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TMI Blog2015 (9) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... ven while disposing of the objections against reopening, the AO is not required to observe anything in detail on merits of the case and with respect to eligibility of the petitioner assessee regarding deduction / exemption under Section 10 A of the Act. When in the respective assessment years, there were intimation under Section 143(1) of the Act and as such there do not appear to be any application of mind while allowing deduction / exemption under Section 10 A of the Act and mechanically same has been allowed on the basis of claim allowed in the previous year i.e. 2006-07 which has been doubted by the revenue, but the assessment for AY 200607 could not be reopened in view of bar under Section 149 of the Act and after considering the material on record and AO has reason to believe that the income chargeable to tax has escaped assessment as the conditions mentioned in clause (II) & (III) of subsection (2) of Section 10 A of the Act have not been fulfilled and therefore, the petitioner assessee is / was not eligible for deduction/ exemption under Section 10 A of the Act and therefore, income chargeable to tax has escaped assessment, in the facts and circumstances of the case, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was entitled to exempt under Section 10 A of the Act in AY 200607. It is the case on behalf of the petitioner that thereafter AO by letter dated 18.08.2008 issued a notice under Section 142(1) of the Act on various points including details in respect of deduction claimed under Section 10 A of the Act and thereafter the AO accepted the computation of income at ₹ 3,89,982/post 10A deduction and added thereto the disallowance of expenditure of ₹ 79,604/and passed assessment order taxing income at ₹ 4,69,586/. 3.2. That thereafter with respect to subsequent AY i.e. AY 2006 to 2011 AO has mechanically allowed the exemption claimed under Section 10 A of the Act i.e. in the subsequent assessment years solely on the ground that exemption under Section 10 A of the Act was allowed in the earlier assessment year i.e. 200607. 3.3. That thereafter by impugned notices under Section 148 of the Act, assessment for AY 200708, 200809, 200910 and 201011 have been reopened in exercise of powers under Section 148 of the Act on the ground that as the assessee has not fulfilled condition laid down in clause (II) (III) of subsection (2) of Section 10A of the Act and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 and 201011 the AO had rightly allowed the exemption under Section 10 A of the Act in the subsequent years. It is submitted that therefore, with respect to subsequent years, it is not open for the AO to contend and / or allege that as the conditions nos. (II) (III) of subsection (2) of Section 10 A of the Act has not been complied with, the assessee is not entitled to exemption claimed under Section 10 A of the Act. It is submitted that the aforesaid is absolutely and wholly impermissible. It is further submitted that as such in the year 200607 i.e. in the first year, the assessee established the eligibility under Section 10 A of the Act and therefore, in the subsequent years such eligibility and / or exemption under Section 10 A of the Act cannot be denied and / or doubted. In support of his above submission, he has heavily relied upon the decision of the Division Bench of this Court in the case of Saurashtra Cement Chemical Industries Ltd vs. Commissioner of Income Tax, GujaratV reported in (1980) 123 ITR 669 (Guj) as well as decision of the Bombay High Court in the case of Commissioner of Income Tax vs. Paul Brothers reported in (1995) 216 ITR 548 (B0m) . He has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther submitted that as such while disposing of the objections, neither the AO has dealt with objections raised by the petitioner in detail nor has dealt with case on merits considering the decisions cited in the objections and even circular issued by the CBDT relied upon by the assessee. Making above submissions and relying upon the above decisions, it is requested to allow the present Special Civil Applications and quash and set aside the impugned notices under Section 148 of the Act. 5.0. All these petitions are opposed by Shri Sudhir Mehta, learned advocate for the revenue. It is vehemently submitted that impugned notices under Section 148 of the Act are absolutely just and proper and in consonance with the provisions of Section 147 of the Act. It is vehemently submitted that after having a reasonable belief and forming an opinion that the income chargeable to tax has escaped assessment, after recording of the reasons and considering the objections raised by the petitioner against reopening when the reassessment proceedings are initiated the same may not be interfered with at this stage in exercise of powers under Article 226 of the Constitution of India. 5.1. It is v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income Tax vs. Rajesh Jhaveri Stock Brokers (P) Ltd reported in 291 ITR 500 (SC). ( iv ) Inductotherm (India)(P) Ltd vs. M. Gopalan, Deputy Commissioner of Income Tax reported in 356 ITR 481 (Guj). (v) Commissioner of Income Tax vs. Ideal Garden Complex (P) Ltd reported in 340 ITR 609(Mad). (vi) Rhythm Chemicals (P) Ltd vs. Assistant Commissioner of Income Tax reported in 33 Taxman.Com 426 (Guj). (vii) Commissioner of Income Tax III vs. Kiranbhai Jamnadas Sheth (HUF) reported in 39 Taxman. Com 116 (Guj) . 