue of notice u/s 48. In view of the above, I hold that the AO had sufficient reasons to hold a prima facie belief that income had escaped assessment within the meaning of section 147, and the same has been confirmed in the findings of the CIT(A) and ITAT in the assessee's own case. There is failure on the part of the assessee to disclose material fact in the return of income that SEB price used as indica....
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....(Appeals) erred in confirming further allocation of common expenditure to the tune of Rs.37,17,127/- to the power undertaking without appreciating the fact that the said expenditure are not related to power units. 5(a) That on the facts and circumstances of the case, Ld. CIT(Appeals) was not justified and erred in holding that DEPB receipts which falls under section 28(iv) also needs to be reduced from the Profit of the Business in terms of Explanation (baa) to section 80HHC 5(b) That on the facts and circumstances of the case, and without prejudice to Ground No. 5(a) here-in above, the Ld. CIT(Appeals) was not justified in not considering the fact that only profits on transfer of DEPB falls within the ambit of section 28(iiid) of the Act. 6(a) That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was wholly unjustified in holding that 90% of interest received is to be reduced from the 'Profits and Gains of Business and Profession' to arrive at the 'profits of the business' for computation of deduction u/s 80HHC. 6(b) That on the facts and in the circumstances of the case, and without prejudice to ground no. 6(a....
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....formed the basis of reopening and thus the reopening of assessment by the Assessing Officer was clearly based on a mere change of opinion. As regards the observation made by the ld. CIT(Appeals) in his impugned order while upholding the validity of reopening that the issue relating to the assessee's claim for deduction under section 80IA was not examined by the Assessing Officer in the original assessment, the ld. Counsel for the assessee invited our attention to the relevant audit certificate placed at page 1 of his paper book as well as other working details given at pages 22, 23, 26 and 27 of the paper book to show that all the material particulars relevant to its claim for the deduction under section 80IA were truly and fully furnished by the assessee. He also invited our attention to the copy of notice issued by the Assessing Officer under section 142(1) of the Act on 13.01. 2003 (copy placed at page 35 of the paper book) to show that the issue relating to the assessee's claim for deduction under section 80IA was looked into and examined by the Assessing Officer with particular reference to the realisable market value of power. He contended that the reopening of assessment by ....
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....f assessment made by the Assessing Officer under section 143(3) read with section 147 and read out the reasons given by the ld. CIT(Appeals) in paragraphs no. 5 to 7 of his impugned order for upholding the validity of the order of the Assessing Officer. 7. In his rejoinder, the ld. Counsel for the assessee submitted that the scope and requirement of section 147/ 148 are specific and every mistake committed by the Assessing Officer cannot be corrected by recourse of the said provision. 8. We have considered the rival submissions and also perused the relevant material available on record. In order to appreciate the stand taken by both the sides on the preliminary issue raised in this case regarding the validity of reopening of assessment by the Assessing Officer, it is relevant to refer to the reasons recorded by the Assessing Officer for reopening the assessment, which are as under:- "Vide the assessment order u/s. 143(3) for the captioned year, deduction u/s. 801A has been granted at Rs.13,86,09,898/- in computing the total income chargeable to tax under the regular provisions of the Act. From the records it can be seen that the said deduction has been computed consi....
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....g and we find merit in the contention of the ld. Counsel for the assessee that the same could not be relied upon to uphold the validity of reopening of assessment made earlier on 24.03.2005. 9. While rejecting the contention raised on behalf of the assessee while challenging the validity of reopening on the ground that the same was based on a mere change of opinion, the ld. CIT(Appeals) in his impugned order has observed that the perusal of assessment records shows that no queries were raised by the Assessing Officer during the course of assessment proceedings on the issue relating to the assessee's claim for deduction under section 80IA. However, as demonstrated by the ld. Counsel for the assessee at the time of hearing before us on the basis of relevant material placed on record in his paper book that the issue relating to the assessee's claim for deduction under section 80IA was not only examined by the Assessing Officer but a specific query in this context was raised by him vide notice dated 13.01.2003 (copy placed at page no. 26 of the paper book) issued under section 142(1) of the Act requiring the assessee to explain the basis of realisable market value of power adopted b....