9911796707
TMI Blog2005 (1) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... a total income of Rs. 1,71,21,790. The return was duly processed under section 143(1)(a) on a returned income. The case was taken up for scrutiny, and assessment was ultimately made under section 143(3) on 3-3-1997 determining the total income at Rs. 3,33,94,470. The total income was subsequently reduced to Rs. 1,96,61,037 in pursuance to the ld. CIT(A)'s order passed in an appeal filed against the original assessment order. In the return of income, the assessee claimed deduction under section 80HHC at Rs. 3,54,97,167 as per certificate given by the Chartered Accountant in Form No. 10CCAC. The Assessing Officer allowed the deduction under section 80HHC at the same amount as per certificate attached to the return of income. The deduction under section 80HHC originally allowed of Rs. 3,54,97,167 in the original assessment made under section 143(3) was subsequently increased to Rs. 4,60,93,747 vide Assessing Officer's order under section 154/143(3) dated 19-9-1997 passed in pursuance to assessee's petition dated 11-4-1997 filed under section 154 of the Act requesting the Assessing Officer to allow deduction under section 80HHC on the basis of income assessed by the Assessing Officer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 148, the assessee filed return of income on 31-12-1998 disclosing the total income at the same figure as originally disclosed. The re-assessment proceedings were ultimately completed on 30-3-2001, wherein the following additions were made:- (i) On account of suppression of production and closing stock Rs. 1,69,02,362; (ii) On account of disclosing lower value then the value disclosed before the Bank Rs. 92,76,827; (iii) On account of disallowance of deduction under section 80HHC Rs. 4,02,37,624. 4. Being aggrieved with the re-assessment order made under section 147, the assessee preferred an appeal before the ld. CIT(A). 5. The ld. CIT(A), after discussing the matter in detail and by making reference to the decisions of the various Courts, has held that re-opening by the Assessing Officer was bad in law as it was based on change of opinion on the same set of facts and law which was in existence at the time of original assessment. The operative part of CIT(A)'s order is as under:- "In view of the above, it is held that: It was in case by mere changes of opinion which is not permitted under para 7.2 of Circular No. 549 issued by CBDT which is binding on Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e further contended that there was no change of opinion as to the allowability of deduction under section 80HHC, and as such the proceeding initiated under section 147 before the expiry of four years from the end of the relevant assessment year was as per law contained in section 147 of the Act. He further pointed out that the deduction under section 80HHC in the original assessment was allowed in routine manner without examining and verifying the same and without applying the mind by the Assessing Officer as would be evident from the assessment order itself wherein deduction under section 80HHC was allowed merely as per the certificate annexed to the return of income. The various interpretation given by the assessee as to the computation of deduction provided under section 80HHC(3) was not considered or placed before the Assessing Officer nor this was examined or looked into in the course of assessment proceedings completed under section 143(3) of the Act. Therefore, the question of forming an opinion by the Assessing Officer in the original assessment did or could not arise at all. The deduction under section 80HHC claimed by the assessee was allowed by the Assessing Officer with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment. He further submitted that the validity of initiation of a proceeding or assumption of jurisdiction in the initiation of a proceeding has to be judged on the basis of reasons as recorded on the date of assumption of jurisdiction. He, therefore, contended that subsequent decision dated 2-7-2001 of Hon'ble Bombay High Court in the case of IPCA Laboratories Ltd. v. Dy. CIT (No. 1) [2001] 251 ITR 401 holding that the loss in trading activity should not be ignored for the purpose of determining amount of deduction admissible under section 80HHC cannot be a basis to justify the initiation of proceedings under section 147 of the Act, which were already initiated on 18-11-1998. He further contended that at the time when the order passed by the Assessing Officer under section 143(3) of the Act, the contention that the loss in trading items in the instant case can be ignored for the purpose of determining deduction under section 80HHC(1) when there were profit from the manufactured items, was supported by the following decisions:- (i) Asstt. CIT v. Pratibha Syntex Ltd. [1999] 106 Taxman 32 (Ahd. -Mag.); (ii) A.M. Moosa v. Asstt. CIT [1996] 86 Taxman 161 (Coch. - Mag.); (iii) Avo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment) Act, 1987 has substituted then section 147 of the Act w.e.f. April 1, 1989. The scope or powers for re-assessment has now been widened and the conditions precedent to be fulfilled