Income Tax Appellate Tribunal - Chandigarh
M/S Nikkamal Jewellers, Ludhiana vs Acit, Ludhiana on 28 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND
SHRI DR. B.R.R. KUMAR, ACCOUNTANT MEMBER
ITA No 1252/Chd/2016
Assessment Year: 2007-08
ACI T Vs. Nikkamal Jewellers
Circle-7, Ludhiana 455, The Mall, Ludhiana
PAN No. AABFN7282Q
Cross Objection No. 17/Chd/2017
(in I TA No. 1252/Chd/2016)
Assessment Year: 2007-08
Nikkamal Jewellers Vs. ACI T
455, The Mall, Ludhiana Circle-7, Ludhiana
ITA No 1253/Chd/2016
Assessment Year: 2008-09
ACI T Vs. Nikkamal Jewellers
Circle-7, Ludhiana 455, The Mall, Ludhiana
Cross Objection No. 18/Chd/2017
(in I TA No. 1253/Chd/2016)
Assessment Year: 2008-09
Nikkamal Jewellers Vs. ACI T
455, The Mall, Ludhiana Circle-7, Ludhiana
ITA No 1254/Chd/2016
Assessment Year: 2009-10
ACI T Vs. Nikkamal Jewellers
Circle-7, Ludhiana 455, The Mall, Ludhiana
Cross Objection No. 19/Chd/2017
(in I TA No. 1254/Chd/2016)
Assessment Year: 2009-10
Nikkamal Jewellers Vs. ACI T
455, The Mall, Ludhiana Circle-7, Ludhiana
ITA No 1255/Chd/2016
Assessment Year: 2010-11
ACI T Vs. Nikkamal Jewellers
Circle-7, Ludhiana 455, The Mall, Ludhiana
2
Cross Objection No. 20/Chd/2017
(in I TA No. 1255/Chd/2016)
Assessment Year: 2010-11
Nikkamal Jewellers Vs. ACI T
455, The Mall, Ludhiana Circle-7, Ludhiana
(Appellant) (Respondent)
Assessee By : Sh. Sudhir Sehgal
Revenue By : Sm t. Chandrkanta
Date of hearing : 28/06/2017
Date of Pronouncement : 28/08/2017
ORDER
PER BENCH All these appeal have been filed by the Revenue against the common order of Ld. CIT(A)-3. Ludhiana dt. 22/09/2016 and Cross Objections in all the appeals filed by the Assessee.
2. Since the grounds raised and issues involved in all the appeals are identical, the same were heard together and are being disposed of by this common order for the sake of convenience. We shall be taking ITA No. 1252/Chd/2016 as the lead case for disposing of all the appeals together.
3. The grounds raised in this appeal are as under:
(i) "Whether on the facts and in the circumstances of the case the learned CIT (A) was right in deleting the disallowance of Rs. 2,14.89.928/-
made by the Assessing Officer u/s 10B of the Income Tax Act, 1961.
(ii) Whether on the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) was justified in holding that the issue of deduction u/s. 10B has attained finality as the department has not contested this issue before the Hon'ble Punjab and Haryana High Court in A.Y. 2011-12 whereas the fact is that this issue was not contested only due to the tax effect being below the monetary limits prescribed in circular No. 21/2015 dated 10-12-2015.
(iii) Whether on the facts and in the circumstances of the case the judgment of the Hon'ble Supreme Court in the case of J.B. Boda and Co. Pvt. Ltd. (223 1TR 271) is applicable to the case of the assessee as in the case of J.B. Boda Co. Pvt. Ltd. the transactions were done by the assessee with the permission of the Reserve Bank of India and also, in the case of J.B. Boda Pvt. Ltd., the Hon'ble Supreme Court granted relief to the assessee on the basis ofCBDT Circular No. 731, dated 20.12.1995 with regards to deduction u/s 80 O whereas in the case of assessee, deduction is claimed u/s 10B.
3(iv) Whether goods manufactured and returned back to a particular party outside India would come under the ambit of export and thus qualify for deduction u/s 10B especially when material for manufacturing has been supplied by that party free of cost and assessee has been paid making charges.
(v) Whether the making charges/job work charges received is convertible foreign exchange can be termed as sale proceeds within the meaning of section 10B.
4. The assessee has also filed Cross Objection in which he has raised the following grounds:
1. That the Worthy Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in initiating the proceedings u/s 147 r.w.s 148 of the Act.
