TaxTMI 
TaxTMI 
2026 (7) TMI 621
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....sessing Officer ("the AO" or "the Respondent" for short) under whose charge the Petitioner's income gets assessed year after year and who has issued the impugned Notice dated 30th March, 2021 under Section 148 of the Act. The Second Respondent is the Assessing Authority appointed under the new Faceless Assessment Scheme responsible for making an assessment under Section 144B of the Act in a faceless manner and who has passed the order disposing objections dated 5th February, 2022 and also the final Draft Assessment Order on 14th March, 2022 proposing variation to the returned income. 4. For the relevant Assessment Year, the Petitioner is eligible and has claimed deduction under Section 10AA of the Act. Section 10AA grants for a period of 10 consecutive years out of a total of 15 years, a deduction of 50% of the profits on eligible units set up in a Special Economic Zone. The Petitioner claimed the said deduction even for earlier years, and, in particular, reference was made to Assessment Year 2015-16. For the relevant year i.e. AY 2017-18, the said deduction was claimed in the column "any other amount allowable as deduction" of its Return of Income. The said return was picked up....
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....deye unit. Assessee has claimed 50% of profit of Genesys Worldeye unit i.e. Rs. 16,13,16,126/- as deduction/exemption u/s. 10AA without setting off losses derived from other two units against the guidelines issued by CBDT vide circular No. 7 dated 16.07.2013. Further it is noticed from Form 56F that the export proceeds in foreign exchange was not brought into India within a period of 6 months from the end of the previous year or within such further period as allowed by competent authority. However, amount of deduction u/s. 10A, the assessee entitled is shown at Rs. 11,68,15,950/- and same is also shown in tax audit report. Since, export proceeds in foreign exchange was not brought into India hence, deduction u/s. 10AA is not allowable. However, the deduction of Rs. 16,13,16,126/- was allowed during assessment proceedings. Further it is noticed from 'return of income/revised return of income that the assessee has neither claimed deduction u/s. 10A/10AA in computation of income nor in schedule prescribed for deduction u/s. 10A/10AA'. Since, assessee claimed deduction under Section 10AA through manual computation of income which is in compliance to the questionnaire ....
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.... 8. In this factual backdrop, Mr. Nishit Gandhi, the Learned Counsel for the Petitioner made the following submissions: i. At the outset, he submitted that the whole purpose of initiating the present reassessment is to deny the Petitioner its claim for deduction under Section 10AA which was allowed in the original assessment proceeding after raising queries and considering the submissions of the Petitioner. He, pointing to the reasons for reopening, submitted that the reasons are recorded simply on the basis of facts already before the Assessing Officer (the Respondent herein) which were considered in the original assessment. There is no new tangible material in possession of the Assessing Officer and in fact reassessment is initiated to review the facts already on record which amounts to a change of opinion. ii. He further submitted that the Respondent has initiated the re-assessment and questioned the deduction under Section 10AA granted earlier, primarily on three counts as per the reasons recorded which are as follows: a) The claim of deduction under Section 10AA was allowed before setting off losses from ineligible units b) As per Form 56F....
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.... into India of convertible foreign exchange within six months) into Section 10AA of the Act, which is wholly impermissible, since the same would amount to legislating which is beyond the power of an Assessing Officer. He, therefore, submitted that a condition non-existent at the time of filing of return or at the time of passing of the original Assessment Order and even at the time of issuance of notice under Section 148 of the Act cannot be a reason to believe for reopening the assessment. v. So far as the third reason is concerned, he submitted that at the relevant point in time for filing Return of Income for AY 2017-18, the income tax return software / utility / portal was not permitting a claim of deduction under Section 10AA of the Act in line with the judgement of the Hon'ble Supreme Court in the case of Yokogawa Ltd. (supra). He submitted that as per this judgement and various other judgements, including those of this Jurisdictional High Court, it has been held that for the purpose of computing deduction under Section 10AA of the Act, firstly the profit from the undertaking eligible for the said deduction has to be computed independently and thereafter the said ded....
