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TMI Blog2018 (2) TMI 1646X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,20,37,665/- u/s 115JB of the Act. On perusal of the record it is revealed that the assessee had earned other income amount to Rs. 46,32,178/-. Among other constituents, the other income also includes the 'income from sale of scrap' of Rs. 38,85,685/- and Misc. Income of Rs. 2,62,993/-. As these two incomes are not directly derived from manufacturing activity, therefore, the deduction u/s 80IC on these two income cannot be claimed by the assessee. Thus, the assessee has claimed excess deduction of Rs. 41,48,678/- u/s 80IC of the Act. By doing so, the assessee has not disclosed its income truly to the extent of Rs. 41,48,678/-. Based on the above facts, I have reason to believe that the income of the assessee chargeable to tax to the extent of Rs. 41,48,678/- has escaped assessment." 3. The Assessing Officer, thereafter, completed the assessment u/s 143(3) r.w.s. 147 determining the total income at Rs. 4,41,550/- and book profit u/s 115JB at Rs. 4,20,37,665/-. 4. The assessee preferred an appeal before the ld. CIT(A) challenging the reopening of the assessment apart from challenging the various additions on merit. The ld. CIT(A) decided the issue of reopening in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) was completed on 16/12/2011. Further, it is seen therefrom that it is mentioned, inter alia, "... On verification of the case record, it has been observed that the assessee has earned other income amounting to Rs. 46,32,178/-. The other income also includes the Income from sale of scrap' of Rs. 38,85,685/- and miscellaneous income of Rs. 2,62,993/-. The assessee has also claimed deduction u/s 80IC on the other income which was not directly derived from manufacturing activity, therefore the deduction u/s 80lC on these two incomes was not allowable to the assessee. Therefore, the assessee claimed excess deduction of Rs. 41,48,678/-, u/s 8OIC of the I T Act..." From the above extract, it is observed that the reason for disallowance of the appellant's claim of deduction u/s 80IC is that the other income of the appellant includes sale of scrap and miscellaneous income which were not directly derived from manufacturing activity. 5.2 Also, the appellant's objections were rejected vide letter dated 24/10/2014 wherein the reasons for such rejection were elaborated. Thereafter, reassessment was made u/s 143(4) r w 147 wherein the appellant's claim of deduction u/s 80I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year)." Also, in the first proviso, it is stipulated that reopening of assessment is not possible after the expiry of 4 years from the end of the relevant AY unless any income chargeable to tax has escaped assessment for such AY by reason of failure on part of assessee to file return u/s 139 or in response to notice u/s 142(1) or 148 or to disclose fully and truly all material facts necessary for assessment for that AY. 5.5 From the above, it is observed that in the present case, no external basis for formation of the "reason to believe" for reopening the original assessment u/s 143(3) appears from the relevant portion in the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cisions has already held that in determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was a prima facie some material on the basis of which the Department could reopen a case. The sufficiency or correctness of the material is not a thing to be considered at re- opening stage. 5.7 Further, while the decision of the Hon'ble Gujarat High Court in the cases mentioned above on the plank that up to four years an assessment is open to the AO's unreserved consideration on his formation of the requisite belief whose formation is not a judicial decision but an administrative decision, yet in that case the AO while making an order of protective assessment in respect of AY 1993-94 found that there was a transfer in favour of the partnership firm by the assessee of his stock-in-trade on 19/09/1990, the capital account of the assessee in the firm was credited by RS.14 lakhs and though the stock-in-trade was sold to that firm on that day, it remained to be taxed in the case of that assessee in that AY 1991-92. Even in the case of Bawa Abhai Singh, the Hon'ble Delhi High Court (jurisdictional high court) it has been observed, inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 561 (SC) observed that the power to reopen assessments w e f 1/04/1989 was much wider and also observed, inter alia, "However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to reassess. But re- assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief." 5.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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