2. That the Worthy CIT(A) has failed to appreciate that the earlier assessment had been completed u/s 143(3) and since the assessment as reopened is beyond four years and there was no failure on the part of the assessee to disclose fully and truly all material facts and it is just a change of opinion, which is not permitted.
3. Notwithstanding the above said ground of appeal, on merits the CIT has rightly allowed the deduction u/s 10B on the basis of earlier order of the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh for Astt. Year 2011-12 and the department has accepted the said order of the Hon'ble ITAT and has not filed any appeal on this ground before the Hon'ble Punjab & Haryana High Court.
5. Brief facts of the case the assessee was 100% export oriented unit engaged in manufacturing and export of jewellery. The assessee was claiming exemption under section 10B since the year of inception i.e. AY 2004-05:
6. Post assessment proceedings for the AY 2011-12 the Assessing Officer has issued notice under section 148 to the assessee vide letter dt. 25/04/2014. The reasons recorded for reopening by the AO which are as under:
Office of the Addl. Commissioner o f Income Tax Range- V I I , Aayahar Bhawan, Rishi Nagar, Ludhiana.
F. No. Addl. CIT/R-VII/142( 1 )/2014-15/ Dated 25.04.201 4 To The Principal Officer M/s Nikka Mai Jewellers, 455, the Mall, Ludhiana.
Dear Sir, Sub: Assessment Proceedings for A.Y. 2007-08 - Reg- Please refer to the above.
2. A notice u/s 148 of the I.T. Act has also been issued on 25.03.2014 and served on you pn the same day. You have submitted vide letter filed on 09.04.2014 that return filed u/s 139(1) of the I.T. Act may be treated as return filed in response to notice u/s 148 of the I.T. Act. Vide aforesaid letter you have also 4 requested for the copy of the reasons recorded for issue of notice u/s 148 of the I.T. Act for reopening of assessment proceedings. Copy of the reasons recorded by the ACIT, Circle-VII, Ludhiana is enclosed herewith as annexure-A. Notice has been issued after approval by the CIT-III, Ludhiana conveyed vide letter F. No.CIT-
III/JB/109/2013-14/4131 dated 25.03.2014.
3. You are requested to furnish following details and explanations for completion of the reassessment in your case:
(I) Copy of all the purchase and sale bills pertaining to the Noida unit. (II) Evidence of receipt of foreign exchange in respect of exports made. (III) Copy of the report of auditor in Form-56G under rule 16E of the I.T. Rules. (IV) From the reasons recorded, copy enclosed herewith it can be seen that you have made incorrect claim of deduction u/s 10B of I.T. Act to the extent of Rs.2,19,70,207/- Please explain why the same should not be disallowed.
4. The hearing is fixed for 01.05.2014 at 3.00 P.M. Notices u/s 143(2) & 142(1) of the I.T. Act 1961 are enclosed herewith for necessary compliance.
(R.N. Poonia) Addl, Commissioner of Income Tax, Range-VII, Ludhiana.
Annexure A During course of assessment proceedings for A Y . 201 1 12 il was observed that the assessee has claimed exemption of income u/s 1 0D of the J.T. for its unit at Noida. The claim of exemption was examined. From the bills of purchase and sale produced by the assessee it was found that the assessee is not involved any export of goods manufactured by it. The assessee actually involved in doing job work of certain parties of Dubai. The assessee claimed that it has been involved in such activities in the previous year relevant to A.Y. 2007-08 also. The assessee furnished the copy of the purchase and sale bills from which it was observed that it is actually involved in job work only. The fact can apparently be seen from the so called purchase bill of M/s Siroya Jewellers, Dubai submitted by it wherein the following note has been given on the invoice:
'This is to certify that the gold bars send by this invoice is delivered free of cost to M/s Nikkamal Jewellers, N.S.E.Z. for manufacturing purpose. After manufacturing the jewellery, should be exported back to us or to AL SALAM JEWELLERY LLC DUBAI or to any of our nominated buyers. This gold is sent through Mr. Sanjeev Kumar Jain holder of Indian passport no. Z1347665."
The note clearly shows that the assessee has only to carry out certain job as assigned and send back the material to same party or any person nominated. The assessee has no liberty to dispose of the items as it wants because the firm is not its owner. The assessee had not produced the bills during assessment proceedings for A.Y. 2007-08. New facts i.e. during the course of assessment pertaining for A.Y. 2011-12, that it has been proved that there is no purchase of Gold & the assessee has done only job work. Foreign exchange realisation is only in respect of value of job work. There is a failure on the part of the N assessee to disclose this material fact fully and truly which was necessary for assessment. Even the tax auditor in the report required to be submitted under sub-section 5 of section 10B of the I.T. Act has submitted an incorrect report in form 56G under rule 16E of the I.T. Rules. In the report so submitted the auditor has certified incorrect figure of foreign exchange realised in India in respect of export turnover. The aforesaid facts pertaining to A.Y.2007-08 have come or* record during assessment proceedings for A.Y. 2011-12. These facts were not available with the assessing officer during the course of proceedings for A.Y.2007-08.