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....urt in the case of Cosmo Films Ltd. v/s CBDT - [WP (C) 3598 of 2019 & CM Appl. 16512/2019 decided on 14th May, 2019]. As such, there can be no manner of doubt that the utility was in fact restrictive of the claims that could be made by the Assessee in line with the relevant law in force as laid down by the Hon'ble Supreme Court. vii. He further submitted that in any case and without prejudice to any of the above submissions, admittedly the Assessing Officer had scrutinised the claim of deduction under Section 10AA of the Act at the time of framing the original assessment. For this submission, he relied on the letters filed before the Assessing Officer during the original assessment along with the annexures thereto which are also furnished before us by way of an additional affidavit. viii. He further submitted that even as per the reasons for reopening each and every aspect, including the facts and figures, are picked up from the submissions made by the Assessee (the Petitioner herein) during the original assessment proceeding. In fact the reasons manifestly show that it is only on a relook / review of the assessment records of the Petitioner, and the claim of dedu....
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.... not be something which is new. c. The reopening was initiated on the basis of reasons duly recorded by the Assessing Officer. He relied on the said reasons for reopening to submit that the reopening of the Assessment was in accordance with law. d. He submitted that the reasons would show that the Assessee had not claimed deduction under Section 10AA of the Act in the respective schedule in the Return of Income. He relied upon the decision of Goetze (India) Ltd. v. Commissioner of Income-tax [2006] 157 Taxman 1 (SC) to contend that the Assessing Officer may allow deduction only if the same is claimed in the Return of Income in the specified column and not otherwise. Therefore, the deduction under Section 10AA of the Act could not have been allowed by the Assessing Officer. As such, this reason for reopening the assessment was justified. e. He submits that the Assessee (the Petitioner) had not brought into India convertible foreign exchange within a period of six months from the end of the year in which the export sales were made by it. He submits that, in the scheme, tax is foregone with the object of earning valuable foreign exchange. The RBI mandates th....
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....nit. Having regard to these facts, we note that, the reasons for reopening the assessment to withdraw the deduction under Section 10AA of the Act was because, according to the Respondent, certain conditions thereto were not fulfilled by the Petitioner. This per se could not be a reason for reopening when the said claim was scrutinised and then allowed in the original assessment. Therefore, even though the assessment is reopened within a period of 4 years from the end of the relevant Assessment Year, the concept of change of opinion would apply. 11. However, since three different reasons are given by the Respondents for reopening the assessment and extensive arguments were heard on the same, we deem it appropriate to deal with each of these three reasons for reopening as recorded by the Assessing Officer / Respondent. 12. The first reason, according to the Respondent, is that the Petitioner has claimed the deduction under Section 10AA of the Act without first setting off the losses of the other units not eligible for deduction under Section 10AA of the Act. In this regard, we note that the said reason is contrary to, and in fact is in the teeth of the judgement of the Hon'ble ....
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....AA). As such, to comply with this requirement, Form 56F was filed by the Petitioner. However, undisputedly, the Petitioner has claimed deduction under Section 10AA and not Section 10A of the Act. This was also admitted by the Revenue on a specific query raised by us at the time of hearing. Therefore, in the absence of any such specific requirement at the relevant time, of bringing in foreign exchange within six months from the end of the Previous Year, the Respondent could not be said to have any reason to believe that income has escaped assessment on this count. 14. Now we examine the third reason that the Petitioner has not claimed the deduction in the Schedule 10AA of the return and instead claimed by way of a manual computation filed at the time of assessment. We note that the Petitioner has in fact claimed the deduction in its return in "33. Any other Amount allowable as Deduction" while computing the Profits and Gains of Business and Profession. Further, the said claim was also explained during the course of original assessment vide Item 9 of letter dated 20.06.2019 filed on 21.06.2019 and vide Item 7 of letter dated 25.10.2019 filed on 04.11.2019. Further, the Petitioner ....