under clauses (a) and (b) of old section 147 effective up to 31st March, 1989 are made less strict. It is significant to note that the amended law, after the merger of clauses (a) and (b) of old section 147, does not employ the phraseology: "the Assessing Officer has in consequence of information in his possession reason to believe". But the use of the expression: "if the Assessing Officer has reason to believe" should be enough to include also cases where "in consequence of information in his possession", he has reason to believe that income has escaped assessment. Such reason need not be in consequence of information received after the original assessment, which was a requirement of the clause (b) of old section 147. Even the use of the wider words "if the Assessing Officer has reason to believe", without the words "in consequence of information in his possession" cannot be construed so widely as to allow an Assessing Officer to reopen assessments on a mere change of opinion. In order to prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e established that the escapement of income was by reason of assessee's failure to disclose fully and truly all material facts. We further see that if there is a failure on the part of the assessee to disclose fully and truly all material facts relating to the assessment, the Assessing Officer shall be empowered to initiate action under section 147 even before or after the expiry of the four years from the end of the relevant assessment year subject to the limitation provided in section 149 of the Act for issuing notice under section 148 of the Act. Under the amended provisions of section 147 of the Act, the Legislature has specified certain cases, for the purpose of section 147, where income chargeable to tax can be said to have escaped assessment, as would appear from Explanation 2 to section 147 of the Act, which reads as under:- "Explanation 2.- For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 on 18-11-1998 as reproduced by the ld. CIT(A) in his order are as under:- "In the return of income assessee has claimed deduction under section 80HHC at Rs. 3,54,97,167. In the assessment order dated 3rd March, 1997 deduction under section 80HHC has been allowed at Rs. 3,54,97,167 vide under section 154 dated 19th September, 1997 the assessee has been allowed deduction under section 80HHC at Rs. 4,60,93,747. In the report under section 80HHC(4) of the Income-tax Act, 1961 in Form No. 10CCAC submitted alongwith the return of income, the assessee has shown profit from export of trading goods at nil and profit from export of manufactured goods at Rs. 3,54,97,167. Though the profit from export of trading goods has been shown as nil, there is loss of Rs. 22,08,86,222 and its calculations are as under:- 1. Export turnover in respect of trading goods Rs. 26,97,49,503 2. Direct cost of trading goods exported Rs. 25,47,60,102 3. Indirect cost attributable to trading goods exported &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the net profit, a deduction is to be given as per sub-section (1) of the section 80HHC. After careful perusal of section 80HHC of the Act, it is apparent that this section is self explanatory and there is no ambiguity in section 80HHC(3). The language adopted in its sub-clause (c) is very clear and by its plain reading. It is apparent that for ascertaining the net profits derived from the export business of goods or merchandise manufactured or processed by him and of trading goods, the individual profit from both the activities of the assessee is to be computed in accordance with the formula applicable to respective activities and clubbed with each other. If this interpretation is applied in this case, it is apparent that the assessee did not make proper calculation of profit export of manufacturing goods and of trading goods and deduction under section 80HHC has not been properly claimed by him. It is further stated that Apex Court has held in the cases of Karam Chand Prem Chand (40 ITR 306) and Har Prasad & Co. Pvt. Ltd (99 ITR 118) that from the charging provisions of IT Act, it is discernible that the words 'income' or 'profit & gains' should be understood as including losses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961 for A.Y. 1994-95." 11. On perusing the reasons so recorded by the Assessing Officer for issuing the notice under section 148 of the Act we find that the Assessing Officer has pointed out that the profit from export of trading goods has been shown by the assessee at Nil though there was actually a loss of Rs. 22,08,86,222 as would be evident from the calculations given as under: 1. Export turnover in respect of trading goods Rs. 26,97,49,503 2. Direct cost of trading goods exported Rs. 25,47,60,102 3. Indirect cost attributable to trading goods exported Rs. 23,58,75,623 4. Total of (2+ 3) Rs. 48,06,35,725 5. Loss from export trading goods (1-4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -10) Rs. 2,19,39,082 14. Profits derived by assessee Rs. 3,54,97,167 from export of goods or merchandise to which section 80HHC applies, computed under sub-section (3) of section 80HHC 15. Export turnover, deduction Nil in respect of which will be claimed by a supporting