TaxTMI 
TaxTMI 
2024 (9) TMI 1061
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....e petitioner is engaged in the business of manufacture and production of iron ore. It carries on business from its units situated at Amona, Chitradurga and at Codli. These units are export-oriented undertakings and the profits derived from them are eligible for a deduction under Section 10B of the Income Tax Act. 3. The petitioner filed its returns of income for the Assessment Year 2009-10 declaring a total income of Rs. 2007.49 crores. This income was arrived at after claiming a deduction for Rs. 451.28 crores under Section 10B in respect of the aforesaid three units. The petitioner had along with its return of income filed a computation of income as well as the Auditor's report in Form 56-G certifying the correctness of the deduction as claimed. The petitioner in the original assessment proceedings had filed a detailed explanation dated 22.11.2011 with regard to its claim for a deduction under Section 10B in respect of each of the units. The petitioner furnished further evidence on 07.12.2011 in support of its claim for deduction under Section 10B. A survey under Section 133A was carried out at the petitioner's premises between 23.12.2011 to 26.12.2011 wherein the Auth....
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....ection 271 (1) (c) for concealment of its income. The Tribunal passed an order dated 08.03.2013 disposing of the cross-appeals filed by the petitioner as well as the Revenue against the order of the CIT (A). 8. The Revenue being aggrieved by the order of the Tribunal preferred an appeal to this Court on 16.07.2013. the Revenue filed Misc. Application before the Tribunal on 19.06.2013 seeking rectification of certain errors that crept into the order whilst disposing of the appeal. The Tribunal passed an order dated 19.09.2013 on the Miscellaneous Application dismissing it. The appeal filed by the Revenue against the order of the department was admitted by this Court on 23.09.2013 only on certain limited questions. Respondent no. 1 passed an order dated 28.03.2013 under Section 143 (3) pursuant to the order under Section 263 and accepted that having regard to the supplementary report furnished by the Serious Fraud Investigation Office (SFIO, for short) there was no basis in the allegation that the petitioner was under invoicing its exports. The Revenue filed an application before this Court on 13.12.2013 seeking admission of the appeal on certain further questions. This Court admi....
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....ioner's objections to the assumption of jurisdiction by him. By letter dated 16.02.2015, the petitioner sought a copy of the sanction granted by respondent no.3 before the notice was issued. On 16.02.2018, the petitioner furnished a copy of the judgment of this Court dated 21.4.2014 in Goa Foundation V/s. Union of India and also the second renewal order dated 09.12.2014. 13. This Court by judgment and order dated 07.05.2021 disposed of the appeals filed by the Revenue against the order of the Tribunal dated 08.03.2012, inter alia, allowing the deduction under Section 10B after noting the argument of the Revenue that the Units at Amona and Chitradurga were not new units. 14. Mr Pardiwala, learned Senior Advocate submitted that having regard to the well settled position in law, it would be apparent that respondent no. 1 has acted wholly without jurisdiction when he has sought to assume jurisdiction to reassess the petitioner's income so as to once again disallow the claim for deduction under Section 10B. Mr Pardiwala submits that the correctness of the claim under Section 10B was upheld by the Tribunal and thereafter by this Court and in such view of the matter there wa....
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....resulted in the escapement of income. According to the learned counsel, the income chargeable to tax had escaped assessment due to failure on the part of the petitioner to disclose truly and fully all material facts necessary for the assessment. 17. Ms Linhares invited our attention to the materials on record which according to her was suppressed by the petitioner and not considered by the Assessing Officer or the appellate Authorities including the Tribunal. She submits that in view of the new material facts which were revealed during the survey conducted on 20.03.2014, respondent no. 1 issued the notice under Section 148 on 16.07.2014 for reassessment of income for the Assessment Year 2009-10 as the Assessing Officer had reasons to believe that the income chargeable to tax has escaped assessment. 18. Ms Linhares submitted that the petitioner was provided with reasons for re-opening the assessment for the Assessment Year 2009-10 vide letter dated 31.12.2014. She submitted that the new materials were found during the course of a survey under Section 133A conducted on 20.03.2014, under-invoicing of the iron export billings and income earned on account of illegal mining is to b....