5.4. Relying upon the above decisions, it is vehemently submitted that as the original assessment of the assessee, was accepted under Section 143(1) of the Act without any scrutiny, condition of income having escaped assessment due to failure on the part of assessee to disclose truly and fully all material facts, is not necessarily required to be established and revenue can reopen the assessment beyond four years under Section 147 of the Act. It is submitted that as held by this Court in the case of Rhythm Chemicals (P) Ltd (supra) and Kiranbhai Jamnadas Sheth (HUF) (supra) intimation under Section 143 cannot be treated as an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 10 A of th I.T. Act and the contention that in order to claim exemption u/s. 10 A of the Act the unit should be new and independent unit. The assessee has not complied with the condition laid down in clause (III) of subsection 2 of Section 10 A of the I.T. Act. It was inter alia observed during the course of assessment proceedings for the AY 201112 that the assessee has not fulfilled condition laid down in clause (II) (III) of subsection 2 of Section 10 A of the I.T. Act, 1961. It is noticed that during FY 200607 relevant to AY 200708, the assessee had claimed exemption u/s. 10A of the I.T. Act of ₹ 3,68,736/. On verification of the record, it is found that the asssessee has filed his Return of Income for AY 200708 on 11.10.2007 and claimed deduction U/s. 10 A of ₹ 3,68,736/, the assessee has not fulfilled condition laid down in clause (II) (III) of subsection 2 of Section 10 A of the I.T. Act, 1961. Assessed income of the assessee within the meaning of section 147 of the Act. I have, therefore, reasons to believe that income of ₹ 3,68,736/has escaped assessment within the meaning of Section 147 of the I.T Act. It is therefore, necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the case of Kiranbhai Jamnadas Sheth (HUF) (supra), the Division Bench of this Court has observed and held that in a case where original assessment of the assessee was accepted under Section 143(1) of the Act without any scrutiny, condition of income having escaped assessment due to failure on the part of assessee to disclose truly and fully all material facts, is not necessarily required to be established and revenue can reopen the assessment beyond four years under Section 147 of the Act even otherwise. 7.1. In the case of Rhythm Chemicals (P) Ltd (supra), the Division Bench of this Court has observed that since the intimation under Section 143 of the Act does not amount to assessment question of change of opinion does not arise and therefore, reopening of assessment based on sufficient material forming reason to believe that income had escaped assessment, is valid. In the aforesaid decision, the Division Bench has considered and followed the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd (supra. 7.2. As observed herein above, in respect to assessment years i.e. 200708, 200809, 200910 and 201011 there were only intima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the initial year of assessment is disturbed or changed on valid grounds. Under the circumstances, the said decision would not be applicable to the facts of the case on hand and / or would not be of any assistance to the petitioner assessee. 8.1. Now, so far as reliance placed upon the decision of this Court in the case of Gujarat Narmada Vally Fertilizers Co. Ltd (supra) which has been confirmed by the Hon'ble Supreme Court, by the learned advocate for the petitioner assessee is concerned, it is required to be noted that on facts it was found that addition which was sought to be made by the AO was not approved by the High Court previously and with respect to the very addition the AO issued the notices for reopening of assessment, the Division Bench held that the same is not permissible. Under the circumstances, even the said decision also will not be applicable to the facts of the case on hand and / or the same shall not be of any assistance to the petitionerassessee. 8.2. Similarly, the decision of the Bombay High Court in the case of Paul Brothers (supra) relied upon by the learned advocate for the petitioner shall not be applicable to the facts of the case on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been allowed on the basis of claim allowed in the previous year i.e. 200607 which has been doubted by the revenue, but the assessment for AY 200607 could not be reopened in view of bar under Section 149 of the Act and after considering the material on record and AO has reason to believe that the income chargeable to tax has escaped assessment as the conditions mentioned in clause (II) (III) of subsection (2) of Section 10 A of the Act have not been fulfilled and therefore, the petitioner assessee is / was not eligible for deduction/ exemption under Section 10 A of the Act and therefore, income chargeable to tax has escaped assessment, in the facts and circumstances of the case, it cannot be said that the impugned notices under Section 148 of the Act are invalid and / or wholly without jurisdiction and / or assumption of jurisdiction under Section 147 of the Act is illegal. Ample opportunity shall be given to the petitioner to put forward its case with respect to eligibility under Section 10 A of the Act as claimed, during the assessment / reassessment proceedings. Under the circumstances and in the facts and circumstances of the case, we are of the opinion that this is not a f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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