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Issues involved: Reopening of assessment u/s 147 of the Income Tax Act, 1961 based on incorrect computation of deductions u/s 10A and 10B, failure to disclose material facts, potential tax implications.
Reopening based on incorrect computation of deductions: The Assessing Officer reopened the assessment u/s 147 due to the incorrect computation of deductions u/s 10A and 10B. The reasons for reopening highlighted that the assessee had claimed excess exemption u/s 10B, resulting in over assessment of loss and potential tax implications. The petitioner argued that the Assessing Officer erred in treating it as an exemption under Section 10B instead of a deduction. The respondent contended that the terminology used did not alter the essence of the order. Failure to disclose material facts: The petitioner contended that there was no failure on their part to disclose material facts necessary for assessment. They argued that unit-wise profitability and deduction computations were duly filed with the return of income, indicating full and true disclosure. However, the Assessing Officer, in a brief manner, rejected this argument stating that incorrect computation u/s 10B constituted a failure to disclose material facts. The court directed the Assessing Officer to provide the petitioner with an opportunity to establish the lack of fault and failure in disclosure, emphasizing the need for a reasoned order. Overall Judgment: The High Court allowed the writ petition in part, setting aside the order of the Assessing Officer and directing a fresh consideration of the matter as per law. The court granted the petitioner the opportunity to present detailed objections and instructed the Assessing Officer to issue a fresh notice for a hearing within six weeks. The period during the pendency of the writ petition and the subsequent proceedings was excluded from the limitation period calculation. No costs were awarded in this matter.
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