2018 (4) TMI 194 - HC - Income Tax

Reopening of assessment - excessive grant of deduction u/s 10B - Held that - Petitioner was asked to submit Form 56G, i.e., claim for deduction under Section 10B duly certified by Chartered Accountant. The same was submitted and it records profits on account of foreign exchange gain is ₹ 2.97 Crores. Besides, by communication dated 5.10.2012, the Petitioner was asked during the regular assessment proceedings to submit necessary documents in evidence in support of deduction claim under Section 10B of the Act. The Petitioner placed reliance on Form 56G, which discloses all particulars in support of its claim under Section 10B of the Act. Thus, prima-facie, there has been full disclosure of all material facts in relation to foreign exchange gain. Further, in view of the queries during regular assessment proceedings was taken into account while allowing the claim for deduction under Section 10B of the Act in respect of its Export Oriented Unit. Thus, impugned notice prima-facie appears to be without jurisdiction. - Decided in favour of assessee.

Summary

Issues:
Challenge to notice seeking to reopen assessment for Assessment Year 2010-11 under Section 148 of the Act.

Analysis:
The petition challenges a notice issued under Section 148 of the Act to reopen the assessment for the Assessment Year 2010-11. The regular assessment for this year was completed on 18.3.2014 under Section 143(3) of the Act. The impugned notice is beyond the 4-year period from the end of the relevant Assessment Year. For the reopening notice to be sustainable, it must meet the requirements of the first proviso to Section 147 of the Act, which necessitates a failure to fully and truly disclose all material facts necessary for assessment. The reasons recorded in support of the notice do not specifically mention any particular fact that was not disclosed during the regular assessment proceedings. The mere mention of 'failure of the assessee to disclose truly and fully material facts' without specific facts being stated does not meet the requirement of failure to disclose all material facts by the Petitioner.

The reasons for the impugned notice are based on the excessive grant of deduction under Section 10B of the Act during the regular assessment proceedings. The notional foreign exchange gain was considered while determining profits under Section 10B for the Export Oriented Unit. The Petitioner submitted Form 56G, certified by a Chartered Accountant, during the regular assessment proceedings, which recorded profits from foreign exchange gain. Additionally, the Petitioner was asked to submit necessary documents in support of the deduction claim under Section 10B, and reliance was placed on Form 56G, which disclosed all relevant particulars. The queries during the regular assessment proceedings were considered while allowing the deduction claim under Section 10B for the Export Oriented Unit. Therefore, there appears to have been full disclosure of all material facts regarding the foreign exchange gain, making the impugned notice prima facie without jurisdiction.

Consequently, an interim stay has been granted in terms of the prayer clause. The learned counsel for the Revenue waived service.