manufacturer in accordance with proviso to sub-section (1) of section 80HHC 16. Profit from the export Nil turnover mentioned in item 15 above, calculated in accordance with proviso to sub-section (1) of section 80HHC 17. Deduction under section 80HHC to which the assessee is Rs. 3,54,97,167 entitled (item 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of trading goods at Rs. 26,97,49,503 vide Column No. 6 thereof. The direct and indirect cost of trading goods exported is shown at Rs. 25,47,60,102 and Rs. 23,58,75,623 aggregating to Rs. 49,06,35,725 which are reflected at Column Nos. 7, 8 and 9 respectively of the said Annexure. The profit from export of trading goods by deducting aggregate of direct cost and indirect cost trading goods from export turnover of trading goods is to be calculated and to be shown against Item No. 10 of the said Annexure. Item No. 10 clearly indicates that the resultant figure of difference between the amount of Item No. 6 (export turnover in respect of goods) and Item No. 9 (aggregate of Item Nos. 7 and 8 i.e., aggregate of direct cost and indirect cost of trading goods) would be the profit from the export of trading goods. In the case on hand the export turnover is Rs. 26,97,49,503 (Item Mo. 6) and aggregate of direct cost and indirect cost is of Rs. 49,06,35,725 (Item No. 9) being total of Item Nos. 7 and 8, and thus the resultant figure (6 minus 9) would be of (-) Rs. 22,08,86,222, though in the certificate it has been shown as 'Nil. In this situation, the Assessing Officer has, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her documents available on record do not indicate in any manner that this aspect of the matter as to why Nil amount was taken against Item No. 10 in Annexure-'A' to Form No. 10CCAC was ever examined by the Assessing Officer or was ever explained or brought on record by the assessee in the course of the original assessment proceedings completed under section 143(3) on 3-3-1997. It is also pertinent to note that in the revised computation of deduction under section 80HHC filed by the assessee on 10-5-1997, subsequent to the assessment completed under section 143(3) on 3-3-1997, in support of its claim to increase the deduction under section 80HHC on the basis of income assessed by the Assessing Officer, the assessee has shown Nil as profit of trading goods instead of negative figure of Rs. 22,08,86,222 (Rs. 26,97,49,503 - Rs. 49,06,35,725) without giving any clarification or explanation as is evident from assessee's calculations as given under:- "Profit of Trading Goods.- Export Turnover of Trading goods - Direct Cost of Trading Goods - Indirect Cost of Trading Goods (a) Export Turnover of Trading Goods Rs. 26,97,49,503 (b) Direct Cost of Trading Goods & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82,11,760 - Nil = 3,82,11,760". The assessee clarified the position only after the assessment was completed vide its reply dated 17-2-1998 given in the course of rectification proceedings initiated by the Assessing Officer under section 154 on 19-9-1997, stating that the loss from export of trading goods has been considered at Nil citing in support thereof, the CBDT Circular Nos. 559 and 564 dated 4-5-1990 and 5-7-1990 and the decision of Delhi Branch of the Tribunal in International Research Park Laboratories Ltd. v. Asstt. CIT [1995] 212 ITR (AT) Page 1. No such explanation as given by the assessee for the first time vide its letter dated 17-2-1998 in response to the Assessing Officer's notice issued under section 154 of the Act on 19-9-1997 was ever given by the assessee during the assessment proceedings originally completed under section 143(3) of the Act. The Id. Counsel for the assessee in the course of the hearing of this appeal invited our attention to the assessee's letter dated 17-2-1997 filed during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed while computing deduction admissible under section 80HHC. 13. In the light of these facts and circumstances of the case and discussion made above, we are of the considered view that there was failure on the part of the assessee to disclose fully and truly all primary or material facts necessary for computation of deduction under section 80HHC. The material facts were prima facie suppressed by the assessee. The assessee has not disclosed complete facts which could enable it to claim deduction under section 80HHC to the extent as computed in the certificate. The very fact noted by the Assessing Officer in the reasons for initiating proceedings under section 147 of the Act that the assessee has shown the Nil' figure instead of the negative figure of Rs. 22,08,86,222 in Form No. 10CCAC and wrongly calculated the amount of deduction admissible under section 80HHC are relevant and sufficient material for the Assessing Officer to have reasons to believe that income chargeable to tax had escaped assessment by reason of excessive deduction under section 80HHC allowed wrongly in the original assessment. The information with regard to the facts and materials previously disclosed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timately to be drawn. It is not for somebody else - far less the assessee to tell the assessing authority