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2012 (11) TMI 1299 - AT - Income TaxDeduction for Employment of New Employees u/s 80JJAA - Reopening of Assessment u/s 147 - A revised return was filed by assessee company where claim of deduction u/s 80JJAA was made and was duly allowed by AO. Matter was reopened after 4 years where the assessee was informed that during the previous year regular workmen totaling 53 were employed by it and since the number of regular workmen employed during the previous year was less than 10% of the existing number of workmen, no deduction was allowable in respect of additional wages paid to regular workmen u/s 80JJAA. HELD THAT - Reopening after four years is legal if the assessee had not provided all material facts along with return of income and or during assessment proceedings. Assessee, through audit report had tried to mislead the department by showing number of new regular workmen at 53. Reopening of assessment u/s 147 allowed. Decision against assessee. Decision in the case of HONDA SIEL POWER PRODUCTS LIMITED VERSUS DEPUTY COMMISSIONER OF INCOME-TAX 2011 (2) TMI 1184 - DELHI HIGH COURT , relied upon
Issues Involved:
1. Reopening of assessment after four years. 2. Disallowance of deduction under Section 80JJAA of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Reopening of Assessment after Four Years: The appellant argued that the reopening of the assessment was "bad in law" as it was initiated after the expiry of four years from the relevant assessment year. They contended that all conditions laid down in the proviso to Section 147 for reopening the assessment were not applicable to their circumstances. The appellant asserted that there was a "full and true disclosure of all material facts" necessary for making the assessment, and the deduction under Section 80JJAA was disclosed along with the revised return. They relied on multiple judgments to support their claim that the reopening was unjustified, including Transworld International Inc. v. JCIT and Indian & Eastern Newspaper Society v. CIT. The Tribunal, however, upheld the reopening of the case under Section 147, noting that the Assessing Officer had initially allowed the deduction without raising any queries. The Tribunal emphasized that reopening after four years is permissible if the assessee had not fully and truly disclosed all material facts necessary for the assessment. The Tribunal pointed out that the audit report submitted by the assessee was not in the prescribed form and included an additional column that could potentially mislead the Department. Consequently, the Tribunal concluded that the assessee had not disclosed all material facts fully and truly, thus justifying the reopening of the assessment. 2. Disallowance of Deduction under Section 80JJAA: The appellant contended that the disallowance of the deduction amounting to Rs. 44,95,566 under Section 80JJAA was incorrect. They argued that the interpretation of the words "employed during the previous year" by the Assistant Commissioner was too narrow and did not align with the intention of the provisions of Section 80JJAA, which aimed to create employment opportunities throughout the year. The appellant maintained that the deduction should be allowed for workmen who completed 300 days of working, regardless of whether they were employed in the preceding financial year or the current one. The Tribunal, however, upheld the disallowance, stating that Section 80JJAA clearly specifies that the deduction is available only if the new workmen are employed for a period of 300 days in the previous year. The Tribunal noted that the definition of new workmen in the section, along with the explanation, does not include employees employed in the preceding year for eligibility under Section 80JJAA. The Tribunal found that the argument that employees employed in the preceding year who had not completed 300 days in that year should be considered in the current year was without merit. Consequently, the Tribunal saw no reason to interfere with the order of the CIT(A). Conclusion: The appeal filed by the assessee was dismissed, and the Tribunal upheld both the reopening of the assessment under Section 147 and the disallowance of the deduction under Section 80JJAA. The Tribunal emphasized the importance of full and true disclosure of all material facts for the assessment and the clear wording of Section 80JJAA regarding the eligibility criteria for the deduction.
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