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TMI Blog2021 (3) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of various power generation units. 2.2 The return of income was processed under Section 143(1) of the Act. 2.3 The case of the assessee was selected for scrutiny and notice under Section 143(2) of the Act was issued on 21.08.2012 and subsequently, notices under Section 142(1) of the Act dated 11.04.2013 and 26.08.2013 were issued along with detail questionnaire. The assessee company had submitted the explanation about justification of the deduction under Section 80IA and also furnished Form No. 10CCB in respect of all Power Generation Unit being the report of CA, as required under Section 7 of the 80IA of the Act. The Assessing Officer passed a detailed scrutiny order under Section 143(3), wherein, he disallowed Rs. 3,65,25,780/- from the total claim made under Section 80IA of Rs. 23,37,65,504/- for generation of power consumed by other units. The assessee company preferred an appeal against the assessment order including the disallowance of Rs. 3,65,25,860/-. The Appellate Authority i.e. the Commissioner of Income Tax (Appeals), allowed the Appeal and delete the addition of Rs. 3,65,25,860/-, which was disallowed by the Assessing Officer out of total deduction claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Steam in total sale (%) Profit claimed Eligible for units as per Form 10CCB Profit Allowable for claim u/s 80IA (excluding Proportionate proportion of steam) Excess Allowed Gas Turbine Power Generation undertaking 287283588 96989683 384273271 74.76 25.24 4109629 30723621 10372588 Gas based Power Generation undertaking Vareli 17414167 16885627 191027094 91.16 8.84 568918 518629 50289 Rolls RoveI Gas Power Generation Undertaking 219895015 53065093 272960108 80.56 19.14 61946527 49903748 12042779 Rolls RoyesII Gas Power Generation Undertaking 219895015 530655093 272960108 80.56 19.44 61946527 49903748 12042779 Rolls RoyesIII Gas Power Generation Undertaking 276098703 53205396 331304099 83.14 16.66 63041097 52536522 10504575 Total 1446708486 229006474 18812539 18812539 40881115 As the word Power is not defined in the Act, therefore, while allowing the deduction u/s.80 IA, the intention of the legislature was required to be considered. For this purpose it is very important to consider the Budget Speech of the Hon'ble Finance Minister dated 27th February,1993, Part-B Para-57 and 58 wherein it was stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arat Electricity Board (MGVCL). The said rate had two identifiable separate components of different nature viz. Energy Charges @ Rs. 4.05 per unit and Time use charges @ Rs. 0.75 per unit. The time use charge component was disallowed for working of 80IA and transfer value was taken at Rs. 4.05. As a result the amount of Rs. 3,65,25,860 (23,37,65,504/4.80 x 0.75) was disallowed from deduction u/s. 80IA and the claim was restricted to Rs. 19,72,39,644 (Rs. 23,37,65,504 less Rs. 3,65,25,860) u/s. 80 IA of the Act. However, as per Form 10CCB the assessee company was eligible for deduction of Rs. 22,90,06,474 u/s. 80IA which was based on transfer value of Rs. 4.80 per unit. The profit allowable for claim of deduction u/s. 80IA excluding proportionate portion of steam works out to Rs. 18,81,25,359/. Since, the above amount was based on the transfer value of Rs. 4.80, which was revised to Rs. 4.05, the revised profit allowable for claim of deduction u/s. 80IA excluding proportionate portion of steam works out to Rs. 15,87,30,772 (Rs. 18,81,25,35914.80 X 4.05). As against this, the assessee was allowed deduction of Rs. 19,72,39,644 u/s. 80IA resulting into excess allowance of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be embedded in annual report, audited P & L A/c. Balance sheet and books of account in such manner that it would require due diligence by the A.O. to extract these information. For aforesaid reasons, it is not a case of change of opinion by the A.O. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s. 148 has been obtained separately of Principal Commissioner of Income Tax as per the provisions of section 151 of the Income Tax Act." 2.5 The assessee company raised its objection vide its communication dated 26.07.2018, namely on the following grounds : (i) No satisfaction of preconditions for invoking the provisions of Section 147; (ii) Reopening beyond the period of 4 years is not permissible, when there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment; (iii) Reassessment proceedings initiated on mere change of opinion on the part of the Assessing Officer, as the present reopening is not on the basis of any new and/or fresh tangible materials. The Assessing Officer has proceeded on the basis of the disclosures for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible for such claim and after considering the explanation and other materials, the claim was partly disallowed to the extent of Rs. 3,65,25,860/- and the addition thereof, was deleted by the Appellate Authority vide order dated 06.07.2015. Thus, in these factual background, the learned counsel submitted that the then Assessing Officer had formed an opinion while passing earlier assessment order and now issuance of notice under Section 148 for the reopening of the assessment on the same material, reviewing the same issue, in the absence of any new tangible material, by the succeeding Assessing Officer cannot be sustained on mere a change of opinion. 6. In view of the above contentions, the learned counsel submitted that the notice dated 30.03.2018 and the order disposing of the objections are bad in law and contrary to the provisions of Section 147 of the Act and therefore, he prays that the writ application having merits, may be allowed. 