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TMI Blog2024 (1) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner to the order dated 11.10.2018, passed by the Assessing Officer (AO), disposing of the petitioner's objections preferred vis-à-vis the reasons to believe generated by the AO. 3. Notice in this writ petition was issued on 16.11.2018. Since then, a counter-affidavit has been filed on behalf of the respondent/revenue, followed by a rejoinder. 4. The moot point which arises for consideration is as to whether the AO had triggered the reassessment proceedings against the petitioner in accordance with law. 5. In order to adjudicate the instant writ petition, the following broad facts are required to be noticed. 5.1 The petitioner had filed its Return of Income (ROI) for the aforementioned AY on 28.09.2011. The ROI was selected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought to the notice of the AO that the petitioner had been subjected to a scrutiny assessment and that the claim of deduction under Section 80-IC of the Act concerning eligible unit III was examined. 9.1 In other words, the stand of the petitioner was that it had disclosed fully and truly all material facts and, therefore, there was no reason to trigger reassessment proceedings against it. 9.2 The petitioner also emphasised the fact that the reopening was bad in law and it amounted to change of opinion, without any fresh material being available with the AO. 9.3 Furthermore, it was the petitioner's submission that even otherwise on merits, the deduction under Section 80-IC of the Act was correctly claimed by the petitioner. 10. The ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended dropping off the proceedings, while issuing notice under Section 148 of the Act recourse was taken to the same audit objection without due application of mind. 12. Mr Prashant Meharchandani, learned senior standing counsel, who appears on behalf of the respondent/revenue, defended the initiation of reassessment proceedings against the petitioner and in this behalf, largely relied upon the reasons to believe set forth by the AO. It is Mr. Meharchandani's contention that the deduction under Section 80-IC was wrongly claimed. 13. We have heard learned counsel for the parties and perused the record. 14. According to us, what has clearly emerged is that the reassessment proceedings against the petitioner had been triggered based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the losses have been set off from the Income of the Unit-I & Unit-II of their respective assessment years; and after adjusting the lossess, net income has been considered for the purpose of deduction under section 80IC (copies of computation of income for A.Y. 2008-09 & 2009-10 are enclosed for perusal). Since, the above lossess have already been set off from the income of other units of the said assessment year, no lossess of Rs. 2.84 cr & 24.73 cr were available to be set off from the income for the year under consideration i.e. A.Y. 2011-12. In view of the above facts, the audit objection raised by audit party is not acceptable and may kindly be dropped." 15. As would be evident from the extracts set forth hereinabove, the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings. For the sake of convenience, the relevant part of the reasons to believe is set forth hereafter: "From the records available it is noticed that the assessee had six units out of which five units were eligible for deduction under section 80IC. In assessment year 2011-12 assessee has earned profit of Rs. 11,81,44,552/- from Unit-III. While calculating the deduction allowable under section 80IC for the instant assessment year of Unit-III, assessee has restricted the deduction at Rs. 7,01,22,868/- after adjusting the notional losses of Rs. 4,80,21,684/- pertaining to assessment year 2010-11 under section 80IC. Further it is noticed that notional lossess of Rs. 33,37,06,761/- (Rs. 3,83,58,139/- + 24,73,26,938 and Rs. 4,80,21,684/- per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a whisper in the reasons to believe which would point in the direction that the petitioner had failed to disclose truly and fairly all material facts. 22. Since the reassessment proceedings were triggered after four years, the AO ought to have indicated as to what were those material facts which the petitioner had failed to disclose. 23. Thus, the impugned proceedings are flawed on various grounds, i.e., borrowed satisfaction, reasons to believe not adverting to the failure on the part of the petitioner to disclose truly and fairly all material facts, and also the change of opinion. 24. Thus, for the foregoing reasons, we are inclined to allow the writ petition. Consequently, the impugned notice dated 02.08.2017 and the order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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