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TMI Blog2013 (12) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... fore reasons recorded do not allow him to reopen the completed assessment under Section 143(3), beyond the period of four years in view of the proviso to Section 147 – Decided against Revenue. - ITA No. 1468/Mum./2012 - - - Dated:- 22-3-2013 - Shri B. Ramakotaiah And Shri Amit Shukla,JJ. For the Petitioner : Mr. Rajarshi Dwivedy For the Respondent : Mr. I. P. Rathi ORDER Per Amit Shukla, J.M. This appeal has been preferred by the revenue, against order dated 05.12.2011, passed by the CIT (Appeals)-32, Mumbai, for the quantum of assessment passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 (for short "the Act") for the assessment year 2003-04 mainly on following grounds of appeal :- "On the facts and circumstances of the case and in law, the Ld CIT(A) has erred in quashing the assessment proceedings reopened under Section 147 of the Income Tax Act, 1961". On the facts and circumstances of the case and in law, the "CIT(A) has failed to appreciate that the case was squarely covered by the decision of the Delhi High Court in the case of Bawa Abhai Singh v/s DCIT (201) 117 TAXMAN 12 to the effect that the power to reopen assessment is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts) Act, 2005 the income received as per section 28(iiic) and 28(iiid) of the Act are eligible for deduction u/s 80HHC. The income described u/s 28(iiic) is any duty of Custom's or Excise repaid or repayable as drawback to any person against exports under the Custom and Central Excise Duty Drawback Rule, 1971. On verification of the scrutiny assessment records it is revealed that in the assessment order dated 28.02.2006 read with section 154 dated 13.03.2006, a deduction u/s 80HHC amounting to Rs. 12,67,441/- was allowed to the assessee. It is seen from the working of the deduction that the adjusted profit or manufacturing exports was (-) 49,60,849 and therefore the deduction mainly related to export incentives vis. DEPB and Deemed Credit of Excise. As per para 3 of Notification no. 6/2002, CE(NT) dated 01.03.2002, General Exemption no. 63, issued by the Government of India, deemed Excise Credit, is not covered under the Customs and Central Excise Duties (Drawback) Rules, 1955 or Rule 18 of the Central Excise Rules 2002. Thus, the income of deemed credit of excise is not covered u/s 28(iiic) of the I T Act and therefore not eligible for computing deduction u/s 80HHC. If the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the provisions of section 147 read with first proviso the assessing officer is not empowered to issue notice u/s 148 under the situation as explained above. The assessment was reopened and notice u/s 148 dated 29.03.2010 issued after four years from the end of the relevant assessment year. And there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment which have resulted into the under assessment of income. Under these circumstances where : a) more that four year has passed from the relevant assessment year and b) where the original assessment was completed u/s 143(3), and c) any income chargeable to tax has escaped assessment not for any failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment or failure to file the return of income. The action of reopening the assessment u/s 147 of the Income Tax Act is illegal, bad in law and void ab initio. Your assessee's case falls squarely with the first proviso to section 147 and the proceedings are barred by limitation. Hence the reassessment proceedings initiated u/s 147 and assessment completed u/s 143(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate order is reproduced herein below :- 3.3 I have considered the above arguments of the Ld AR and perused the original assessment order u/s 143(3) as well as the order passed u/s 147. It is noted that though the assessee had specifically raised the issue of invalidity of notice u/s 148 after expiry of 4 years on grounds that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The AO has just not dealt this objection of assessee in the assessment order passed u/s 147. he has not at all mentioned whether there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment or not. I have gone through the reasons recorded by the AO wherein also there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. In fact in para 9 of the assessment order u/s 147, the AO has himself mentioned that in response to rectification application of assessee, the correct figure of DEPB and Excise credit were adopted at Rs. 98,12,527/- as against the figures of Rs. 88,31,275/- and accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titute a receipt u/s 28(iiic). The apex court in case of Kelvinator of India 320 ITR 561 (SC) has also held that the reopening on mere change of opinion is not valid. Hence the reopening of asstt is also not valid on the ground that it amounts to mere change of opinion. 3.4 In view of the above factual position and the decision of the jurisdictional high court, the reopening of assessment after 4 years without pointing failure on part of the assessee is, not a valid reopening as per law and hence the assessment framed in pursuance to an invalid proceedings initiated u/s 174 are quashed. 9. Besides quashing the assessment on legal grounds, he has dealt the issue on merits also and held that the view taken by the Assessing Officer that deemed excise credit is not part of export profits is not tenable. His finding has been recorded in para 4.2 of his order, which has not been challenged by the department. This inter alia can also mean that the grounds challenged before us purely on legal issues, has become purely academic as the department has not challenged the deletion of addition on merits. However, we still feel that it would be appropriate to deal with the issues and grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147, after the expiry of four year from the end of the assessment year, unless twin conditions are fulfilled, firstly, an income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to make return under Section 139 or in response to notice under Section 142(1) or under Section 148 and secondly, there is failure on part of the assessee to disclose fully and truly all material facts necessary for the assessment. In the present case it is an undisputed fact that assessee has filed its return of income under Section 139(1) on 01.12.2003, therefore, the first condition does not fulfill in the assessee's case. The second condition, whether there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment or not, can be examine from the perusal of the 'reasons recorded'. From the plain reading of the same it would be seen that nowhere, the Assessing Officer has held or ascribed any failure on the part of the assessee to disclose all the necessary material facts. From the 'reasons recorded', it is gathered that the Assessing Officer is withdrawing the deduction under Section 80HHC which was ear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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