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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 ..... CIT(A), Jodhpur. 2. Following grounds have been raised in this appeal:- 1. The proceedings u/s 148 initiated in the case of the appellant is bad in law and bad on facts, and without proper jurisdiction and is also barred by limitation of time. 2. The proceeding initiated u/s 148 is also bad in law in view of original assessment being completed u/s 143(3) after detailed examination of issues on which the proceedings has been initiated. 3. The conditions precedent to initiation of proceedings u/s 148 being absent such order deserves to be quashed. 4. The approval granted by Ld. CIT for initiation of proceedings is also bad in law and bad on facts. 5. The Ld. CIT(A) has erred in sustaining disallowance of ₹ 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not treated the income from sale of DEPB license as income derived from export business of the assessee and had also not allowed deduction u/s 80HHC on the same. Later on, proviso was inserted in sub-section 3 of S. 80HHC vide Taxation Laws (Amendment) act 2005, with retrospective effect from 1.04.1998 whereas the assessment in question was completed by the A.O on 30.03.2005. So the A.0 had already passed the order when this amendment was brought on the statute. The amended provisions stipulated that in the cases having Turn-Over more than 10 Cr, the profit on sale of DEPB could not qualify business income for the purpose of deduction u/s 80HHC unless conditions laid down in this regard are fulfilled. In this case, the Turn Over of the assessee is to the tune of ₹ 10,84,37,280/- and a sum of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee observed that as per the requirement of section 147 of the Act, the Assessing Officer should record his reason for the belief that the income had escaped assessment and the reasons shall prima-facie justify escapement. He also observed that the notice u/s 148 of the Act was issued beyond four years but within 6 years from the end of the Assessment Year after taking the permission of CIT u/s 151(1) of the Act. Ld CIT(A) pointed out that in the reasons recorded, it was clearly stated the DEPB amounting to ₹ 15,82,933/- was considered by the Assessing Officer as profit not derived from the activity of undertaking, therefore, the assessee was not entitled to deduction u/s 80IB of the Act in addition to disallowance of deduction u/s 80HHC. The ld CIT(A) was of the view that Assessing 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 propositio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued before the decision of the Hon'ble Apex Court, it would not make any difference and the decision of the Hon'ble Apex Court could not be ignored. Reliance was placed on the judgment of the Hon'ble Rajasthan High Court in the case of Chandi Ram Vs. ITO and Another reported in 225 ITR 611. The ld CIT(A) distinguished the cases relied upon by stating that in the case of Purity Tech Textiles Pvt Ltd vs ACIT (supra), the Hon'ble Bombay High Court laid down the proposition that the reasons recorded for reopening of assessment were crucial and it was on the basis of those reasons alone that validity of an order of reopening of an assessment has to be decided. But in the present case, the facts are different because the Assessing Officer had not considered the proposition laid down by 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 ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim of the assessee so there was a change of opinion while reopening the assessment framed u/s 143(3) of the Act. It was pointed out that the Assessing Officer issued the notice u/s 148 of the Income Tax Act on 23.9.2008 while judgment of the Hon'ble Supreme Court in the case of Liberty India Vs. CIT (supra) was dated 31.8.2009, therefore, the judgment of the Hon'ble Supreme Court was not available to the Assessing Officer when the notice u/s 148 was issued so it cannot be said that reopening was done on the basis of the judgment of the Hon'ble Supreme Court. It was further stated that the notice u/s 148 of the Act was issued after a period of more than 4 years so it was patently invalid, barred by limitation of time prescribed under the provisions of section 147 of the Act which provides 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, therefore, reopening was valid. 10. We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it is noticed that Assessing Officer framed the original assessment u/s 143(3) of the Act on 30.3.2005. the Assessing Officer in the opening para of the said assessment order clearly stated that the assessee filed the return of income on 11.11.2003 along with Audited report in form No. 3CB, 3CD, 10CCB 10CCAC and claimed deduction u/s 80HHC, 80IB and 80G of the Income Tax Act. He also mentioned that the assessee had furnished the requisite details, produced cash book, ledger, journal, sales book, purchase book, salary wages payment register, bank pass book, purchases, sales expenses bills / vouchers, export invoices, packing lists, bills of lading, shipping bills, advices of bank realization 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to disclose truly and fully all material facts necessary for assessment, the impugned notice u/s 148 issued after expiry of period of four years from the end of the relevant Assessment Year is liable to be quashed. 13. A similar view has been taken by the Hon'ble Bombay High Court in the case of Prashant Projects Ltd Vs. ACIT Ors. [2011] 333 ITR 368 (Bom), wherein it has been held as under:- in the original assessment order the Assessing Officer had specifically held that the assessee was carrying on manufacturing activity and having exported manufactured goods could claim a deduction under section 80HHC only as a manufacturer. During the course of the appellate proceedings before the Commissioner (Appeals), a remand report was called for and the Assessing Officer, after considering the material which was produced by the assessee, concluded that goods had 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; ..... X X X X Extracts X X X X X X X X Extracts X X X X
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