what inferences, whether of fact or of law, should be drawn. Indeed when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences - whether of fact of law - he would draw from the primary facts -Calcutta Discount Co. Ltd.'s case. (v) Mere production of evidence before the ITO is not enough. There may be omission or failure to make a true and full disclosure, if some material for the assessment lay embedded in the evidence which the assessee could have uncovered but did not, then it is the duty of the assessee to bring it to the notice of the assessing authority. The assessee knows all the material and relevant facts the assessing authority may not. In respect of the failure to disclose, the omission to disclose may be deliberate or inadvertent. That is immaterial. But if there is omission to disclose the material facts, then subject to the other conditions jurisdiction to reopen is attracted - Indo Aden Salt Mfg. & Trading Co. (P.) Ltd. v. CIT [1986] 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82 Taxman 199 (All.). (vii) The assessee must disclose fully and truly all material primary facts; if any such fact is suppressed, misrepresented or falsified, re-assessment proceedings under section 147 may justified. Phool Chand Bajrang Lal v. CIT [1993] 203 ITR 456 (SC); Sri Krishna (P.) Ltd's case, Hanuman Trading Co. v. CIT [2001] 250 ITR 365 (Delhi); Gurera Gas Cylinders (P.) Ltd. v. CIT [2002] 258 ITR 170 (Punj. & Har.); Citi Bank N.A. v. S.K. Ojha [2002] 257 ITR 663 (Bom.). (viii) In Phool Chand Bajrang Lal's case, their Lordships of the Hon'ble Supreme Court has held and observed as under:- "From a combined review of the judgments of this Court, it follows that an Income-tax Officer acquires jurisdiction to reopen an assessment under section 147(a.) read with section 148 of the Income-tax Act, 1961, only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons, which he must record, to believe that, by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notes.- Mere production of evidence before the Income-tax Officer is not enough. There may be omission or failure to make a true and full disclosure, if some material for the assessment lay embedded in the evidence which the Revenue could have uncovered but did not, then it is the duty of the assessee to bring it to the notice of the assessing authority. If there are some primary facts from which a reasonable belief could be formed that there was some non-disclosure or failure to disclose fully and truly all material facts, the Income-tax Officer has jurisdiction to reopen the assessment." (x) Relying on the decision of the Hon'ble Supreme Court in the case of Phool Chand Bajrang Lal, the Hon'ble Punjab & Haryana High Court in the case of Gurera Gas Cylinders (P.) Ltd. dismissed the assessee's Writ Petition by observing that a perusal of the reasons recorded showed that the Assessing Officer had applied his mind to the relevant material and formed a belief that the petitioner had not disclosed the complete facts which could enable it to claim deduction under section 80-I, and, therefore its income had not been properly assessed. It was further observed by the Court that at this st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under section 147 after a period of four years on the ground that the claim was wrongly allowed as held by Hon'ble Gujarat High Court in the case of Sheth Bros. v. Joint CIT [2001] 251 ITR 270. Here, it is pertinent to note that the facts of the present case before us are just opposite to the facts of the said case before the Hon'ble Gujarat High Court. (xiv) Fresh material discovered in the assessment of next year. Merely because the case of assessee was accepted as correct in the original assessment, the Assessing Officer is not precluded from re-opening the assessment on the basis of his findings of facts made on the basis of fresh materials in the course of assessment of next year. It is not a case of mere change of opinion.- Ess Ess Kay Engg. (P.) Ltd v. CIT [2001] 247 ITR 818(SC). (xv) In the case of Peerless General Finance & Investment Co. Ltd. v. Dy. CIT [2002] 258 ITR 160 (Cal.), it was held by Hon'ble jurisdictional Calcutta High Court as under:- "Head Notes.- The assessee used to collect deposits on contracts. The contracts envisaged the depositors getting back the deposits alongwith certain interest by way of bonus. The contracts used to provide that the deposits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that no action under section 147 can be initiated on a mere change of opinion. We are also inclined to be in agreement with the ld. Counsel's contention that the Board's Circular No. 549, dated 31-10-1989 makes it clear that section 147 of the Act does not give arbitrary powers to the Assessing Officer to re-open past assessments on a mere change of opinion. It is also equally true that the Board's Circular are binding on the Revenue as held in the following decisions, on which the Id. Counsel has placed heavy reliance:- (i) Kelvinator of India Ltd.'s case; (ii) Azadi Bachao Andolan's case; (iii) Dhiren Chemical Industries' case; (iv) Steelco Gujarat Ltd.'s case. But, the word "change of opinion" pre-supposes that an opinion must have been