It has not exported any item manufactured by it in 100% export oriented unit established in Noida. Such facts were not available with the assessing officer during assessment proceedings for A.Y. 2007-08. New facts have come to light 5 only in the proceedings for A.Y. 2011-12 that the assessee is not at all involved in export of any goods but it is only involved in job work. Findings on this issue has been given by the A.O. i.e. JCIT, Range VII, Ludhiana in order passed u/s 143(3) of the I.T. Act for A.Y. 2011-12 as under:-"
(I) First of all this is to be pointed out that the exemption u/s 10B of the I.T. Act is available only to the units which are involved in 100% export of goods manufactured by it in export processing zone. For manufacturing and export the assessee has to be the owner of goods. Dictionary meaning of purchase is as under:
" to acquire by the payment of the money or its equivalent."
Further sale of goods has been defined in section 4 of The Sale of Goods Act, 1930 as under:
"Sale and agreement to sell:-
1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part - owner and another.
2) A contact of sale may be absolute or conditional.
3) Where under a contact of sale the property in the goods id transferred from the seller to the buyer, the contract is called a sale, hut \uhere the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled., the contract is called an agreement to sell.
4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in tfie goods is to be transferred."
Goods have been defined by section 2 (7) of The Sale of Goods Act, 1930 as under:-
"Goods means every kind of movable property other than the actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale."
Price has been defined by section 2 (10) of The Sale of Goods Act,1930as under:-
"Price means the money consideration for a sale of goods."
Property has been defined by section 2 (11) of The Sale of Goods Act, 1930 as below:-
"Property means the general property in goods and not merely a special property."
As per section 32 of The Sale of Goods Act, 1930 payment and delivery are concurring conditions. The definition has been given as under: -
" unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller shall be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer shall be ready and willing to pay the price in exchange for possession of goods."
From the definitions reproduced above it is apparent that the title of goods never passed to the assessee. The assessee never had the dominion over the gold bars claimed to have been purchased by it. The,-ownership always remained with the sender. The assessee is involved in export of jewellery then it has to be the owner of gold from which the jewellery is manufactured. In the instant case the gold or old jewellery was received by the assessee for making or remaking. It is clearly mentioned in the so called purchase or sale bills that the gold or old gold jewellery has been received free of cost by the assessee. The gold or old gold jewellery has to be returned by the assessee specifically mentioning as to
i) what was the quantity received in advance free of cost,
ii) what the wastage / manufacturing loss is and 6
iii) what is the quantity of jewellery manufactured.
The assessee had never become the owner of the gold or old gold jewellery received by it. The assessee never had any authority to use the gold for any other purpose like trading etc. but could only use for the purpose of making jewellery. Further the assessee never had any liberty to sell the jewellery manufactured out of the gold received to anybody other than the person mention in the so called purchase bill i.e. M/s Siroya Jewellers or to AL SALAM JEWELLERY LLC DUBAI or to any of our nominated buyers of M/s Siroya Jewellers who provided the gold. When no gold was purchased, the assessee had no gold of his own for manufacturing jewellery and its subsequent export. (Copies of all the purchase bills are made part of this order as Ann.-A, Page no. 27 to 43. Copies of all the'sale bills are made part of this order as Ann. B, Page no.44 to 60.
(II) It is important to note from the sale bills / bill of landing submitted by the assessee that only the amount of making charges was receivable by it. If the assessee had purchased the gold then it was entitled to receive the value of entire gold jewellery. In the instant case the assessee has not shown the entire value of jewellery as receivable but only the making charges have been shown as receivable.
(III) The fact that the assessee had to mention the weight loss during manufacturing of jewellery clearly establishes that it had not become the owner of the gold received but the entire quantity was to be returned. That is why manufacturing losses has to be mentioned in the sale bill.
(iv) The assessee's submission that it is involved in conversion of imported gold as well as standard gold purchased from local market in jewellery is factually incorrect as discussed above. The assessee has never purchased or imported any gold as discussed at sub para I to III above. Factually the assessee has received either old jewellery or standard gold for specified job work. The gold or jewellery so received has been returned after necessary job work as can apparently be seen from the sale bills wherein the making charges are clearly mentioned and which is the amount received from the party at Dubai.
