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TMI Blog2018 (4) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... in original assessment order. This issue is squarely covered in favour of the assessee by the decision of G.S. Pharmbutor Pvt. Ltd. vs. ACIT 2011 (11) TMI 808 - ITAT DELHI) - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... turned nil income was accepted by the Assessing Officer in the original assessment proceedings u/s. 143(3) vide order dated 22.12.2011. The assessee had claimed exemptions u/s. 10A/10AA for the year, which were also accepted by the Assessing Officer in the original assessment proceedings. Later on, the case was reopened u/s. 147 by issuing notice u/s. 148 dated 12.03.2015. The notice was served on the assessee. The assessee did not make any objection for reopening neither filed revised return. Therefore, the Assessing Officer proceeded on the return originally filed on 29.09.2009. The reasons for reopening are as under : "Assessee claimed exemption u/s. 10A at ₹ 4,57,16,415/- & u/s. 10AA at ₹ 52,66,799/- respectively. Aggregate exemption for the year amounted to ₹ 5,09,83,214/-. The assessee has claimed allowable depreciation at ₹ 1,44,01,237/-. As the assessee did not file the report u/r. 56F, which is mandatory as per the act for the claim of exemption u/s. 10A & 10AA (refer to section 10A(5) and section 10AA(8) of I.T. Act), total exempt income of ₹ 3,65,81,977/- (Rs.5,09,83,214 - ₹ 1,44,01,237/-) was wrongly allowed vide order u/s. 143(3) da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that proposition even if the audit report is filed in reassessment proceeding, exemption/deduction cannot be disallowed is directly covered by the following judicial decisions:- • G.S. Pharmbutor Pvt. Ltd. vs ACIT, ITA 4255-4256/Del/2011, dated 25.11.2011, IT AT Delhi Bench. • CIT vs. G.S. Pharmbutor Pvt. Ltd., ITA 134-135/2013, dated 19.03.2013, High Court of Delhi. In the instant case also, undisputed facts (pi see page 3 of the impugned assessment order) are that audit report was in any case filed in reassessment proceeding (PIS 84-87, 87A-87B, 81-83). That being so, exemption denied may please be allowed in view of the above mentioned judicial decisions. 2. Without prejudice to above, the audit report was produced before Ld. AO during original assessment proceeding as deposed by CA (PB 87A-87B) and Ld. AO himself countered the audit objection by mentioning in the left margin of the audit objection initially and later on in his letter addressed to Ld. CIT that he has verified all the conditions of the grant of exemption u/s 10A which means verifying the audit report also. Thus, there was no infirmity whatsoever in the grant of exemption of section 10A. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when demanded by Ld. AO. Even ITR 6 which is income tax return form did not mandate of filing of Audit report in form No. 56F. Rather instructions appended to this form clearly mentions that figure of exemption shown in column 17 of Form no. 56F has to be shown in 'Schedule 10A' of the return of income. Thus the very basis of reopening of the assessment was incorrect premise and in such a situation, reopening is bad in law as held in the following judicial decisions:- • S. Power (P) Ltd. vs. ITO, ITA 6544/2014, dated 29.04.2016, ITAT Delhi Bench. • Raj Kumar Dugar (HUF) vs. ITO, 12 DTR 0016, ITAT Delhi Bench. • Shipra Srivastava & Anr. vs. ACIT, 319 ITR 0221, High Court of Delhi. • Balkrishna Hiralal Vani vs. ITO, 321 ITR 0519, High Court of Bombay. 6. Reopening has been done after four years and original assessment was made u/s 143(3) (PB 79-80) and there is no allegation in the 'reason' recorded about any failure of the assessee to disclose material facts and hence reopening is barred by limitation in terms of first proviso to section 147 and in view of the following judicial decisions: • Harvana Acrylic Manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wanivs. ITO, (2010)321 ITR 0519, High Court of Bombay. • Cartini India Ltd. vs. Addl. CIT, (2009) 314 ITR 0275, High Court of Bombay. • Parvccn P. Bharucha vs. DCIT, (2012) 348 ITR 0325, High Court of Bombay. • Purity Tcchtcxtilc (P) Ltd. vs AC1T, (2010) 325 ITR 0459, High Court of Bombay. • Carlton Overseas (P) Ltd. vs ITO, (2009) 318 ITR 0295, High Court of Delhi. • CIT vs Kcane India Ltd., ITA 230/2012, dated 20-04-2012, High Court of Delhi. 9. The reassessment was done on the basis of 'audit note' as became clear from the inspection of departmental assessment records done on 22.12.2017, and therefore, in view of following judicial decisions reopening and reassessment are bad in law: • P.C.Patel vs. DCIT, 379 ITR 0151, High Court of Gujarat. • National Constructions Co. vs. JCIT, 234 Taxman 0332, High Court of Gujarat Reassessment-Change of opinion-Notice based on audit objection-AO issuing notice under s. 148 on the basis of audit objection mechanically without any application of mind, such a notice was invalid suffering from change of opinion and no substantial question of law arises.-CIT vs. Indian Sussar & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral India Electric Supply Co. Ltd. vs. ITO & Anr., 333 ITR 0237, High Court of Delhi. Chhugamal Rajpal vs. S.P. C ha 1 ill a & Ors., 79 ITR 0603, Supreme Court of India. United Electrical Company (P) Ltd. vs. CIT, 258 ITR 0317, High Court of Delhi. N.C. Cables (Del)(HC), supra Thus, it is prayed that viewed from any angle, the reassessment may please be held as bad in law and exemptions disallowed may please be allowed." 4. The learned DR, on the other hand, relied on the orders of the authorities below and submitted that for want of any evidence of filing the audit report in Form No. 56F in the original assessment proceedings or alongwith return, the ld. Authorities below are justified in rejecting the claim made by the assessee u/s. 10A/10AA of the Act. 5. We have considered the rival submissions and have gone through the entire material available on record. The vital question to be adjudicated in this appeal, inter alia, is whether the ld. Authorities below were justified in not considering the audit report furnished by the assessee in Form No. 56F during the course of re-assessment order on the premise that the said report was not filed alongwith the return or up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of law contained in that behalf and accordingly, a copy of form 1OCCB dated 20.04.2003 and 10.10.2004 obtained from Aggarwal Sarraf & Co, Chartered Accountant, pertaining to the Assessment Years 2003-04 and 2004-05, was furnished. It is, thus, clear that the audit report in Form 10CCB was available with the AO at the time when the assessment under sec. 147 of the Act was made. The claim of the assessee u/s 8o-IB has been disallowed in the reassessment made under sec. 147 of the Act though the same was allowed in the original assessment made under sec. 143(3) of the Act. In the case of CIT vs. Gujarat Oil & Allied Industries, 201 ITR 325 (Guj.), the Hon'ble Gujarat High Court has taken a view that the requirement of filing of an audit report under sec. 8oJ(6A), which is similar to that of sec. 8o-IA(7), is to be taken as a directory in nature, and in case, the audit report is submitted at any time before framing of the assessment, there will be substantial compliance with the provisions of sec. 8oJ(6A) of the Act. An identical view has also been taken by the Hon'ble Madras High Court in the case of CIT vs. A.N. Arunachalam, 208 ITR 481 (Mad.). There are other d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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