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....0AA without setting off the loss of the ineligible unit. As a result the entire loss of the ineligible unit got set off against the PGBP of the eligible unit. The net losses of the ineligible unit which were to be carried forward was thus brought down to 'Nil'. 5. The Petitioner filed an application before the jurisdictional Assessing Officer ('AO') on 3rd August, 2018 pointing out to the above discrepancy in the online filing of Form ITR-6. The Petitioner enclosed a hard copy of the income tax return and requested that it be acted upon so that the carry forward of the losses of the ineligible unit would not be denied to the Petitioner. This was followed by a representation on 15th November, 2018 to the Central Board of Direct Taxes ('CBDT') invoking its jurisdiction under Section 119(2) of the Act. The Petitioner pointed out that it is facing genuine hardship due to being unable to carry forward the losses of the ineligible unit. This was followed by reminders on 21st January, 13th February, and 25th March, 2019. Thereafter, the present petition was filed." After noting these facts, it was held that the Petitioner should be allowed to claim deduction by way of a manual....
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....s stand. The non-rejection of the explanation in the Assessment Order would amount to the Assessing Officer accepting the view of the assessee, thus taking a view/forming an opinion. Therefore, in these circumstances, the reasons in support of the impugned notice proceed on a mere change of opinion and therefore would be completely without jurisdiction in the present facts. Accordingly, the impugned notice dated 27th March 2019 is quashed and set aside." 17. This judgement of this Court in Marico was upheld by the Hon'ble Supreme Court SLP (C) Diary No. 7367 of 2020 holding as follows: "According to the record, certain queries were raised by the Assessing Officer on 25.09.2017 during the assessment proceedings which were responded to by the Assessee vide letters dated 10.10.2017 and 21.12.2017. After considering said responses, the assessment order was passed on 30.01.2018. Subsequently, by notice dated 27.03.2019 issued under Section 148 of the Income-Tax Act, the matter was sought to be re-opened. While accepting the challenge to the issuance of notice, the High Court in para 12 of its judgment observed as under: "12. Thus we find that the r....
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....noted above, the claim of deduction under Section 10AA of the Act was made in the original Return of Income albeit under the head of any other amount allowable as deduction. Therefore, the said judgement is not applicable in the facts of the present case. We also note that the issue before us is not in respect of a fresh claim made without filing revised return but the issue is whether the reopening of the assessment by the Assessing Officer was valid. 20. Further, from the judgement in the case of Export Credit Guarantee (supra) relied on by the Learned Counsel for the Revenue we note that first of all the said judgement is rendered in a different set of facts. In the said case, there is a categorical finding that in respect of the five issues on which the reassessment was reopened, there was no query raised by the Assessing Officer in the original assessment proceedings. However, in the present case, as noted above, the Assessing Officer not just raised the query during the original assessment but it was also duly answered and explained. It is the very submission made in the original assessment that is now being reviewed to initiate reassessment. The case of Export Credit Guar....
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.... (2013) 30 taxmann.com 211 (Bom) the Court held that it was a case where the notice under Section 148 had not been issued after the expiry of four years, but within four years and in these circumstances, it was necessary that there ought to have been a reason to believe that income chargeable to tax has escaped assessment and which alone would enable the Assessing Officer to assess or re-assess such income. It is in such context the Court observed that the Court did not agree with the reasoning of the Assessing Officer for the reason that the assessment order had taken into consideration all relevant documents and that there was "no new tangible material". The relevant observations of the Court are required to be noted which read thus:- ... 19. The facts reveal and we are satisfied that in the present case, the order of reopening of the assessment will not be justified. The decision to reopen assessment is not based on proper reasons but obviously is a result of change of opinion. This is impermissible. In the case of ECGC, there was specific finding that there existed tangible material and reason to reopen the assessment and that was evident from the record in th....