(V) The assessee has referred to circular 14 of 2013 dated 01.07.2013. Referring the circular assesse has submitted that it was not required to bring the entire sale proceeds of export turnover in India. It has been submitted that credit for payments in foreign currency is to be allowed. The reliance on circular is of no help as the assessee is not at all involved in export of any article manufactured by it as it was never be owner of the jewellery manufactured. Moreover, no payment in foreign currency has been made.
(VI) The assessee has also submitted that the term "manufactured" has to be understood in wider perspective. It has been submitted that if an operation or process that renders a commodity or article fit for use which is not otherwise fit should be considered as manufacturing. Section 10B provides benefits only with regard to profits derived from export of article or thing manufactured. The assessee may have manufactured the jewellery items but the same was only for job work and not for purpose of export. Still the fact remains that the assessee has to manufacture any article of which it was the owner. When the assessee manufactures anything of which somebody else is the owner it is called job work. It is pertinent to mention that exemption u/s 10B of the I.T. Act is available only to the exporters and not to the assessee who are involved in job work.
(VII) The assessee has placed reliance on the decision of Honourable High Court of Delhi in the case of CIT vs. Lovlesh Jain 204 Taxman 134 (Del) (2012). The facts of the case relied upon by the assessee are entirely different. In the case relied upon the assessee had possession of the gold and had a right, dominance and dominion over it. In the said case the assessee has imported gold and it had become the owner. He was in a position to dispose off in any way the way he liked. In the instant case, the assessee had never become the owner of the gold received by it but the other party whose gold was received always remained the owner. The assessee had to return the gold after job work.
(VIII) The assessee has further submitted that on similar facts deduction has been allowed to it in earlier year by the AO in order u/s 143(3) of the I.T. Act. The copies 7 of the order for A.Y. 2007-08, 2008-09 and 2009-10 have been submitted. The assessee's argument is not acceptable because the principle of res judicata does not apply to the income tax proceedings. It is well settled that a finding on any matter in relation to a particular year of assessment does not operate as res judicata on a similar question in the subsequent assessment year. In Joint Family of Udayan Chinu bhai v. CIT [1967] 63 ITR 416, wherein the Supreme Court observed:
"It is true that an assessment year under the income-tax Act is a self-contained assessment period and a decision in the assessment year does not ordinarily operate as res judicata in respect of the matter decided in any subsequent year, for the Assessing Officer is not a court and he is not precluded from arriving at a conclusion inconsistent, with his conclusion in another year. It is open to the Income-tax Officer, therefore, to depart from his decision in subsequent years, since the assessment is final and conclusive between the parties only in relation to the assessment for the particular year for which it is made. A decision reached in one year would be a cogent factor in the determination of a similar question in a following year, but ordinarily there is no bar against the investigation by the Income-tax Officer of the same facts on which a decision in respect of an earlier, year was arrived at."
The Punjab and Haryana High Court in Case of Dashinesh Transport Company Pvt. Ltd. Vs CIT, Paliala 125 ITR 681 said:
" A perusal of the Judgment, annex. 'F, would show that in the earlier case, the Tribunal did not express any opinion on the question CLS to whether the expenditure incurred by the assessee- company Wa& the capital expenditure or business expenditure and instead disallowed the deduction on the ground that the same was barred by the provisions of s. 40(a)(ii) of the Act. On a reference under s. 256(1) of the Act, the Division Bench of this court (Dashmesh Transport Co. Ltd. v. 93 ITR 275) reversed that finding of the Tribunal and there aro occasion to express any view on the question of the nature expenditure. As no opinion has been expressed in the judgment as to whether the alleged expenditure was the capital expenditure or a business expense, the judgment cannot, by any stretch of reasoning, operate as res judicata. Otherwise also, it is well settled that a finding on any matter in relation to a particular year of assessment does not operate as res judicata on a similar question in the subsequent assessment year."
(IX) It is important to note that deduction u/s 10B was not available to the assessee from A.Y. 2012-13. The assessee has closed its Noida Unit although it was earning very handsome profit i.e. more than 20 to 25% net profit from A.Y. 2007-08 onwards particularly to the extent of 25% in 2011-12. The percentage net profit of earlier year is as under:-
Sr. No. A.Y Turnover Profit Deduction
claimed
u/s 10B(in
Rs.)
