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2012 (9) TMI 148 - AT - Income TaxRe-invocation of Section 147 - AO had made assessment u/s 147 - Later on AO observed that he compute income by giving deduction under 80HHC but without deducting profit from undertaking claiming deduction u/s 80IA - AO again invoked the provision of u/s 147 and issue notice u/s 148 - Held that - Assessee has disclosed all the material and relevant particulars, in respect of claim u/s 80IA and 80HHC of the Act - AO has invoked the provisions of Section 147 read with proviso thereunder on the basis of mere change in opinion and without bringing any tangible material for the formation of record. Therefore AO not complied with the statutory conditions contained in the provision of the section 147. Decision in favor of Assessee.
Issues Involved:
1. Validity of proceedings initiated under Section 148 of the Income-tax Act, 1961. 2. Deduction under Section 80HHC after reducing the claim of deduction under Section 80IA. Issue-wise Detailed Analysis: 1. Validity of Proceedings Initiated Under Section 148: The assessee challenged the validity of the proceedings initiated under Section 148, arguing that it was based on a change of opinion without any new information. The original return was filed on 31.10.2002 and processed under Section 143(1). The AO later invoked Section 147 and issued a notice under Section 148 on 21.06.2004, leading to a reassessment. The assessee contended that the AO's actions were not justified as they were based on a mere change of opinion without tangible material, referencing decisions such as CIT V Kelvinator of India Ltd. (2010) 320 ITR 561 (S.C) and CIT V Bear Shoes (India) (P) Ltd. (2010) 45 DTR 181 (Mad). The Tribunal found that the assessee had disclosed all material facts and that the AO's invocation of Section 147 did not meet the statutory conditions required under the proviso to Section 147. The Tribunal emphasized that the AO must have tangible material to justify the reopening of an assessment and cannot do so based on a mere change of opinion. The Tribunal concluded that the AO's actions were not justified, and the reassessment proceedings were invalid. 2. Deduction Under Section 80HHC After Reducing the Claim of Deduction Under Section 80IA: The assessee argued that the deduction under Section 80HHC should not be reduced by the amount of deduction allowed under Section 80IA. The AO had disallowed the excess deduction claimed under Section 80HHC without reducing the deduction allowed under Section 80IA, resulting in a reassessment and additional tax liability. The Tribunal noted that the issue was covered against the assessee by the jurisdictional High Court's decision in Friends Casting (P) Ltd. V CIT (2012) 340 ITR 305 (P&H). The Tribunal upheld the AO's action of reducing the deduction under Section 80HHC by the amount of deduction allowed under Section 80IA, aligning with the precedent set by the jurisdictional High Court. Conclusion: The Tribunal allowed the appeal of the assessee on the first issue, declaring the reassessment proceedings under Section 148 invalid due to the lack of new tangible material and the improper invocation of Section 147. However, on the second issue, the Tribunal upheld the AO's action of reducing the deduction under Section 80HHC by the amount of deduction allowed under Section 80IA, in line with the jurisdictional High Court's decision. Order Pronouncement: The appeal of the assessee was allowed, and the order was pronounced in the open court on 21st June 2012.
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