9911796707
TMI Blog2014 (12) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the assessee to disclose fully and truly all facts for assessment –thus, the impugned notices dated 25th January, 2006 and subsequent impugned orders dated 7th March, 2006 for Assessment Years 1998-99 and 1999-2000 are not sustainable – Decided in favour of assessee. - WRIT PETITION NO.762 OF 2006, WRIT PETITION NO.763 OF 2006 - - - Dated:- 17-9-2014 - M.S.SANKLECHA AND N.M.JAMDAR, JJ. For The Petitioner : Mr. Farrokh Irani with Mr. J. Dastur i/b. M/s. Hariani Co., For The Respondent : Mr. Arvind Pinto JUDGMENT M. S. Sanklecha, J. - These two Petitions under Article 226 of the Constitution of India, challenge: (a) two separate notices dated 25th January, 2006 issued under Section 148 of the Income Tax Act, 1961 (the Act), seeking to re-open the assessment for the Assessment Years 1998-99 and 1999-2000; and (b) two separate re-assessment orders passed on 7th March, 2006 by the Assessing Officer under Section 143(3) read with Section 147 of the Act for Assessment Years 1998-99 and 1999-2000 respectively. 2. Originally, the challenge in both the Petitions was the non-disposal of the Petitioner's objections to the reasons in support of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 1,66,19,692/- u/s. 80HHC(1) of the Act therein. The assessment records showed loss / negative profit at ₹ 47,75,729. The assessment has been completed u/s. 143/143(1) of the Act at ₹ 72,12,960/- allowing deduction of ₹ 1,64,26,974/- u/s.80HHC(1) of the Act. Thus, deduction u/s. 80HHC(1) of the Act has been claimed/allowed, contrary to the express provisions of the section, even in a situation where the assessee has suffered loss. 2. The Hon'ble Supreme Curt in the case of IPCA Laboratory Ltd. v. Deputy C.I.T. [2004] 266 ITR 521(S.C.) has categorically held that deduction u/s.80HHC(1) of the Act can be permitted only if there is positive profit in the exports of both self manufactured goods as well as trading goods. If there is loss in either of the two then the loss has to be taken into account for the purposes of computing the profits. If the net figure is positive profit then the assessee will be entitled to deduction; if the net figure is a loss then the assesee will not be entitled to deduction. 3. Further, jurisdictional High Court in the case of Rohan Dyes Intermediater Ltd. v. CIT [2004] 270 ITR 350(Bom.) has held that the meaning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o complete the re-assessment proceeding for Assessment Years 1998-99 and 1999-2000. In response, the Petitioner by its letter dated 24th February, 2006 sought time till 15th March, 2006 and the same was granted. In spite of having granted time, the Assessing Officer on 7 March 2006 passed the re-assessment orders for the Assessment Years 1998-99 and 1999-2000. The impugned reassessment orders dated 7th March, 2006 were both best judgment Assessment passed under Section 144 of the Act. 9. Mr. F. V. Irani, learned Counsel appearing for the Petitioner in support submits as under: (a) Both the impugned notices dated 25th January, 2005, seek to re-open assessment beyond a period of four years from the end of the relevant Assessment Years 1998-99 and 1999-2000. The jurisdictional requirement to issue a notice for re-assessment is failure on the part of the Petitioner to truly and fully disclose all material facts necessary for assessment. It is submitted that the grounds furnished to the Petitioner in support of the impugned notice nowhere indicates any failure on the part of the Petitioner to disclose truly and fully all material facts necessary for assessment. Thus, the notices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notices dated 25th January, 2005 as the earlier opinion was formed in the absence of the decision of the Supreme Court in IPCA Laboratory (supra). Therefore, it is submitted that the change in law warrants issuing of the impugned notices. 11. The contention of Mr. Pinto, learned Counsel appearing for the Respondent-Revenue that the Petitioner should be relegated to the alternative remedy of filing an appeal, as the assessment order has already been passed at the final hearing of both the petitions, without examining the challenge to jurisdiction of the Assessing Officer, is strange. These Petitions have been pending in this Court since 2006. Although, at the time of admitting the Petition, on 28th April, 2006, none appeared on behalf of the Revenue to oppose the admission, the Respondent-Revenue had filed its affidavit in reply on 25 April 2006, taking the same objection of alternative remedy and yet the Petition was admitted on 28th April, 2006. Thereafter, no application for vacating the order of admission or for early hearing of the Petitions was made by the Respondent-Revenue. They choose to await the Petitions reaching their turn for final hearing and now raise a plea of al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, yet where assessments are sought to be opened beyond a period of four years from the end of the relevant assessment year before a notice to reopen can be issued, the condition precedent must be satisfied i.e. failure on the part of the Petitioner to disclose fully and truly all material facts necessary for assessment. 14. This Court had occasion to consider an identical submission in Sesa Goa Ltd. v. CIT [2007] 294 ITR 101 to hold that a subsequent decision cannot justify re-opening of an assessment beyond a period of four years from the end of the relevant Assessment Year unless there is a failure to disclose fully and truly all facts necessary for Assessment. This is a jurisdictional requirement. Similarly in Voltas Ltd. v. Asstt. CIT [2012] 349 ITR 656 our Court has observed as under:- . . . While a subsequent decision of a court or a legislative amendment enforced after the order of assessment may legitimately give rise to an inference of an escapement of income, before the Assessing Officer proceeds to reopen an assessment after the expiry of four years of the end of the relevant assessment year, he must none the less apply his mind to the fundamental question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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