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TMI Blog2018 (11) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... me of original assessment proceedings; that the re-opening of assessment is just change of opinion without being any tangible material before the AO and that the objections filed by the assessee against the re-opening before the AO were not disposed off by way speaking order and therefore quash the re-assessment proceedings as being without valid jurisdiction and also the consequent order - decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... was completed on 31.12.2005 by framing assessment under section 143(3)/147 of the Act assessing the total income of ₹ 121,90,92,650/-. The case of the assessee was once again reopened by the AO under section 147 by issuing notice under section 148 dated 03.07.2006. The said notice was complied with by the assessee by filing a return of income on 04.08.2006 declaring the same income as returned in the original return of income. The AO supplied the copy of reasons recorded for re-opening the assessment to the assessee. As is clear from the assessment order the assessment was reopened on the ground that deduction under section 80IA of the Act is to be recomputed by excluding certain item of income included under the head business income and secondly that deduction under section 80IA of the Act was wrongly granted in respect of Crude Distillation Unit (hereinafter referred to as CDU-11 ) new unit in the ratio of Gross Block of Fixed Assets (hereinafter referred to as GBFA) in the ratio of 0.3611 which needs to be revised as the assessee has made huge additions to the fixed assets over the years however, the GBFA ratio was not revised accordingly on the basis of additions in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO on the ground that the issue proposed to be raised and raked up in the reassessment proceeding was fully examined by the AO in the assessment proceedings by raising a specific query which was answered by the assessee by way of written submission filed on 30.01.2003. It was also submitted by the assessee before the AO that so far as AY 2000-01 is concerned , the reopening of the assessment proceeding was initiated after four years from the end of the relevant assessment year which could only be done if there is failure on the part of the assessee to disclose fully and truly all the material facts in terms of 1st proviso to section 147 of the Act otherwise not whereas there has been no such failure on the part of the assessee during the year to disclose fully and truly all materials facts necessary for assessment or reassessment. However, the contention of the assessee did not find favour with the AO and he went ahead with the framing of the assessment vide order dated 31.10.2006 passed under section 143(3) read with section 147 of the Act without even disposing of the objections as filed by the assessee against re-opening of assessment. 5. Aggrieved assessee challenged the jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. ITO (2003) 259 ITR 19 (SC). The Ld. A.R. submitted that where the reassessment order is passed without disposing of the objections filed by the assessee/appellant by way of speaking order, the assessment so framed would be void ab initio and bad in law. In defense of his arguments, the Ld. A.R. relied on the following decisions: • KSS Petron Pvt. Ltd. vs. ACIT (ITA No.224 of 2014) (Bombay High Court) • CIT vs. Tupperware India Pvt. Ltd. (2016) 236 Taxman 494 (Delhi) • DCIT vs. National Bank for Agriculture and Rural Development (ITA No.4964/Mum/2014 dated 28 October 2016) The ld. AR submitted that the second serious non curable defect in the re-opening of assessment is that the same was done by the AO beyond four years from the end of the relevant assessment year which could only be done validly only if there is a failure on the part of the assessee to disclose fully and truly all material facts in terms of 1st proviso to section 147 of the Act otherwise not. However, in the present case the assessee has disclosed all the material facts fully and truly during the course of assessment proceedings. The Ld. A.R. contended that even on this count the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not permissible under the Act and thus is bad in law. In defense of his arguments, the Ld. A.R. relied on the following decisions: • ITO v/s. TechSpan India (P. ) Ltd. (2018) 92 taxmann.com 361 (SC) • CIT v/s . Kelvinator of India Limi ted (2010) 320 ITR 561 (SC) • Satnam Over seas v/s. DCIT (2010) 188 Taxman 172 (Del ) • CIT vs. Eicher Ltd. (2007) 294 hR 310(DeI). The Ld. A.R. summing up his arguments on the technical grounds that the reassessment so framed is bad in law (i) for the non disposal of objection filed by the assessee by way of speaking order, (ii) disclosure of all material facts truly and fully in the course of assessment proceedings and whereas the assessment was reopened beyond a period four years from the end of relevant assessment year (iii) the reassessment proceedings are based on change of opinion by reappraising and reviewing the same material which was available for the AO in the original assessment proceeding and non existence of new tangible material before the AO which was not before the AO at the time of original assessment proceeding. The Ld. Counsel submitted that in view of these facts the reassessment proceedings are bad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon for the purpose of better understanding of the issue at hand. The assessee Kochi Refinery Ltd.(KRL) increased its refining capacity to 7.5 MMTPA which was 4.5 MMTPA prior to the commissioning of said (CEP)capacity expansion project. Due to practical difficulties and operational problems it was not possible to ascertain the profit relating to CEP (capacity expansion project) for the purpose of claiming deduction under section 80IA/IB and therefore a mechanism was adopted known as administered price mechanism by applying the ratio of GBFA which was calculated on the basis of gross value of block assets of the CEP vis-à-vis the total gross block assets of the assessee (KRL) which worked out to 0.3611. Thereafter, the same ratio was consistently followed and the profits were apportioned for the purpose of claiming deduction under section 80IA/IB of the Act on the said ratio without revising the same in the subsequent years which witnessed the additions to the fixed assets. According to the AO such ratio required revision in the light of the huge investments/additions in fixed assets and thus the reassessment proceedings were initiated after recording reason under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat AO has power to reopen provided there is tangible material to come to the conclusion that there is escapement of income from assessment and the reasons have live link with the formation of belief. Similarly, the Hon'ble Supreme Court has held in the case of ITO vs. Techspan India Pvt. Ltd. (supra), Satnam Overseas vs. DCIT (supra), CIT vs. Eicher Ltd. (supra) that no reassessment could be initiated on the basis of reappreciation/reexamination of the same records as available before the AO in the original assessment proceedings and in absence of any new tangible material the assessment proceedings are bad in law. After perusing the case laws relied by the revenue, we find them to be distinguishable on facts. In the case of Nishith Madan Lal Desai Vs CIT (Supra) the case was re-opened where the assessment was completed u/s 143(1) and not u/w 143(3) and also that the Hon'ble court has held that there was material found and received during the assessment for the subsequent year. In Crown Consultants P Ltd Vs CIT (Supra) the fresh plea was raised by the assessee before the High Court whereas no such plea was taken up by the assessee in the objections filed against the re-assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e various judicial forums, we are of the view that the reassessment framed by the AO is bad in law for the three reasons namely that re-assessment is proposed to be done after four years despite there being no failure on the part of the assessee to disclose materials facts in the return of income of original assessment proceedings; that the re-opening of assessment is just change of opinion without being any tangible material before the AO and that the objections filed by the assessee against the re-opening before the AO were not disposed off by way speaking order and therefore quah the re-assessment proceedings as being without valid jurisdiction and also the consequent order. Accordingly, this ground is allowed. 9. Since we have decided the legal issue supra in favour of the assessee , the other grounds raised by the assessee on merit are rendered academic in nature and need not to be adjudicated. 10. Appeal of the assessee is partly allowed. ITA No.2825/M/2011 for A.Y. 2002-03, ITA No.2824/M/2011 for A.Y 2003-04 & ITA No.2823/M/2011 for A.Y 2004-05 11. The facts in the above three years are slightly different from that of A.Y. 2000-01 to the tune that the reassessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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