9911796707
TMI Blog2018 (2) TMI 2129X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act then the reopening for the purpose of the disallowing the said deduction on the issue on which two views are possible is not permissible in the absence of any fresh material came to the knowledge of the AO which could lead to the formation of belief that the income chargeable to tax has escaped assessment due to excess deduction u/s 80IA of the Act allowed in the original assessment. It is not the case of claim of deduction u/s 80IA of the Act allowed by the AO which is absolutely not permissible under the Act but the opinion of the AO in allowing the claim in the original assessment u/s 143(3) is a possible view. Accordingly, in view of the facts that the interest and penal interest was received as part of the other Revenue earned by the assessee from the allottees and from the activity of developing, maintaining and operating the industrial parks then the case of the assessee does not fall in the category of absolute impermissible claim. Hence, the reopening based on change of opinion is not permissible under the law and the same is held as invalid. Accordingly, we set aside the reopening u/s 148 as invalid and consequently quash the reassessment framed by the AO. Decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a result of which the assessee was allowed excess deduction u/s 80IA of Rs. 11,78,54,899/-. The assessee raised the objections against the notice issued u/s 148 vide letter dated 11.06.2014 however, the AO rejected the objection raised by the assessee vide order dated 14.11.2014. The AO completed the second reassessment u/s 143(3) r.w.s. 147 vide order dated 31.12.2014 whereby the AO disallowed the deduction u/s 80IA on interest income including penal interest and other income items. The assessee challenged the action of the AO before the ld. CIT(A) and also raised the objects against the validity of reopening however, the ld. CIT(A) rejected the objections raised by the assessee against the validity of the reopening. The ld. CIT(A) allowed part relief to the assessee and sustained the disallowance of deduction u/s 80IA of the Act in respect of penal interest and other income. Thus, both Revenue as well as assessee are aggrieved by the impugned order of ld. CIT(A) and filed the appeal and cross objection before this Tribunal. 4. Before us, the ld. AR of the assessee has submitted that in course of original assessment proceeding, assessee filed the audit report u/s 80IA of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport and books of accounts would not constitute discloser of relevant facts fully and truly. He has referred to the explanation-1 to section 147 of the Act and submitted that production of books of account or other evidence from which the material evidence could with due diligence has been discovered by the AO will not amount to discloser within the meaning of proviso to section 147 of the Act. He has further submitted that as per the explanation 2 excessive allowance under the Act is also deem to be income chargeable tax has escaped assessment. He has relied upon the orders of the authorities below. 6. We have considered the rival submissions as well as relevant material on record. There is no dispute that the original assessment was completed u/s 143(3) on 24.12.2009 and thereafter the AO reopen the assessment and completed the reassessment u/s 143(3) r.w.s. 147 of the Act on 01.03.2013. Further, the AO issued a noticed u/s 148 on 25.03.2014 proposed to disallow the claim of deduction u/s 80IA on interest and other incomes. Thus, it is clear that after completing the original assessment u/s 143(3) of the Act as well as reassessment u/s 147 of the Act, the AO has made second atte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed its belief on the basis of the material available on record without any fresh evidence or material came to the knowledge of the Assessing officer, the opinion form by the AO on the basis of the re-appreciation of material already available on record is nothing but mere change of opinion. The Hon ble jurisdiction High Court in case of CIT Vs. Hindustan Zinz Ltd.(supra) while considering an identical issue as held in paras 4 to 12 as under:- 4. We have considered the submissions of the learned counsel for the Revenue and perused the material on record. 5. Indisputably, as per the provision of Section 147 of the Act, the Assessing Officer is empowered to initiate the re- assessment proceedings if any income of the assessee chargeable to tax has escaped assessment for any assessment year. But then, before initiating the re-assessment proceedings, the AO has to record the reasons in terms of sub-section (2) of Section 148, for formation of the belief that any income of the assessee chargeable to tax for the relevant assessment year has escaped assessment. As laid down by the Hon'ble Supreme Court, the belief entertained by the Assessing Officer must not be arbitrary or irration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 219, the Hon'ble Supreme Court while relying upon the decision in the matter of Calcutta Discount Co. Ltd. (supra), has observed as under: 'But the legal position is that if there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material baring on the question of under-assessment, that would be sufficient to give jurisdiction to the Income Tax Officer to issue the notice under section 34. Whether these grounds are adequate or not is not a matter for the court to investigate. In other words, the sufficiency of the grounds which induced the Income-tax Officer to act is not a justiciable issue. It is of course open for the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. Again the expression reason to believe in section 34 does not mean a purely subjective satisfaction on the part of the Income-tax Officer. The belief must be held in good faith: it cannot be merely a pretence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tense. It is open to the court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section. To this limited extent, the action of the Income-tax Officer in starting proceedings in respect of income escaping assessment is open to challenge in a court of law. The Hon'ble Supreme Court further observed : As stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income -tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. (Emphasis Supplied) 9. In the matter of Ganga Saran Sons (P.) Ltd. v. ITO [1981] 130 ITR 1/6 Taxman 14 (SC), the Hon'ble Supreme Court held as under: 6. It is well settled as a result of several decisions of this Court that two dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaped assessment. The existence of the reason(s) to believe is intended to be a check, a limitation, upon his power to reopen the assessment. Section 148(2) imposes a further check upon the said power, viz., the requirement of recording of reasons for such reopening by the Income-tax Officer. Section 151 imposes yet another check upon the said power, viz., the Commissioner or the Board, as the case may be, has to be satisfied, on the basis of the reasons recorded by the Income-tax Officer, that it is a fit case for issuance of such a notice. The power conferred upon the Income-tax Officer by sections 147 and 148 is thus not an unbridled one. It is hedged in with several safeguards conceived in the interest of eliminating room for abuse of this power by the Assessing Officers. The idea was to save the assessees from harassment resulting from mechanical reopening of assessments but this protection avails only to those assessees who disclose all material facts truly and fully. Every disclosure is not and cannot be treated to be true and full disclosure. A disclosure may be a false one or a true one. It may be a full disclosure or it may not be. A partial disclosure may very often be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phasis Supplied) 12. In the backdrop of the settled position of law noticed hereinabove adverting to the facts of the present case, it is to be noticed that the assessee had made true and full disclosure of all relevant facts relating to the claim of additional depreciation and also in respect of claim for grant of deduction under Section 80 IA. A separate audit report in the prescribed form 10CCB in support of the claim for deduction under Section 80IA/80IB was also duly submitted. The assessee had also submitted reply pursuant to all queries made by AO during the assessment proceedings under Section 143(3) of the Act. In this view of the matter, the contention sought to be raised by the Revenue about non-disclosure on the basis of the failure on the part of the assessee in mentioned bifurcated amount of additional depreciation allowable in the depreciation chart is absolutely baseless. It is to be noticed that all that has been said by the AO is that after scrutiny assessment, it was observed that assessee has made incorrect claim of additional depreciation on CPP whereas, the claim for additional depreciation on CPP was allowed by the AO while framing the assessment under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
