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TMI Blog2015 (9) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O. and the ld. CIT(A). That aspect of the matter is, however, not really relevant because once we come to the conclusion that order of the A.O. stood merged in the order of the ld. CIT(A) on the issue of deduction under section 80IA and 80HHC of the Act, as we are obliged to hold in the light of law laid down by Hon’ble jurisdictional High Court, these aspect of the matter are wholly academic. - Decided in favour of assessee. - ITA No.1199/Ahd/2006, ITA No.1279/Ahd/2006, ITA No.1200/Ahd/2006, ITA No.1280/Ahd/2006 - - - Dated:- 21-8-2015 - Pramod Kumar and Kul Bharat, JJ. For The Assessee : S.N. Soparkar For The Revenue : Shankar Lal Meena ORDER Per Pramod Kumar AM: ITA No.1199 and 1279/Ahd/2006 Assessment Year: 2000-01 These two cross appeals are directed against the two separate orders, both dated 28th February, 2006, passed by the learned CIT(A) in the matter of assessment under section 143(3) read with section 147 of the Income Tax Act, 1961 ( the Act hereinafter), for the Assessment Years 2000-01 2001-02. 2. Learned counsel for the assessee submits that one of the issues raised in the assessee s appeals is assessee s grievance aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the assessee has submitted voluminous details along with the return of income which are not at all required to be filed along with the return of income. What is required is the Tax Audit Report, Profit and Loss Account and Balance Sheet, Other Statutory Reports pertaining to deductions u/s. 80HHC and 80IA, Computation of Income, Proof of payment of Advance Tax and TDS Certificates. The various details submitted by the assessee are very confusing and complicate the matter pertaining to the assessment. The details filed by the assessee are such as filing of which are necessitated with the object to create confusion in the matter and frustrate quick understanding. The assessee has furnished the branches details. The statements furnished are not straight forward e.g. please refer to the profit calculation sheet/statement u/s. 80-IA (copy enclosed) for a period of April, 1999 to March, 2000. Though the name of the statement is profit calculation u/s 80-IA, but I do not find anywhere figure of the profit which has been determined for the purpose of 80-IA. Thus, the assessee has deliberately presented the facts in such a manner so that it is not understood by the Tax Authority easi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sa Unit. The assessee has claimed weighted deduction u/s.35(1) of ₹ 23,04,83,379/- in the computation of income. Hence, as per the order of CIT(A) in the case of the assessee, 10% of ₹ 23,04,83,379/- amounting to ₹ 2,30,48,338/- should have been allocated as expense to the Silvasa Units on the basis of turnover. The turnover of Silvasa I Unit and Silvasa II Unit is in the ratio of 58.6% and 41.4%. Hence, the allocation of 10% of weighted deduction u/s. 35(1) between the two units should be ₹ 1,35,06,326/- and ₹ 95,42,012/- respectively. However, the assessee has allocated ₹ 18,72,973/- and ₹ 13,20,088/- only in the two units respectively. Hence, the correct working of 80IA deduction of the two units is as under :- Silvasa I Unit Net Profit s calculated by the assessee Rs.28,51,48,292/- Add: R D Exp. allocated by the assessee ₹ 18,72,973/- Rs.28,70,21,265/- Less: R D Expenses actually allocable ₹ 1,35,06,326/- Profit of Silvasa I Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the export of ₹ 35.46 lacs from the Silvasa I Unit, which is not correct as per the provisions of section 80AB. b) While working out the deduction u/s. 80HHC of the Act, the assessee has taken the total profit of the business at ₹ 71,40,20,133/-. However, it is seen that this figure has been wrongly taken by the assessee because in the relevant assessment year, the assessee has amalgamated Gujarat Lyka Organics Ltd. which had unabsorbed depreciation loss of ₹ 5,39,51,466/-. As per the provisions of Section 32, any unabsorbed depreciation becomes the part of the current depreciation and the same has to be allowed u/s.32. Therefore, for working out the profits of the business as per explanation baa to section 80HHC, the profit of the business has to be worked out after reducing the unabsorbed depreciation of ₹ 5,39,51,466/- of M/s. Gujarat Lyka Organics Ltd. This will substantially reduce the deduction u/s. 80HHC. The assessee has claimed that it has two business viz; pharmaceutical and finance. The assessee has set off interest payment against the gross interest receipt. This netting off is not proper. The details of interest paid clearly indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objections to the reassessment proceedings vide letter dated 25.05.2004, which were considered but not accepted by the Assessing Officer, vide his note dated 16.11.2004. The relevant part of the said note reads as under : The assessee has objected to the issue of notice u/s.148 on the grounds that the allegation is merely a change of opinion on exiting facts, which were fully within the knowledge of the Assessing Officer. This is not correct because the issue of inflating the deduction u/s.80IA, incorrect allocation of R D expenses to the Units claiming deduction us/. 