TaxTMI 
TaxTMI 
2010 (2) TMI 26
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....rea at Nani Daman. Briefly stated, from the record of the Court it appears that the Maharashtra State Financial Corporation (`MSFC') had granted loan facilities to a company by the name of Innovative Plastics Private Limited. The company was in default of the payment of its dues, following which MSFC exercised its powers under Section 29 of the State Financial Corporations Act and sold the land and building to Khosla Filters Private Limited under a Deed of Conveyance dated 24th December 1999 for consideration. The purchaser granted a lease of the property on 29th December 1999 to the Petitioner for a period of ten years. The Petitioner sought registration as a Small Scale Unit for manufacturing filter bags, filter panels, made ups of cotton and manmade fabrics. Provisional registration was granted to the Petitioner by the Director of Industries on 3rd March 2000. The Petitioner made an investment of Rs. 7,19,447/for the purchase of plant and machinery and set up an industrial undertaking on the property. Industrial production commenced from 6th April 2000 and a permanent license was received on 19th February 2001. 4. The Petitioner made its claim for the first time in respec....
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.... deduction had been allowed under Section 80IB for A.Ys. 2003-2004 and 2004-2005. However during the course of the assessment proceedings for a subsequent year, it was observed that the factory had been purchased by Khosla Investment Private Limited and was given on license to the assessee. The notices record that the plan of the factory premises was approved by the Sarpanch on 12th September 1988, which would show that the industrial unit was already in existence and in the use of some other person for the purpose of availing benefits provided under the Act. In the case of the assessee, it has been stated that the factory plan having been approved twelve years prior to the commencement of the business of the assessee, that would lead to an inference that the business/ industrial unit of the assessee had come into existence at the place where the business of someone else was already in existence and that the other party had availed of the benefit provided in the Act. A reference has been made to the provisions of Section 80IB of the Act to suggest that one of the conditions for claiming a deduction is that the business should not be formed either by splitting up or by reconstructio....
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....en assessment proceedings took place for A.Y. 2003-2004. A full enquiry was made and all relevant details were disclosed. The license contains a disclosure of the circumstance that plans had been approved on 12th September 1988; (ii) In any event, there was no connection between the alleged nondisclosure and the conclusion formed by the Assessing Officer. Even if it were to be assumed that a factory had been worked at the site by the person who was subjected to proceedings under State Financial Corporations Act, 1961 by MSFC, that would not disentitle the Petitioner to the benefit of a deduction under Section 80IB of the Act. The Petitioner who has set up a new industrial undertaking by purchasing plant and machinery would still be entitled to a deduction under Section 80IB of the Act; (iii) The reasons for reopening an assessment must indicate both a failure to disclose all material facts and what circumstance constitutes the failure to disclose. In the present case, that requirement has not been fulfilled; (iv) In the present case, the Assessing Officer had not formed the belief that income had escaped assessment. The information which has been obtained....
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....s or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the Section. Under the first proviso, where an assessment has been made under Section (3) of Section 143 or Section 147 for the relevant assessment year, no action can be initiated under Section 147 after the expiry of four years from the end of the relevant assessment year unless the income chargeable to tax has escaped assessment by reason of the failure of the assessee inter alia to disclose fully and ruly all material facts necessary for his assessment, for that assessment year. The jurisdictional condition under Section 147 is the formation of belief by the Assessing Officer that income chargeable to tax has escaped assessment for any assessment year. The reasons which are recorded by the Assessing Officer are crucial and it is on the basis of those reasons alone that the validity of the order reopening an assessment has to be decided. Where an assessment has been made under Section 143(3), action can be initiated after the expiry of four years from the end of the relevant assessment year if the inc....
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....ant particulars of the license to work that was granted to the unit of the assessee was disclosed. The license to work dated 14th August 2000, copy of which was filed before the Assessing Officer, contains a disclosure of the fact that the plans have been approved by the Sarpanch by his letter dated 12th September 1988. The basis on which the assessment for A.Ys 2003-2004 and 2004-2005 has been sought to be reopened is that it was during the course of assessment proceedings for subsequent years that the Revenue had obtained a copy of the license which showed that the plans have been approved as far back as on 12th September 1988. This statement which is contained in the reasons, on the basis of which the assessment is sought to be reopened, is belied by the record which shows that the Revenue was in possession of the material produced by the assessee during the course of the assessment proceedings for A.Y. 2003-2004 which showed that the plans had been approved in the year 1988. Therefore, the basis on which the assessment has been sought to be reopened is factually incorrect. The Assessing Officer granted the assessee a deduction under Section 80IB after being appraised of all the....
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....nd of the relevant assessment year. 15. We may also note in addition that the assessee has filed together with its affidavit in rejoinder, a copy of the information received during the course of a query under the Right to Information Act. The information includes a letter by the Assessing Officer to the Commissioner of Income Tax dated 24th March 2009 seeking permission to the proposal for reopening the assessment under Section 151(1) of the Act. The Assessing Officer has noted, while seeking approval of the Commissioner of Income Tax, that during the course of Revenue audit proceedings, an audit objection has been raised on the ground that the assessee was not eligible to a deduction under Section 80IB from A.Y. 2002-2003. The Assessing Officer notes that the audit objection was not accepted but that as a precautionary measure the assessment was reopened under Section 147. There is merit in the submission urged on the part of the assessee that the Assessing Officer had no reason to believe that income had escaped assessment. We clarify that we have not regarded this circumstance namely, the information which was divulged during the course of a query and the Right to Information....