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TMI Blog2012 (9) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance of Rs. 3,95,733/- made u/s 80IB. The disallowance so made is bad in law and bad on facts. 6. The interest charged u/s.234B and 234C is bad in law and bad on facts. 7. The appellant pray for suitable costs. 8. The appellant crasves liberty to add, amend, alter and modify any of the ground of appeal on or before its hearing before your honour. 3. In ground Nos. 1 to 3, the assessee has challenged the proceedings initiated u/s 148 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" in short"] for reopening of the original assessment already completed u/s 143(3) of the Act. 4. The facts relating to this issue in brief are that the assessee vide his original return of income filed on 11.9.2003 disclosed total income of Rs. 70,77,021/- after claiming the deduction u/s 80HHC, 80IB and 80G of the Act. The assessment was completed u/s 143(3) of the Act on 30.3.2005 determining the total income at Rs. 82,33,173/-. Subsequently, the Assessing Officer recorded the reasons after taking the approval from the CIT-II, Jodhpur as required u/s 147 of the Act and issued the notice dated 23.9.2008 u/s 148 of the Act. The reasons recorded u/s 147 of the Act for takin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 10,84,37,280/- and a sum of Rs. 15,82,933/- has been shown to have received on account of sale DEPB. Instant case is a case where the assessee did not fulfill these conditions at the time of assessment though he was required to do so in the light of said amendment, so the profit on sale of DEPB cannot be treated as business income either for the purpose of 80HHC or even section 80IB. Thus, I hold that on a/c of failure on the part of the assessee in fulfilling statutory conditions for treating profit on sale of DEPB as business income, assessee was allowed excessive claim u/s 80IB within the meaning of clause C of explanation 2 appended to ' section 147. Since the matter pertains to A.Y. 2003-04 & Four years have already elapsed, necessary permission to issue notice u/s 148 of the IT Act has been sought from CIT - II, Jodhpur, who has accorded permission vide letter No. 1859 dated 22-9-2008. Acordinlgy notice u/s 148 issued." 5. The Assessing Officer completed the assessment u/s 143(3) of the Act read with section 147 of the Act on 24.12.2009 determining the total income at Rs. 86,09,120/- wherein excess claim of deduction u/s 80IB of the Act amounting to Rs. 3,95,733 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer was justified in issuing the notice u/s 148 even beyond the period of four years from the end of Assessment Year. Ld CIT(A) relied upon the judgment of the Hon'ble Punjab & Haryana in the case of Jawand Sons vs CIT reported in 33 DTR 121. The ld CIT(A) further observed that the Assessing Officer had passed the order u/s 143(3) of the Act on 30.3.2005 ignoring the proposition laid down by the Hon'ble Supreme Court in respect of incentive received from the Govt. for the purpose of eligibility of deduction by the undertaking u/s 80HH of the Income Tax Act and that the provisions of section 80HH are similar to the provisions of section 80IB of the Act. A reference was made to the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Sterling Foods 237 ITR 579 (SC). The ld CIT(A) also pointed out that the Assessing Officer had passed the order u/s 143(3) read with section 147 of the Act on 24.12.2009 by applying the decision of Hon'ble Supreme Court delivered on 31.8.2009 in the case of Liberty India Vs. CIT reported in 317 ITR 218. The ld CIT(A) also referred to the Circular No. 68 issued by the CBDT wherein it was mentioned that the Board are adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon'ble Supreme Court in the case of CIT Vs. Sterling Foods (supra). The ld CIT(A) also distinguished another decision of the Hon'ble Allahabad High Court relied upon by the assessee in the case of Pardesiya Industrial and Investment Corporation Vs. CIT (supra) and stated that in the said case the proposition lad down was that no notice u/s 148 of the Act could be issued after expiry of four years where there was no failure on the part of the assessee in disclosure of all material facts fully and truly but in the present case, issue related to provisions of section 80IB in respect of claim of value of DEPB which was received by the assessee on account of incentive declared by the government and it was considered as profit not derived form the activity of industrial undertaking. The Ld CIT(A) accordingly held that the Assessing Officer was correct in initiation of proceedings u/s 147 and rejected the ground raised by the assessee that notice u/s 148 was issued on change of opinion. Now the assessee is in appeal. 8. The ld. counsel for the assessee reiterated the submissions made before the authorities below. He further submitted that the Assessing Officer while framing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides that no action u/s 147 shall be taken after the expiry of four years from the end of the relevant Assessment Year, in a case where original assessment had been made after scrutiny u/s 143(3) of the Act. It was contended that there was no omission or failure on the part of the assessee to disclose fully or truly all relevant material facts, therefore, the reopening of the assessment was only a change of opinion which is not maintainable and the ld CIT(A) was not justified in confirming the action of the Assessing Officer. It was further stated that the view taken by the Assessing Officer while framing the assessment was supported by the view taken by the Hon'ble Rajasthan High Court in the case of Saraf Seasoning Udyog Vs. ITO (2008) 219 CTR (Raj) 461 and CIT Vs. Sharda Gum & Chemicals (2007) 288 ITR 116 (Raj). Thus, at the time when the original assessment was framed u/s 143(3) of the Act, the view taken by the Assessing Officer was legally possible view and was supported by the various decisions of the Tribunal and the Hon'ble High Courts. Reliance was placed on the following case laws:- a) Vishwanath Engineers Vs. ACIT (2012) 72 DTR (Guj.113) b) CIT Vs. Kelvinator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for export sale proceeds and the same had been examined on test check basis. He also mentioned in page 2 of the assessment order that the assessee was manufacturing and exported handicraft articles and had fulfilled all the conditions required for allowability of deduction u/s 80IB of the Act. The Assessing Officer discussed the admissibility of deduction u/s 80HHC and 80IB in para 5 and 5.3 of the assessment order dated 30.3.2005. The Assessing Officer raised specific query regarding the deduction u/s 80IB and reply of the assessee dated 23.3.2005 has been reproduced in para 5.1 of the assessment order which at the cost of repetition is not reproduced herein. The Assessing Officer after considering the submissions of the assessee and examining the issue in detail allowed the claim of the assessee for deduction u/s 80IB on account of DEPB allowance and the relevant observation have been made in para 5.2 of the assessment order, which reads as under:- "5.2 After carefully considering the detailed submissions of the ld AR and keeping in view the judgment in the light of the provisions of deduction u/s 80HHC and u/s 80IB of the Act, I am of the view that it may considerably be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been purchased by the assessee which were then exported and that the case of the assessee fall within the purview of sub-section (3)(b ) of section 80HHC. The Commissioner (Appeals) accepted the contention of the assessee. This showed that there was a full and true disclosure of the facts by the assessee; and that there was a due application of mind by the Assessing Officer. The second proviso to section 147 provides that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject-matter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. The very issue on which the assessment was sought to be reopened was canvassed in appeal and was determined in the appellate proceedings by the Commissioner (Appeals). The same issue could not lawfully formed the basis of the notice for reopening the assessment. The reassessment proceedings were not valid." 14. Similarly, the Hon'ble Madhya Pradesh High Court in the case of CIT Vs. Steel Tubes of India Ltd [2010] 333 ITR 368 (M.P.) held as under:- "Under section 147 the Assessing Officer can reopen an assessment if he has reason to believe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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