80IA and wrong claim of deduction u/s.80HHC was never examined by the Assessing Officer in light of the facts narrated in the Reasons recorded for issue of notice u/s. 148 of the Act. So, there is not change of opinion by the A.O. but correct appreciation of facts in the case of the assessee. Hence, the Board s Circular cited by the assessee is not applicable here. In view of the foregoing facts and reasons, I hold that the assessment has been rightly reopened u/s. 147 r.w.s. 148 of the Act. It is to be mentioned that the decisions have been cited mechanically without pointing out which decisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t caused by either an erroneous construction of the transaction or due to its non-consideration, or, caused by a mistake of law applicable to such transfer or transaction even where there has been a complete disclosure of all relevant facts upon which a correct assessment could have been based. In case where the A.O. had over-looked something at the first assessment, there can be no question of any change of opinion, when the income which was chargeable to tax is actually taxed as it ought to have been under the law, but was not, due to an error committed t the first assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to believe that such income had escaped assessment. The words reason to believe cannot mean that the Assessing Officer should have finally ascertained the facts by legal evidence. Unless the ground or the material on which his belief is based, is found to be so irrational as not to be worth of being called a reason by any honest man, his conclusion that it constitutes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v/s. CIT (Deputy) (Assessment) (No.1) [1996] 222 ITR 27 (Guj) Garden Silk Mills Ltd. v/s. CIT (Deputy) (No.2) [1996] 222 ITR 68 (Guj) Humboldt Wedag India Ltd v/s. CIT (Asst.) [1999] 236 ITR 845 (Cal.) [1996] 220 ITR 194 (Guj) Madan Mohan Lal v/s. CIT [1935] 3 ITR 438 (Lahore) [FB] Special Civil Applications Nos.4201 and 4203 of 1996. In view of the above, the cases of non-assessment of an item of income chargeable to tax would warrant formation of requisite belief to initiate the proceedings within four years from the end of the relevant assessment year, even where full disclosure were made and yet an income chargeable to tax had escaped from being included in the final assessment order, in which taxable income was worked out. In such cases, the A.O. has in fact, a duty to exercise his jurisdiction under the main section 147. The present proceedings since, initiated within four year from the end of relevant assessment year, are held to be valid. The action of the A.O. is justified. This ground of appeal is thus rejected. 9. The assessee is not satisfied by the stand so taken by the learned CIT(A) and is in further appeal before us. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 by the Revenue. 16. Learned Representatives fairly agree that whatever we decide in Cross Appeals for the assessment year 2000-01 in assessee s own case (i.e. 1199/Ahd/2006 ITA No.1279/Ahd/2006) which were heard along with these appeals, will apply mutatis mutandis to these cross appeals as well. It was also fairly accepted that all the material facts of the case, barring the dates of order and amounts, are exactly the same. 17. Vide paragraph nos. 11 to 14 above, upholding the grievance of the assessee, we have observed as follows: - 11. We find that in the course of the original assessment proceedings the claim for deductions under section 80HHC and 80IA of the Act were discussed in length and on those issue the matter was carried in appeal before the ld. CIT(A) who had partly allowed the appeal. On these facts, in the light of the law laid down by Hon ble jurisdictional High Court in the case of United Phosphorus Limited vs. ACIT [(2011) 56 DTR 193 (Guj)], the order of the A.O. stood merged with the order of the CIT(A) and had no existence of it s own, and, as such, assessment could not be reopened in respect of the said item. For this short reason alone, the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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