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.... A.O. had reason to believe that income had escaped assessment after new material facts were revealed during the survey conducted on 20.03.2014. E. The Supreme Court in the case of CIT v Kelvinator of India reported 2010(187) Taxman 312 (SC) held that Assessing officer has to re-open provided there is tangible material to come to conclusion that there is escapement ofincome from assessment, reasons must have a live link with formation of belief. E The Supreme Court in the case of Raymond Wollen Mills Ltd v. ITO reported 1999 (236) ITR 0034 held that the sufficiency or correctness of the material is not a thing to be considered at this stage. The Court cannot strike down the re-opening of the case in the facts of this case. It will be open to the assessee to prove the assumption of facts made in the notice was erroneous. The Assessee may also prove that no new facts came to the knowledge of the ITO after completion of the assessment proceeding. The question of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the Assessing Authority. G. In the case of Sesa Ster....
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....ficiation was suppressed by the petitioner before Authorities. During the course of survey u/s 133A conducted on 20.03.2014, the impounded material marked as BB-28 is M/S. Sesa Goa Ltd., capital Expenditure Proposal proves that most of the Amona Plant 2 structures needed replacement due to corrosion& instead of replacing the structures of the existing plant, it was amalgamated into one plant. This fact was suppressed by the petitioner before the authorities. II. The physical inspection of the Amona Unit after the date of survey by the JCIT Range-I and Range-2 along with AGM of the petitioner Mr. Benecio, revealed that the earlier two dry plants and one wet plant is amalgamated as one unit. III. The depreciation chart filed by the petitioner for the A. Y. 2003-04 along with return of income mentions the cost of amalgamation of Amona unit. The depreciation chart filed by the petitioner along with return of income is evidence beyond doubt about the amalgamation of the above three units as one unit. As per the depreciation chart filed by the petitioner, the amalgamation of Amona plants is completed in November 2002 cost of amalgamation is shown at Rs.3,94,30,....
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.... wet plant and these are modified by the petitioner and claimed as new machineries. The statements recorded from fabricators post survey enquiries confirmed these facts. These facts are suppressed by the petitioner during the course of assessment proceedings / appellate proceedings which are noticed during the post survey enquiries and statements recorded from the Further, the petitioner also did not consider the old machineries of Generators, control panels and electrical substation in the above value though the same are used. In the new unit, petitioner has not denied the use of these old machineries in the new unit. During assessment year 2003-04, the petitioner purchased only one machinery viz. Banana screen from Schenck Australia Pvt. Ltd. costing Rs. 51,51,434/-. The remaining capital expenditure classified under the head amalgamation relates to cost of removal of old machineries of all the three existing units and re-installation of these machineries and modification of the existing machinery by amalgamating the same as single unit as per the new layout. The cost incurred for removal of old machineries and reinstallation of the same and cost incurred on modification....
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.... existing plant was much below the threshold of 20% required for substantial investment for setting up of a new unit for the purpose of section 10B" However, during the course of survey conducted on 20.03.2014, it was noticed that the petitioner suppressed material fact relating to the use of the old plant & machinery in the new unit and suppressed the taking of the values of several old machineries in the above value which resulted into the above decision. No new machinery purchased during the year relevant to A.Y. 2006-07 other then the Dust Suppression Machine /plant costing Rs. 54,69,839/-. All other machineries which are essential for running the unit were used by the petitioner in the A.Y 2006-07 & also in subsequent assessment years. These machineries were neither scrapped nor sold as claimed by the petitioner before the ITAT, mere addition of the "Dust Suppression Plant" to the old unit does not result into new unit. The old machinery used in the Chitradurga unit is less than 20% of the total value of plant & machinery of the new unit. In view of the suppression of material facts by the petitioner the ITAT concluded that Amona & Chitradurga are new units. ....
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....tory evidence with regard to the date of commencement of production. He also held that the approval granted by the Development Commissioner for the Codli unit is not ratified by the Board. Another reason given was that the profits of the units was determined without taking into consideration the cost of the wastage from other Units which was utilised in the alleged production that was carried out in the unit under reference. He also held that the units at Amona and Chitradurga were not new units and the setting up of the Units in the old mines which were operated by the petitioner cannot be regarded as new units. He further held that the petitioner had not maintained separate books of accounts for the EOU unit. 24. The CIT (A) passed an order under Section 263 seeking to revise the assessment originally framed for the assessment year 2009-10 and directed the Assessing Officer to consider the report filed by the SFIO and submissions of the petitioner thereon. The CIT (A) felt that the petitioner was under invoicing its exports. After considering the response of the petitioner, the CIT (A) passed an order on 31.08.2012 upholding the stand of the Assessing Officer and denying the c....
