9911796707
TMI Blog2008 (1) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... e clearly emerging from within the assessment records. He argued that, no new facts are necessary for adjudication of this issue and this additional ground goes to the very root of the matter. He briefly stated the facts, that the original return of income was filed by the assessee on 31st Oct., 1991 and the assessment was completed under s. 143(3) by the AO vide his order dt. 7th Feb., 1994. The assessment was subsequently reopened by issuance of notice under s. 148 of the Act dt. 9th March, 1998. The assessee vide its letter dt. 31st March, 1998 objected to the reopening of the assessment. He argued that this reopening was done only to add the export price variation reserve on the following counts: Value of difference of import to be done for Export already performed (profit) Rs. 2,32,412 Value of imported material used in local manufacture for which export is to be made (loss) Rs. 9,66,000 ------------ Net difference: Rs. 7,33,368 ------------ 4. The learned counsel of the assessee referred to the show-cause no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iligence have been discovered by the AO will not necessarily amount to disclosure within the meaning of proviso to s. 147 of the Act. He argued against the admission of additional ground. 7. We have heard the rival contentions, gone through the relevant documents. facts and circumstances of the case. As regards to the admissibility of additional ground, it is seen that, this is issue is purely a legal issue as regards to assumption of jurisdiction under s. 147 of the Act. The reassessment proceedings started by the AO goes to the very root of the appeal and all the material facts for deciding the issue are available on record and nothing new is to be brought on record for adjudicating this issue. In the similar circumstances Hon'ble Gujarat High Court in the case of P. V. Doshi vs. CIT (I978) 113 ITR 22 (Guj) at p. 36 has held as under: "Therefore, if this settled position was borne in mind, the Tribunal's view was clearly erroneous that the matter became final when the Tribunal passed the earlier remand order so that this point of jurisdiction got finally settled, which could not be agitated unless the assessee had come in the reference to this Court at that stage. The Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. Answering this question the Hon'ble apex Court held as under: "The view that the Tribunal is confined only to issues arising out of the appeal before the CIT(A) takes too narrow a view of the powers of the Tribunal vide e.g., CIT vs. Anand Prasad (1981) 128 ITR 388 (Del), CIT vs. Karamchand Premchand (P) Ltd. (1969) 74 ITR 254 (Guj) and CIT vs. Cellulose Products of India Ltd. (1985) 44 CTR (Guj)(FB) 278 : (1985) 151 ITR 499 (Guj)(FB). Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. The reframed question, therefore, is answered in the affirmative, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to urge grounds not set forth in the memorandum of appeal, and in deciding the appeal the Tribunal is not restricted to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal. The Tribunal was, therefore, competent to allow the assessees to raise the contention relating to the cash credits which was not made the subject-matter of a ground in the memorandum of appeal. It cannot be said that in accepting the contention of the assessee that the cash credits represented income from the business withheld from the books, the Tribunal made out a new case inconsistent with the assessee's own plea. In any event the Tribunal is not precluded from adjusting the tax liability of the assessee in the light of its findings merely because the findings are inconsistent with the case pleaded by the assessees." In view of the above case laws of Hon'ble apex Court and Hon'ble Gujarat High Court, we admit the additional ground and adjudicate the same. 10. The briefly stated facts leading to this issue are, that the original return of income was filed by the assessee, on 31st Oct., 1991 and the assessment was completed under s. 143(3) by the AO vide his order dt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withdrawal of the deduction of Rs. 7,33,388 already allowed would be a change of opinion and it is submitted that any disallowance would be without foundation and bad in law." 12. Further, it is seen that during the course of original assessment proceedings, assessee vide letter dt. 9th Dec., 1993, has filed complete details before the AO, when during the course of hearing certain information/clarification were called for. In response to query, the assessee filed complete details vide letter dt. 9th Dec., 1993, para 2 and the relevant para is reproduced for the sake of clarity: "The import policy of the Government of India has a provision for issue of advance licences for import of raw material against an obligation by the exporting manufacturer to export out of the country the specified goods. Similarly an exporter is entitled to import raw material in respect of good exported and in respect of which advance licence has not been taken. The international prices of raw material and the Indian prices of the same material vary considerably. the imported material being cheaper than the indigenous material. The same is the position as regards the prices of finished goods which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -------------------------- Net Difference 7,33,388" ----------------------------------------------------------------- 13. In view of the above information, we have to examine whether the assessee's case falls under proviso to s. 147 or Explanation to s. 147 of the Act? First of all, we will go through the show-cause notice issued in respect of reopening of assessment dt. 16th March, 1998, where the AO has very categorically come to the conclusion, on going through the records for the asst. yr. 1991-92 and from the assessment order under s. 143(3) dt. 7th Feb., 1994, that the AO has wrongly allowed deduction of Rs. 7,33,388 on account of provision for price variation in raw materials for export. It means that the AO has considered this aspect of deduction of price variation for foreign exchange of raw material for export at the stage of original assessment which is apparently clear from the reply of the assessee dt. 9th Dec., 1993. Provision of Expln. 1 to s. 147 of the Act is very clear and for the sake of clarity the same are reproduced as under: "Production before the AO of account books or other evidence from which material eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be disputed that discovery of new and important matter or knowledge of fresh facts which were not present at the time of original assessment would constitute a 'reason to believe that any income chargeable to tax has escaped assessment' within the meaning of even s. 147 (operative from 1st April, 1989). Here also such facts which could have been discovered by the AO but were not so discovered at the time of original assessment may not constitute a new information. In that view of the matter, where the AO has formed the opinion that the income has escaped assessment because he has allowed the deduction under s. 80-I wrongly and even though in recording the reasons the AO has used the phrase 'reason to believe', between the date of the original order of assessment sought to be reopened and the date of forming of opinion by the AO, nothing new has happened. There is no change of law. No new material has come on record. No information has been received. In such circumstances, it can be said that it is merely a fresh application of mind by the same AO to the same set of facts. What the AO has said about the order of the first appellate authority while recording reasons under s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reassessment proceedings upon his mere change of opinion and that also beyond 4 years. In the present case, the assessee vide letter dt. 9th March, 1993, replied to the query of AO, whereby it was narrated as per import policy of Government of India there is a provision for issue of advance licences for import of raw material against the obligation by the exporting manufacturer to export out of the country the specified goods and he narrated the details of pricing of local and foreign market whereby the difference arises at Rs. 7,33,388. Even the AO in his show-cause notice dt. 16th March, 1998 has admitted that the deduction of Rs. 7,33,388 on account of provision for price variation in raw material for export was wrongly allowed by him. It means that the AO while framing original assessment under s. 143(3) of the Act has gone into the details of price variation in raw material of export and allowed the claim of assessee. It has disclosed all material facts for its assessment for this assessment year and there is no failure on the part of the assessee to disclose truly and fully all material facts necessary for its assessment. In view of these facts, where the AO has formed an o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
