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Issues involved: Impugning the validity of a notice dated 28 March 2007 for reopening an assessment for Assessment Year 200001 under Section 148 of the Income Tax Act, 1961.
Summary: The petition challenged the validity of a notice dated 28 March 2007 seeking to reopen an assessment for Assessment Year 200001 under Section 148 of the Income Tax Act, 1961. The grounds for reopening the assessment were related to the denial of deduction u/s. 80IA during scrutiny proceedings for A.Y. 200405. The assessment was completed u/s. 143(1), but the deduction claimed by the assessee was turned down. The petition was admitted by a Division Bench, and an interim order restrained the Revenue from further proceedings based on the notice. The basis for reopening the assessment for A.Y. 200001 was the denial of Section 80IA benefit to the assessee during scrutiny for A.Y. 200405. However, the Income Tax Appellate Tribunal ruled in favor of the assessee for A.Y. 200405, confirming that the assessee was engaged in manufacturing activity of producing Perfumed Hair Oil. The Tribunal's decision was upheld by a Division Bench, which observed that the activity of producing perfumed hair oil constituted manufacturing activity, allowing the assessee to avail deduction under Section 80IB. This decision rendered the basis for reopening the assessment invalid, as the proceedings for A.Y. 200405 had already concluded. In conclusion, the Court made the Rule absolute by quashing the notice under Section 148 dated 28 March 2007, citing that the basis for reopening the assessment could no longer stand following the Division Bench's decision in the case of the assessee. No costs were awarded in this matter.
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