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....econd survey and alleging that there was a mistake apparent on record in the order of the Tribunal. Respondent no. 1 vide communication dated 31.12.2014 furnished reasons recorded prior to the issuance of the notice indicating the escapement of income. The Tribunal dismissed the Miscellaneous Applications filed and even this Court in the Tax Appeal filed by the Revenue passed an order that the applications will be considered at the time of the final hearing. Thus the claim of the Revenue about the new materials found during the fresh survey conducted pursuant to the passing of the assessment order was placed before the Tribunal as well as this Court. 28. It is in these facts that the rival claims which fall for our determination need to be considered. Shri Pardiwala, learned Senior Advocate relied on the third proviso of Section 147 to support his submissions. Section 147 reads thus: 147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allo....
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....iew of the materials which we have referred to hereinbefore which form part of the submissions made by Ms Linhares, learned counsel for the Revenue, that the notice under Section 148 was issued on 16.07.2014 for reassessment of the income and the consequent reasons for opening the reassessment were supplied. The reasons for reassessment essentially are that the deduction under Section 10B was claimed by suppressing material facts which are found during the course of the survey under Section 133A conducted on 20.03.2014 under invoicing of the iron export billing and income earned on account of illegal mining which is to be held as income from other sources. 31. The Assessing Officer before he validly assumes jurisdiction to reassess the income of an assessee has to comply with certain jurisdictional preconditions, the fulfilment of which is mandatory. These jurisdictional preconditions are: (i) the Assessing Officer must have reason to believe that the income had escaped assessment; (ii) if the re-opening is proposed after a period of four years from the end of the relevant assessment year and the assessment as originally framed was under section 143 (3), then, ....
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....ry of the mining leases were illegal. This Court reiterated this view in its subsequent judgment dated 09.07.2019 in the case of Sociadade de Formento Industrial Co. Ltd. V/s. ACIT WP No. 233 of 2015 and judgment dated 26.04.2024 in the case of Balaji Mining and Minerals Private Limited & Ors. V/s. ACIT Circle-I WP No. 262 of 2016. This aspect of the matter has been dealt with from paras 52 to 59 of the judgment. For the same reason, in the present case also, the reopening in so far as this circumstance is concerned is not sustainable in law. So far as the allegation of under invoicing of exports is concerned, we find that by an order dated 30.03.2012, the CIT (A) had passed an order under Section 263 revising the assessment originally framed and directing the Assessing Officer to consider the report filed by the SFIO and submissions of the petitioner thereon. Thereafter, the Assessing Officer has passed an order under Section 143 (3) on 20.03.2013 accepting that having regard to the supplementary report furnished by SFIO there was no basis in the allegation that the petitioner was under invoicing its exports. The Assessing Officer has also found that the petitioner has not under i....
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....fficer in support of his finding may be several but what is relevant is the subject matter of the tax appeal. It is here that according to us the third proviso to Section 147 will spring into effect. The third proviso says that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. 37. Let us examine if the third proviso comes in the way of reassessment. The reassessment proceedings are obviously initiated as the income chargeable to tax has escaped assessment. The claim of the assessee for deduction under Section 10B after the initial survey was negatived by the Assessing Officer as well as the CIT (A). When the fresh survey was conducted during the pendency of the proceedings before this Court, the new materials found by the Assessing Officer were sought to be placed before the Tribunal and this Court. The issue under consideration before the Tribunal as well as this Court was whether the assessee is entitled to claim deduction under Section 10B. Assuming that the reassessment proceedings is allowed to continue on....
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....challenge before the competent forum. 39. In Poonam Builders V/s. ACIT 162 Taxmann 238, the assessee therein had claimed a deduction under Section 80IB (10) which was denied to it in the course of an assessment framed under Section 153A read with 153C of the Act. This denial was challenged by the assessee therein before the CIT (A) on two grounds, viz., that such denial could not be done in the course of an assessment framed under section 153A read with section 153C of the Act in the absence of any incriminating material found in the course of the search and, in any event, all the conditions required to be complied with for being entitled to a deduction under Section 80IB (10) were fulfilled. The CIT (A) passed an order accepting the first contention and, therefore, did not deal with the second contention. Thereafter, a notice under Section 148 was issued proposing to reassess the assessee's income on the ground that the deduction under Section 80IB (10) was wrongly allowed in the original assessment. This Court held that the proviso is a clear bar to the exercise of jurisdiction to reopen where any income which is the subject matter of appeal is alleged to have es....