formed by the Assessing Officer at original stage being based on all and true material facts necessary for forming an opinion on a certain issue. There should be something positive to show that there was in fact such formation of opinion at the original assessment stage. If initially no opinion was formed, the question of change thereof could not be said to take place. It is only when all the primary facts necessary for assessment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other words, the interpretation given by the Assessing Officer as to the meaning of section 80HHC(3)(c) was in the context of and based on the factual as well as legal mistake/omission pointed out by the Assessing Officer in Form No. 10CCAC submitted by the assessee alongwith the return of income by the assessee. Therefore, it is a case where the Assessing Officer has also proceeded to re-open the case on the basis of assessee's mistake and omission to disclose fully and truly all material facts and particulars necessary for calculating the deduction under section 80HHC as already pointed and discussed by us in foregoing paras. 17. Further, reading and perusing the reasons as a whole given by the Assessing Officer in initiating proceedings under section 147 of the Act and giving the true meaning thereto, and in the light of foregoing discussions, we find that the reasons given by the Assessing Officer are prima facie relevant, sufficient and reasonable on the basis of which an honest and reasonable person in good faith can form a reasonable belief that income had escaped assessment within the meaning of section 147 of the Act. We, therefore, cannot say that in the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef under section 80HHC(1). That, in order to become eligible for deduction under section 80HHC(1), the resultant amount calculated under section 80HHC(3)(c) cannot be a figure of loss. That, an ingenious method for claiming deduction was adopted by the assessee which has gone unnoticed by the Assessing Officer who passed the order of assessment on March 26, 1997, under section 143(3) of the Act. In view of the said reasons, we are of the view that the Assessing Officer respondent No. 1 herein was right in giving the impugned notice. In the present case, the impugned notice has been given within a period of four years. The present case falls clearly under Explanation 2(c)(iii). Therefore, the present case is one of those castes which the Legislature, by a deeming section, has said that such cases would constitute cases of income escaping assessment. This is demonstrated by the reasons given by the Assessing Officer. Hence, the aforesaid judgments cited on behalf of the assessee do not apply to the facts of the present case. We may also mention that the expression "reason to believe" refers to the belief which prompts the Assessing Officer to apply section 147 to a particular case; t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore concluding, we may mention that in the case of the same assessee in respect of the assessment year 1996-97 in Income-tax Appeal No. 131 of 2001 [IPCA Laboratories Ltd v. Dy. CIT (No. I) [2001] 251 ITR 401], this Court has come to the conclusion that in calculating the profits under section 80HHC(3)(c), the assessee was not entitled to ignore the losses in respect of the export of trading goods and that if the net result of the computation under the section is a loss, then the assessee is not entitled to claim the relief under section 80HHC(1). For the aforestated reasons, the following order is passed. There is no merit in this writ petition. The writ petition falls. The same is dismissed. No order as to costs." 19. The facts of the present case are quite similar and identical to the case of IPCA Laboratories. The facts and circumstances of the present case being identical to the case of IPCA Laboratories, by respectfully following this decision also, we hold that the notice issued by the Assessing Officer, in the case before us, under section 147 of the Act on 18-11-1998 within the four years from the end of the assessment year was valid and within jurisdiction inasmuch as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 and not under the proviso to section 147. Therefore, the validity of the impugned notice is required to be examined with reference to the statutory requirements of the main provisions of section 147. Under the substituted section 147, existence of only one condition, i.e., the Assessing Officer must have reason to believe that income, profits or gains chargeable to income-tax has escaped assessment, suffices. Two, the Assessing Officer has, at the original assessment stage, neither considered nor dealt with the claim of the assessee under section 80HHC in the original assessment order as there is no reference in the said order to show that this aspect was at all considered/examined by the said Assessing Officer. From this, it is clear that there was no conscious consideration of the aforesaid issue at the original assessment stage. May be the Assessing Officer placed too much faith on the audit report which too did not point out that the calculation of deduction was not in accordance with the statutory