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TMI Blog2017 (11) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... lled in this case. - Decided in favour of assessee. Allowability of the claim of the assessee for development expenditure - Held that:- The details of the expenditure are given at para 6.2. of the order of the ld. CIT(A). The assessee has filed an application for the admission of additional evidence on this issue. On a careful consideration of this application we are of the considered view that the assessee was prevented by sufficient cause from furnishing these evidences before the First Appellate Authority or AO. Hence we allow this application of the assessee and admit this additional evidence. The additional evidence is in the form of order of exemption passed by D.G.I.T. (Exemption), Kolkata. The claim of the assessee for deduction u/s 80G of the Act, for a sum of ₹ 1 crore paid to West Bengal Family Welfare Samity was disallowed, on the ground that there is no certificate of exemption from Directorate of Exemption, Kolkata. As this alternative claim of the assessee has to be considered by the AO in the light of this new order of Director of Income Tax (Exemption), Kolkata dated 08.05.2006 we set aside this ground to the file of the AO for fresh adjudication in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined in the first year of the production/commencement of business, such figure cannot be disturbed in the subsequent years. Notwithstanding the fact that the appellant on its own filed the return reducing its claim. ( iii) That the Ld. CIT(A) grossly erred on fact and in law in the determination of the figure u/s. 35E of the Act, when the same was already determined in the first year of production/commencement of business i.e. assessment year 1998-99 and which has become final. ( iv) That the Ld. CIT(A) failed to appreciate that he had no authority in law in appellate proceedings to disturb the determination finally arrived at in the assessment year 1998-99. 2(i) That without prejudice to the above grounds, the Ld. CIT(A) grossly erred on facts and in law in not accepting the claim of deduction of ₹ 54,62,981/- u/s. 35E of the Act, as claimed in the return filed in response to notice u/s. 148 of the Act. ( ii) That the Ld. CIT(A) grossly erred on facts and in law in enhancing the income of the appellant by reducing the claim u/s. 35E of the Act, below the figure determined by the Assessing officer. 3 (i) That the Ld. CIT(A) grossly erred on f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Hon ble Supreme Court in the case of Hukumchand Mills 63 ITR 232 for the proposition that in such circumstances, the ground has to be admitted. In the result this additional ground is admitted. 6. We have heard the rival contentions on this legal issue as to whether the reopening of assessment is valid in law. On a careful consideration of the facts and circumstances of the case and a perusal of the papers on record and the orders of the authorities below as well as case law cited, we hold as follows :- 7. The reasons recorded for reopening are as follows :- The original assessment for Assessment Year 2002-03 was completed under section 143 ( 3) on 22.03.2005. The assessee had claimed deduction of ₹ 87,35,400 under section 35E of the Act which was allowed in the original assessment. Subsequently, the assessment was modified u/s. 154/143(3) vide order dated 20-12-2006, wherein the deduction u/s. 35E was restricted to ₹ 62,16,050. The deduction under section 35E of the Act is allowable 'in respect of expenses incurred on prospecting of any mineral or on the development of Mines or other natural deposit of such nature. The deduction is admissib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer, from which material evidence could with due diligence have been part discovered by the Assessing Officer, such production of evidence does not amount to disclosure within the meaning of section 147 of the Act, as stipulated in Explanation -1 of. the Section. The assessment as originally made has resulted in excessive relief to the assessee so far as claim under section 35E of the Act is concerned. (emphasis In view of the above facts, I have reason to believe that income to the extent of Rs. (62,16,050-48,82,112), i.e., ₹ 13,33,938 has escaped assessment due to excessive allowances of deduction under section 35E of the Act. 8. The reopening is beyond the period of four years from the end of the assessment year and the original assessment was completed u/s 143(3) of the Income Tax Act, 1961 (Act.) Hence the proviso to section 147 is applicable. This proviso reads as follows :- Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year unless any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer in not applying and invoking section 2(22)(e) of the Act. This lapse or error on the part of the Assessing Officer could not be attributed and regarded as a failure on the part of the assessee to make full and true disclosure of the material facts in the -original assessment proceedings. The reassessment for the assessment year 1999-2000 was not valid. 13. Applying the propositions of law laid down in the case laws cited above to the facts of the case, we hold that the proviso to section 147 is attracted. As there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment, the reassessment is bad in law. 14. Even otherwise, no fresh material has come into the possession of the AO as is clear from the reasons recorded. The reopening is based on the very same material which was considered by the AO in the original assessment proceedings. Hence the re-opening of assessment is based on change of opinion. On this ground also the reopening is bad in law. In the result the assessment order is quashed as bad in law and the appeal of the assessee is allowed. A.Y.2006-07 15. Grounds of appeal in this assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its claim under sections. 35E and 28/37 of the Act. The CIT(A) has relied on irrelevant consideration and therefore, the order requires to be set aside and the claim of the appellant or the claim allowable under the Act has to be allowed. 5. That the appellant craves leave to add, to alter, to amendments and or withdraw any of the above grounds of appeal before or at the time of hearing of the appeal. 16. Ground No.1 and 2 is on deduction u/s 35E of the Act. The ld. CIT(A) has at para-4, page-2 of his order stated that he based his decision in his own order for A.Y.2002-03. 17. We have squashed the reassessment order for A.Y.2002-03. Consequently the finding of the ld. CIT(A) on this issue for A.Y.2002-03 does not survive. Hence we set aside this issue to the file of the AO, for fresh adjudication in accordance with law. 18. Ground No.3 is on the issue of allowability of the claim of the assessee for development expenditure. The details of the expenditure are given at para 6.2. of the order of the ld. CIT(A). The assessee has filed an application for the admission of additional evidence on this issue. On a careful consideration of this application we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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