TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 332
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....nd 7th February 2022 issued under Section 142(1) of the Act are also assailed. 3. Petitioner is in the business of providing healthcare technology services. It commenced its business activities by establishing a unit in Software Technology Park ("STP") Andheri, Mumbai. Production was commenced in the previous year relevant to AY 2006-07. Petitioner claimed 100% deduction under Section 10(A) of the Act on the profits earned from STP Unit from AY 2006-07 to AY 2011-12, which was allowed by the Assessing Officer ("AO"). Even in subsequent assessment years the AO accepted the profits and losses declared by Petitioner under Sections 10A and 10AA of the Act after calling for additional details from Petitioner for examination. The AO also allowed the deduction under Section 10AA of the Act from AY 2012- 13 to AY 2014-15. 4. Petitioner filed return of income for AY 2015-16 declaring a total income of Rs. 42,53,18,780/- and claimed deduction of Rs. 104,14,77,844/- for its unit established in the Special Economic Zone ("SEZ"), clearly disclosing that the unit in SEZ commenced production in AY 2011-12. During the assessment proceedings, Respondent No. 1 called upon Petitioner to submit fina....
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....ted the notices and the order impugned on the grounds that firstly, Petitioner had made full disclosure regarding the deduction claimed under Section 10AA of the Act in the return of income, financial statements and statutory audit report in Form No. 56F during the original assessment in respect of the profits earned from SEZ unit and hence, there was no failure to disclose fully and truly material facts as required under the Act; secondly, there was nothing to indicate that the deduction claimed on the profits earned from the SEZ unit was a result of splitting up or reconstruction of STP unit; thirdly, no tangible material had come in the possession of Respondent No. 3 after completion of the original assessment and all information was already available with the AO in the earlier assessment years and; finally that the entire re-opening was on the basis of 'a change of opinion' which was evident from the very language of the notice as well as the order impugned herein. Mr. Mistri emphasized that there was ample evidence to indicate that Respondent No. 1 had perused all the relevant material furnished by Petitioner on his own as well as pursuant to the requirement made by the AO and....
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....ppearing for the parties and with their assistance have gone through the record of the proceedings. In our opinion, the following issues arise for consideration in this case: - (i) Whether in the facts and circumstances of the case, it can be adduced that the petitioner failed to disclose fully and truly all material facts during the course of original assessment which led to the finalization of the assessment order and income escaping assessment? (ii) Whether 'reasons to believe' conveyed vide the notice dated 19th July 2021 to petitioner can be attributed to a 'change of opinion' as a basis of re-opening of the assessment proceedings? 13. It is trite law that the AO can only re-open an assessment if he has 'reason to believe' that undisclosed income has escaped assessment. Mere change of opinion of the assessing officer is not sufficient to meet the standard of 'reason to believe'. As far as the first issue regarding full and true disclosure by Petitioner is concerned, since admittedly the notice under Section 148 of the Act has been issued more than four years after the expiry of the relevant assessment year and assessment under Section 143(3) of the Act has been complete....
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....d in foreign currency. The Mark to Market (MTM) is considered on portfolio approach wherein the hedging instrument and the hedging items are evaluated together. Further, from note-15 other assets, it was also seen that Premium on Put Options of Rs. 2,27,38,682/- was not routed through P&L account. As the assessee claimed MTM losses and was allowed, this amount should have also been routed through P&L Account and brought to taxation. This has resulted into underassessment of income to the tune of Rs. 2.27,38,682/-. 4. Further, it is seen from P&L, the assessee has claimed an amount of Rs. 127,29,02,550/- as Employees Benefit Expense. Further, it was noticed from the Note-30 (Prior Period Items) of financial statements, Employee benefit Expense includes Employee Stock Appreciation Rights of Rs. 19,18,75,324/- pertaining to Prior Period. The expenditure being not for current year, should have been disallowed and added the total income. This has resulted into underassessment of income to the tune of Rs. 19,18,75,324/-. The first point regarding claiming of deduction under Section 10AA of the Act, it says "On perusal of the case records it is seen that the assessee has claimed dedu....
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....tioned. Further financial statements of AY 2014-15 also mention details of the SEZ unit and Form No. 56F and relevant extract of ITR form for AY 2012-13 to AY 2014-15 as furnished also disclose details of the claim of deduction under section 10AA of the Act. Hence there is no neglect or failure on the part of petitioner to render full and true disclosure at the time of assessment. 15. There can be no doubt that the duty of disclosing all the primary facts relevant to the decision of the question before the assessing authority lies on an assessee. Does the duty however extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn. It is not for somebody else - least of all an assessee - to tell the AO what inferences should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that an assessee must disclose what inf....
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....sessment is based on a 'change of opinion'. 18. The impugned order dated 22nd March 2022 rejecting the objections of Petitioner to the 'reason to believe' notice merely justifies the reopening on the ground that Explanation I to Section 147 of the Act provides that 'production before the assessing officer of books of accounts or other evidence from which material evidence could, with due diligence, have been discovered by the assessing officer will not necessarily amount to disclosure within the meaning of the foregoing proviso'. This is the only basis on which the objection of Petitioner is rejected. The impugned order does not even deal with any of the objections taken by Petitioner. The order is also silent on the objections of Petitioner in respect to the language of the notice indicating clearly that the reopening is based on a change of opinion. This Court in its decision rendered in Ananta Landmark Pvt. Ltd. v. Deputy Commissioner of Income Tax and Ors (2021) 131 taxmann.com 52 Bombay has held as under: - "....that when the primary facts necessary for assessment are fully and truly disclosed, the assessing officer is not entitled on change of opinion to commence proceedin....