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2021 (2) TMI 217 - AT - Income TaxReopening of the assessment u/s 147 - Reopening beyond the period of four years from the end of the assessment year - excess claim of deduction u/s.80JJAA - HELD THAT - In a case where assessment was reopened after 4 years, for invoking proper jurisdiction, the AO has to record the reason to believe that any income chargeable to tax had escaped by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. In this case, on perusal of reasons recorded for reopening of assessment, we find that there is no allegation by the AO on failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Therefore, we are of the considered view that reopening of assessment is not based on sound footing and hence the impugned assessment order framed u/s.143(3) r.w.s. 147 of the Act, is illegal and liable to be quashed. Further, the issue is fully covered in favour of the assessee by the decision of ITAT, Chennai Benches in assessee s own case for assessment year 2008-09 where the Tribunal after considering relevant facts had held that reopening of assessment without satisfying second condition is invalid and liable to be quashed. Thus we quash notice issued u/s.148 of the Act and consequent assessment framed u/s.143(3) r.w.s.147 - Decided in favour of assessee.
Issues Involved:
1. Validity of reopening the assessment under Section 147 beyond four years. 2. Disallowance of deduction of additional wages paid to new workmen claimed under Section 80JJAA. Detailed Analysis: 1. Validity of Reopening the Assessment under Section 147 Beyond Four Years: The primary issue revolves around whether the reopening of the assessment under Section 147 of the Income Tax Act, 1961, beyond the period of four years from the end of the assessment year, was valid. The appellant argued that the reopening was invalid as the original assessment was completed under Section 143(3) and the reopening was beyond four years without any allegation of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the reopening, stating that the assessee failed to disclose fully and truly all material facts necessary for assessment. The CIT(A) cited several judicial precedents to support this view, including the cases of Indian Hume Pipe Co. Ltd., Manubhai Sons & Co., and Honda Siel Power Products Ltd., which emphasize that mere production of books of account or other evidence does not necessarily amount to full and true disclosure within the meaning of Section 147. However, the Income Tax Appellate Tribunal (ITAT) found that the Assessing Officer (AO) did not record any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The ITAT relied on its own decision in the assessee’s case for the assessment year 2008-09, where it was held that reopening without satisfying the condition of failure to disclose material facts was invalid. The ITAT concluded that the reopening of the assessment was not based on a sound footing and quashed the notice issued under Section 148 and the consequent assessment framed under Section 143(3) read with Section 147. 2. Disallowance of Deduction of Additional Wages Paid to New Workmen Claimed under Section 80JJAA: The second issue pertains to the disallowance of the deduction claimed by the assessee under Section 80JJAA for additional wages paid to new workmen. The AO disallowed the deduction on the grounds that the assessee claimed it for workmen who were employed for less than 300 days during the year, which is in contravention of the provisions of Section 80JJAA. The CIT(A) upheld the disallowance, relying on the decision of the ITAT, Chennai in the assessee’s own case for the assessment years 2010-11 and 2011-12, and the decision of the Delhi Tribunal in the case of LG Electronics India P. Ltd., which confirmed the disallowance under similar circumstances. However, since the ITAT quashed the reassessment proceedings initiated under Section 147, the issue of disallowance of the deduction under Section 80JJAA became academic. Consequently, the ITAT dismissed the ground taken by the assessee on merits as infructuous. Conclusion: The ITAT allowed the appeal filed by the assessee, quashing the notice issued under Section 148 and the consequent assessment framed under Section 143(3) read with Section 147. The issue of disallowance of the deduction under Section 80JJAA was dismissed as infructuous due to the quashing of the reassessment proceedings.
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