7. Ms. Kalpana Raval, learned Standing Counsel appearing for the revenue vehemently opposed the writ application, contending that the revenue is justified in reopening the assessment, as the assessee company failed to disclose fully and truly th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a particular matter and issue. 13. In the case of CIT Vs. Kelvinator India Ltd (2010) 320 ITR 561 (SC), wherein, it was held that the concept of "change of opinion" must be treated as in-built test to check the abuse power by AO. Hence, after 1.4.1989, the AO has power to reopen an assessment provided there must be a "tangible material" to come to the conclusion that there was an escapement of income from assessment. The relevant paras 5, 6 and 7 reads thus; "5......where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. 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. 6. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has generated the power and utilized / transferred the same to its other unit. The assessee has charged the transfer value while applying the rate of per unit at Rs. 4.80/claiming it as market value and during the course of assessment proceedings, the assessee was asked to explain why the demand charges and time used charges should not be disallowed from deduction under Section 80IA as these are over and above the energy charge, which is actual sale price of the energy and both charges are not sale price but these are the additional charge. 4.3 The explanation of the assessee that they have submitted statement and Form no. 10B of the Act and further stated that in the earlier years also claim was considered and allowed by the Assessing Officer and legally the company is entitled for the claim. 4.14 In view of the above, transfer value to the extent of time used charge of Rs. 3,65,25,880/- at the rate of 0.75 is liable to the disallowed from the deduction under Section 80IA and we brought to taxation as the income of the assessee company." 18. A bare perusal of the reasons recorded for reopening reveals that the Assessing Officer upon perusal of the records found tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... primary materials, disclosed by the assessee company, the erstwhile Assessing Officer assigned cogent reasons and discussed the issue at length and disallowed the claim of deduction to the extent of Rs. 3,65,25,860/- out of total claim of Rs. 23,37,65,504/- stating that deduction is available only in relation to profits and gain derived from the generation of powers. Now on the same set of facts and materials, the Assessing Officer formed the belief about the escapement of assessment which is nothing but mere a change of opinion on the facts which were already before the Assessing Officer while making the first assessment on which conscious application of mind is reflected from the proceedings. Therefore, on the issue of steam power, the relevant material was available on record, however, the then Assessing Officer failed to apply his mind to that material in making the assessment order, now in the present proceedings, again the Assessing Officer cannot take recourse to the provisions of Section 147 for the failure of the Assessing Officer to apply his mind to the material which according to him is relevant. In this regard, we may refer to the following decisions, wherein, the iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that case, there would be no finality to any assessment. Then, at any point of time, after expiry of time, the AO can reopen assessment. That would plainly be against the statutory policy. Therefore, the impugned notice and proceedings are quashed and set aside. (f) In ITO Vs. Sirpur Papers Mill Ltd (1978) 113 ITR 393 (AP), it was held that where the assessee discloses his all primary facts to the Income Tax officer and if officer does not draw appropriate inference on the facts placed before him and complete the assessment, the assessment cannot be reopened under Section 147(a) merely on the ground that subsequently he came to regard to the conclusion he reached earlier as erroneous and therefore, the AO cannot take recourse to the reassessment proceedings in order to correct the mistake on account of lack of inquiry, deficiency in inquiry, total oversight or inadvertence on the part of the AO, while making the assessment, sought to be reopened. (ii) In view of the legal proposition and considering the facts and circumstances of the present case, it appears that on the issue of steam power, the succeeding Assessing Officer has different opinion and it seems to be re-look o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue was carried in Appeal by the assessee. The CITA, accepted the contention of the assessee and thereafter, the assessment was reopened on the basis that the assessee had claimed special deduction under Section 80 HHC. The High Court was of the view that, as per 2nd proviso of Section 147, when very issue on which the assessment was sought to reopen was canvassed in appeal and was determined in the appellate proceedings. Therefore, same issue could not lawfully form the basis of the notice for reopening of the assessment and accordingly, the assessment proceedings held invalid. (iv) Bearing in mind the legal provision as well as the judicial pronouncements on the issue, we are of the view that in the present case, the issue regarding disallowance of the claim is pending for disposal before 2nd Appellate Authority and in view of the 3rd proviso to Section 147 of the Act, the respondent cannot reopen the assessment invoking the provision of Section 147. (v) In the present case, considering the materials on record, we are of the view that at relevant time, there was no omission or failure to disclose the truly and fully all primary material facts for the assessment by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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