provisions of section 80HHC. Be whatever it may, the fact remains that the Assessing Officer, while completing the original assessment, overlooked to examine the claim of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, i.e., irregular deduction allowed to the assessee which is not consistent with the mode of calculation provided under section 80HHC for quantification of deduction. However, mere receipt of audit report does not by itself mean that the Assessing Officer has acted upon the same mechanically. It is also not true to say that audit report pointed out factual errors cannot form the basis for re-opening the assessment. In CIT v. P.V.S. Beedies Pvt. Ltd [1999] 237 ITR 13 (SC), the Hon'ble Supreme Court has held that there could be no dispute that the audit party is entitled to point out a factual error or omission in the assessment and the re-opening of a case on the basis of a factual error pointed out by the audit party was permissible under law. The case before us is squarely covered by the ratio laid down in the said judgment. As already mentioned above, it is not the case of the assessee that the reasons recorded by the Assessing Officer were irrelevant or not germane to the formation of his belief that the income chargeable to tax has escaped assessment or that the factual error pointed out by the audit was incorrect or that the assessment has been re-opened on the basis of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded by him. Besides, it is not the case of the assessee before us that (i) the reasons re-corded by the Assessing Officer were irrelevant or not germane to the formation of the requisite belief; or (ii) excessive relief was not allowed to it with reference to the statutory mode of calculation provided under section 80HHC at the original assessment stage; or (iii) the re-opening was based on interpretation of law as given by the Audit; or (iv) the Assessing Officer had considered or examined the claim of the assessee on merits in the original assessment order on the basis of which it could be inferred that the re-assessment was guided by mere change of opinion. Thus all the facts in the case before us are materially difference from those before the Hon'ble High Court in IMC v. JCIT and hence that judgment, in our view, would not apply on the facts and in the circumstances of the case before us". 21. Also in the light of the decision of Coordinate Bench in the aforesaid case of ITAT, 'C Bench, Kolkata in the case of Delta Industries Ltd., we are unable to support the order of the ld. CIT(A), in the instant case, in cancelling the reassessment proceedings initiated under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t date for assuming the jurisdiction under section 147. The subsequent event cannot validate or invalidate the action already initiated under section 147 on the basis of reasons/materials which were before the Assessing Officer at the time of assuming jurisdiction under section 147. When the reassessment proceedings has been validly started, subsequent event cannot invalidate the earlier proceedings already initiated under section 147 of the Act. Therefore, the Assessing Officer's order under section 154 made on 11-6-1999/24-6-1999 subsequent to the issuing of notice under section 148 on 18-11-1998 and also subsequent to the filing the return of income by the assessee on 31-12-1998 in response to Assessing Officer's notice issued under section 148 of the Act, cannot be held to be a basis to hold that the reassessment proceedings are bad being based on change of opinion on the question of allowability of deduction under section 80HHC. 24. Having regard to the foregoing discussion and for the reasons given above in the light of the facts and circumstances of the case so found by us, we may summarise our conclusions as under:- (i) The Assessing Officer has initiated reassessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount Nil against Item No. 10 of the Annexure annexed to the Certificate enclosed with the return of income as against actual amount of loss of Rs. 22,08,86,222 and consequently computing the amount of deduction under section 80HHC on that basis without giving any reason in support thereof as clearly pointed out in foregoing paras of this order, tends to expose untruthfulness of the facts disclosed by the assessee. (xi) It is a case where deduction under section 80HHC was allowed without any application of mind based on incomplete material, significant and relevant facts necessary for the said purpose. (xii) It is a case where income had escapement by reason of allowing excessive deduction under section 80HHC. (xiii) It is not a case where the re-opening under section 147 is based on interpretation of law as suggested by the Audit Party. The Assessing Officer has examined the case himself and came to an independent conclusion that income had escaped assessment within the meaning of section 147 of the Act for the reasons recorded by him in writing. (xiv) It is not the case of the assessee that the reasons recorded by the Assessing Officer were irrelevant or imaginary or not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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