1 2007-08 1,01,38,17,723/- 2,19,70,207/- 2,19,70,207/-
2 2008-09 1,03,44,26,295/- 2,96,94,126/- 2,96,94,126/-
3 2009-10 1,19,14,16,709/- 2,85,72,199/ 2,85,31,092/-
4 2010-11 34,61,259/-
Closer of a unit which was earning so handsomely cannot be explained by normal business prudence. The only possible reason for closer of the unit could be that no actual business was carried out from that place and the deduction u/s 10B was not available to the assessee from A.Y. 2012-13.
83.6 From the facts discussed above it comes clear that the assessee is not involved in export of article or thing. The activity carried out by the assessee is not covered by provisions of section 10B of the I.T. Act, Hence the claim of exemption u/s 10B of the I.T. Act is not allowable to it. The claim of exemption u/s 10B of the I.T Act to the extent of Rs.48,18,153 /- is disallowed."
2. I have gone through the records and purchase & sale bills submitted during assessment proceedings for A.Y. 2011-12. From perusal of the bills it has been found that the assessee is actually involved in job work during previous year relevant to A.Y. 2007-08 also. The assessee has shown in its accounts the purchase of gold whereas as per bill even in A.Y. 2007-08 there is no cost to purchase of gold. The assessee has never become the owner of gold but it was merely received for certain job work and to be return to the sender i.e. M/s Siroya Jewellers or to Al SALAAM Jewellery LCC, Dubai or to any of the person nominated. It is also noted that -as per explanation 1 to section 147 of the I.T. Act production before the A.O. of account books or other evidence from which material evidence could with due diligence have been discovered by the A.O. will not necessarily amount to disclosure within the meaning of the foregoing proviso. Even the tax auditor has given certificate which is not correct because export turnover has wrongly been reported. Thus there is a failure on the part of the assessee to disclose the material facts fully and truly which were necessary for assessment. The assessee actually claimed exemption u/s 10B of the I.T. Act to the extent of Rs. 2,19,70,207/- in A.Y. 2007-08. The claim made by the assessee is not allowable in view of the facts emerging during assessment proceedings for A.Y. 2011-12 which were not made available to the A.O. during proceedings for A.Y. 2007-08. In the case M/s I. P. Patel And Co. Vs Deputy Commissioner Of Income- Tax, 346 ITR 207 the Hon'ble Gujarat High Court has upheld the issue of notice u/s 148 of the I.T. Act beyond four years when there was prima facie some material on the basis of which the assessment could be reopened.
Hence I have reasons to believe that income of the assessee has escaped assessment by way of excessive relief allowed to it because of the failure on the part of the assessee to disclose its income fully and truly.
(Dr.Rahul Sohu) Asst. Commissioner of Income Tax Circle VII, Ludhiana
7. During the re-assessment proceedings the Assessing Officer has disallowed the claim of 10B of the assessee. Aggrieved the assessee filed appeal before the Ld. CIT(A) contesting the disallowance of claim under section 10B which has been regularly allowed to the assessee from the year of inception and also on the grounds that the notice under section 148 was invalid as no new facts have emerged in reopening of the case under section 147 on the same facts amounts to change of opinion.
8. Ld. CIT(A) has upheld the reopening of the assessment under section 147 and deleted the disallowance of the claim under section 10B on examination of the issue.
99. Aggrieved, the Revenue filed the present appeal before us contesting the deletion of disallowance under section 10B, whereas assessee filed cross appeal against the reopening of the assessment per se.
10. We have heard Ld. Representatives of both the parties and perused the material placed before us.
11. The moot point of the reopening of the case is that, the assessee is not involved in the business of Export and Import of Article or things but was merely doing a job work to the person for sending the gold to the assessee from Dubai which the assessee is exporting back after doing job work.
12. Before us the assessee has submitted a copy of the letter issued by the Additional Commissioner of Income Tax, Range-VII, Ludhiana dt. 16/10/2008 pertaining to assessment proceeding for AY 2007-08 wherein the comprehensive note on business activity, manufacturing process, types of articles produced, brand name of goods sold, complete address of office and business premises and raw material used have been enquired into. The notice also called for month wise details for purchase which used, consumption and production.
