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2020 (10) TMI 1156 - HC - Income TaxReopening of assessment u/s 147 - Notice issue beyond periods of four years or not - claim of deduction under Section 80IA - HELD THAT - Tribunal, in a cryptic and cavalier manner, has found that during the course of survey u/s 133A no material was found and the reopening of the assessment is not valid in law. It is pertinent to mention here that it was admitted on behalf of the assessee in the statements recorded u/s 131 that the unit at Tumkur was an old unit and the claim of deduction under Section 80IA of the Act was not correct and the assessee itself had withdrawn the claim under Section 80IA of the Act for the Assessment Year 2001- 02. In the proceedings under Section 148 of the Act also, the assessee had filed the return stating that the return filed on 23.02.2004 should be treated as response to the notice under Section 148 of the Act and the assessee had filed revised return withdrawing the claim under Section 80IA of the Act in respect of Tribunal erred in holding that the reopening of the assessment under Section 147 of the Act was beyond 4 years and was barred by limitation. - Decided in favour of the revenue.
Issues involved:
1. Validity of reopening assessment under Section 147 of the Income Tax Act, 1961 beyond the limitation period. 2. Consideration of material detected during a survey for deduction under Section 80IA of the Act. 3. Entitlement of the assessee to claim deduction under Section 80IA of the Act for an old unit manufacturing electrical cables. Issue 1: Validity of reopening assessment under Section 147: The appeal pertained to the Assessment Year 1998-99, where the revenue challenged the correctness of the Appellate Authorities' decision regarding the reopening of assessment under Section 147 of the Act beyond the 4-year limitation period. The Tribunal had upheld the decision that the reopening was valid, based on fresh material and the assessee's failure to disclose all relevant facts. The Assessing Officer's satisfaction for reopening was based on the assessee's withdrawal of the claim under Section 80IA of the Act after a survey revealed discrepancies. The Tribunal's finding that no material was found during the survey was deemed incorrect, as statements recorded under Section 131 confirmed the unit was old and the claim was incorrect. The Court held that the Tribunal erred in finding the reopening beyond the limitation period and ruled in favor of the revenue. Issue 2: Consideration of material for deduction under Section 80IA: The case involved a survey conducted at the Tumkur unit during the Assessment Year 2001-02, revealing that the unit was not new as claimed for Section 80IA deduction. Statements by individuals confirmed this, leading to the assessee withdrawing the claim. The Assessing Officer subsequently issued a notice under Section 148A based on the survey findings, disallowing the deduction for the old unit. Despite the assessee's revised return withdrawing the claim for the relevant year, the Appellate Authorities had held the reopening invalid. The Court, however, found the reopening justified based on fresh material and the assessee's failure to disclose accurate information for assessment. Issue 3: Entitlement to claim deduction under Section 80IA for an old unit: The assessee, a company manufacturing ACSR conductors, claimed deduction under Section 80IA for the Tumkur unit. However, a survey revealed the unit was not new, leading to the withdrawal of the claim for the relevant year. The Assessing Officer disallowed the deduction, which was upheld by the Appellate Authorities. The Tribunal's decision in favor of the assessee was overturned by the Court, emphasizing the assessee's acceptance of ineligibility and the withdrawal of the claim as evidence of failure to disclose all material facts. The Court ruled in favor of the revenue, quashing the Tribunal's order. In conclusion, the High Court of Karnataka addressed the issues related to the validity of reopening assessments under Section 147, consideration of material for deduction under Section 80IA, and entitlement to claim such deduction for an old unit. The Court found in favor of the revenue, emphasizing the importance of disclosing all material facts accurately and timely to avoid discrepancies in assessment.
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