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TMI Blog2022 (5) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantial expansion in the original assessment proceedings and, therefore, without recording any cogent reason, which would justify the reopening, without pointing out any difference in the facts and circumstances of the case and without establishing that there has been some fraud or misrepresentation on part of the assessee, the claim once allowed cannot be revisited. Section 147 of the Act authorizes the re-opening of any assessment of a previous year. Section 148, which contains the conditions for re-opening assessments, including the limitation period within which notices can be issued, by its proviso. As to what can be the valid grounds for re-opening an assessment has been the subject matter of several decisions. In Income Tax Officer, Calcutta Ors. vs. Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] the Hon'ble Apex Court held that the reasons to believe must be based on objective materials, and on a reasonable view. Thus basis for a valid reopening of assessment should be availability of tangible material, which can lead the AO to scrutinize the returns for the previous assessment year in question, to determine, whether a notice under Section 147 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the business of manufacturing of various types of aluminum products and availed deduction u/s 80IC in respect of Unit No-II Baddi. 2. The case of the assessee was completed on the basis of findings of a survey conducted u/s 133A at the business premises of the assessee on 17.06.2013 at #SR-37, Sector-26, Madhya Marg, Chandigarh, The assessment order in this case was passed on 27.03.2015 by making only addition of Rs. 3,23,20,000/-. However, on going through the assessment records, it is seen from the Para No. 4 of the assessment order that the share of the assessee in the property Industrial Site No. 70,1A-1, Chandigarh was 23%, however the calculation of these share of the assessee in Para No 6 of the same order has been done @ 20% only. By doing so the share of the assessee has been determined by a lesser amount of Rs. 3,23,20,000/- instead of Rs. 3,11,68,0001; hence amount of Rs.48.43,000/- (Rs. 3,71,68,000 - Rs. 3,23,20,000) has escaped assessment in terms of section 147 of the Income Tax Act, 1961. 3. Further, as per provisions of section 80IC(i) r.w.s. sub section 3 a company assessee Deriving any profits gains from the eligible businesses in liable for deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the meaning of Section 147 of the Income Tax 1961. 2.2. In response to the notice issued u/s 148 of the Act, the assessee intimated the Assessing Officer (AO) that the return already filed u/s 139(1) of the Act may be treated as return in response to notice u/s 148 of the Act and also requested the AO to supply the copy of reasons recorded for reopening of the case. Thereafter, the assessee filed objections against the issuance of notice u/s 148 of the Act which were disposed off by the AO rejecting the assessee s objection against the issuance of notice u/s 148 of the Act. Thereafter, the assessment was finalized in terms of section 147 r.w.s. 143(3) of the Act after making a disallowance of Rs.4,09,45,317/- being alleged excess claim of deduction u/s 80IC of the Act. Another addition of Rs.48,43,000/- was made on account of difference in share of the assessee company in industrial property. The assessment was completed at Rs.12,64,93,000/-. 2.3. Aggrieved, the assessee carried the matter before the Learned First Appellate Authority challenging the invocation of jurisdiction u/s 147 of the Act on legal grounds. The assessee also challenged the disallowances/additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve submitted that ground Nos.3, 4 and 5 were not being pressed. Accordingly, these three grounds are dismissed as not pressed. 3.1. The Ld. Authorized Representative submitted that ground Nos. 1 and 2 challenge the reopening of the already completed assessment by issuance of notice u/s 148 of the Act, whereas ground No.6 challenges the upholding of addition on merits. The Learned Authorized Representative submitted that the assessee company had commenced its operations in Baddi plant during financial year 2004-05 relevant to assessment year 2005-06 and had availed 100% deduction u/s 80IC of the Act for assessment years 200506, 2006-07 and 2007-08. Thereafter, due to substantial expansion in the financial year 2008-09, the assessee had also claimed 100% deduction in assessment year 2009-10 onwards. It was submitted that the addition to plant machinery had started in financial year 2006-07 and further additions and deployment of additional working capital required to use the enhanced capacity was done during financial year 2008-09 which resulted in enhancement of the production/output from assessment year 2008-09 onwards. It was submitted that even the Department of Industries, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only after being duly satisfied, had accepted the assessee s claim at that point of time. It was submitted that there was not fresh or cogent material available with the AO at the time of recording of reasons which would empower him to issue notice u/s 148 of the Act. It was submitted that, therefore, reopening of the assessment being only a change of opinion was legally not sustainable. The Learned Authorized Representative further submitted that the assessee company had truly and fully disclosed all the material facts while filing its return of income and also during the course of original assessment proceedings which had duly been considered by the AO while framing the assessment and there was no suppression of material facts and further there was no failure on the part of the assessee company to fully disclose the material facts necessary for the purpose of the assessment and further the AO did not have any tangible material or independent reasoning to justify the reopening of a concluded assessment and, therefore, the reopening was bad in law and deserve to be set aside. 4.0. Per contra,, The Ld.CIT DR submitted that by way of issuance of notice u/s 148 of the Act, the AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne through the copy of reasons recorded for reopening of the case and have also gone through the objections raised by the assessee in this regard as well as the order of the AO rejecting the objections. The basic question for us to consider is whether the assessee s allowance of claim of deduction u/s 80IC of the Act can be revisited by issuing notice u/s 148 of the Act especially when there has been no change in facts and circumstances of the case. The primary facts are not in dispute. The assessee company started its production in assessment year 2005-06, and thus, assessment year 2005-06 was the initial assessment year for the purpose of claim of deduction u/s 80IC of the Act and the assessee was eligible for such deduction @ 100% up to assessment year 2009-10. Thereafter, the assessee undertook substantial expansion and it is the assessee s claim that the substantial expansion took place in assessment year 2009-10 and, therefore, the assessee was eligible for claim of deduction u/s 80IC of the Act again @ 100% from assessment year 2009-10 to assessment year 2013-14. The assessee s claim, both in assessment years 2010-11 and 2012-13 (i.e. the year under consideration), was initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal by the Department against this order of the Tribunal. If the assessee s claim for deduction is held to be allowable in assessment year 201314, there is no reason why the assessee s claim is not allowable in assessment year 2012-13 (i.e. the year under appeal) when the Statute specifically provides allowance of claim of deduction @ 100% for the initial five assessment years. As far as the issue of having multiple initial assessment years for the purpose of claim of deduction is concerned, the same stands having attained finality by the order of the Hon'ble Apex Court in the case of Pr.CIT, Shimla Vs. M/s Aarham Softronics (supra) and there is no dispute about that. It is also to be mentioned again, even at the cost of repetition, that the AO himself had accepted the assessee s claim for deduction @ 100% on substantial expansion in the original assessment proceedings and, therefore, without recording any cogent reason, which would justify the reopening, without pointing out any difference in the facts and circumstances of the case and without establishing that there has been some fraud or misrepresentation on part of the assessee, the claim once allowed cannot be revisited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer has no power to review; he has the power to re-assess. But reassessment 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 re-opening the assessment, review would take place. 7. 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 re-open, 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. 5.6 It is therefore, clear that the basis for a valid reopening of assessment should be availability of tangible material, which can lead the AO to scrutinize the returns for the previous assessment year in question, to determine, whether a notice under Section 147 is called for. 5.7 Accordingly, in view of the settled judicial precedents as noted above, we cannot endorse the reopening of the assessment in the present case. Moreover, it is our considered view that reopening for the captioned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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