13. The Ld. DR relied on the order of the Ld. CIT(A) on the ground of justification under section 147 the order of the Ld. CIT(A) reads as under:
9 For acquiring jurisdiction u/s 147 of the Act, the A.O. is required to have in his possession certain material or information on the basis of which he could prima-
facie have reason to believe that income escaped assessment. The AO has relied upon the judgement of The Hon'ble Apex Court in the case of ACIT Vs. Rajesh javeri stock brokers p. ltd 291 ITR 500 234, observed as under:-
"At the initation stage, what is required is" reason to believe ", but not the established fact of escapement of income. At the stage of issue of notice,the only question is whether there was relevant material on which a reasonable person could have formed a requsit belief. Whether the materials could conclusively prove the escapement is not,the concern at that stage "
3.10 After initiation of proceedings, the A.O. could conclude on the basis of other information and explanation of the appellant that no income had escaped assessment, yet for acquiring the jurisdiction, the A.O. could still have valid basis on the basis of information available at the time of initiating action u/s 147/148 of the Act to have prima-facie reason to believe that such income escaped assessment. The information gathered by the A.O. in subsequent years, as mentioned above, could very well make him prima-facie have such reason to believe that income escaped assessment. Further, as the AO has initiated the 10 proceedings on the basis of above mentioned specific information it could not be said that the action of the A O. was on the basis of certain surmises or conjectures only. It could also not be said that the material in possession of the A.O. could just make him have reason to suspect and not reason to believe that income escaped assessment. Moreover, adequacy of satisfaction of AO is not justice-able as was held by Hon'ble Punjab & Haryana High Court in the case of Gurera Gas Cylinders Pvt. Ltd. Vs. CIT (258 ITR 170) and in case of Swaraj Engine Ltd. Vs. ACIT (260 ITR 202) following the judgment of Hon'ble Supreme Court in cash of Phool Chand Bajrang Lai Vs. ITO (203 ITR 456). The ratio of the decisions relied upon by the Ld. Counsel would, therefore, not help the case of the appellant.
3.11 The notice U/s 148 had not been issued on the conjectures and surmises but on sound footings and on the basis of information collected during the course of assessment proceedings for A.Y. 2011-12. It is incorrect to say that no new facts had come into existence. Actually, it had come to the notice of the department for the first time that the assessee was not involved in export of any article or thing but it was actually involved in the job work of a party form Dubai. This issue had been elaborately discussed in the assessment order for A.Y. 2011-12. The assessee had never purchased any gold, therefore there couldn't be any export for the purpose of exemption U/s 10B of the IT. Act,. Hence, it is incorrect to say that no new fact had come into existence. The assessee's objection that the reopening had been done merely as a result of change of opinion by the assessing office is also not correct. The objections raised by the assessee are therefore not acceptable.
The appellant has further submitted that liability of deduction in assessment framed U/s 143(3) for three years i.e. 2007-08 to 2009-10 by different AOs and thus now taking an opposite view without change of fact is merely change of opinion. It is seen that the submissions made by the assessee are not factually correct because new facts had come to light during assessment proceedings for A.Y. 2011-12 which were never before the AOs in earlier years. Such facts were never before any of the AOs in earlier years. Accordingly, it is held that the objections raised by the assessee for reopening u/s 148 are not correct.Further, it is seen from the reason recorded by the AO that the AO applied his mind to this information by verifying the assessment record .
3.12 Keeping in view the aforesaid facts, the AO was fully justified in initiating the proceedings u/s 147 r.w.s 148 of the I.T. Act. This ground of appeal is accordingly dismissed.
14. The Ld. AR has submitted that the case has been continuously examined under section 143(3) for the year in question and no new facts have been came in to force. The fundamental issues are being looked into examining the validity of the reopening.
1. Full and true disclosure.
2. Notice after expiry of four years.
3. Absence or presence of new material .
Hon'ble Jurisdictional High Court in the case of Mahavir Spinning Mills Ltd. Vs. CIT 270 ITR 290 (P&H) opined that no allegation that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Absence of this finding 11 makes the action of the AO wholly without jurisdiction. In the instant case there has been no change in the business activity of the assessee right from the inception of the company and the deduction under section 10B has been continuously claimed examined and allowed by the department. Similar view has been taken in the case of Duli Chand Singhania Vs. Assistant Commissioner of Income Tax 269 ITR 0192 by the Jurisdictional High Court. Even in the instant case there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. All the business processes have been stands examined by the Revenue in the previous assessment years. In the case of Apeejay Education Society Vs. Assistant Commissioner of Income Tax [2016] 47 ITR (Trib) 0033 (ASR) it was held that AO must have reasons to believe that income chargeable to tax has escaped assessment and that such escapement occurred by reasons of failure on part of the assessee. Hon'ble Supreme Court in the case of IOCL Vs. ITO & Ors. [1986] 158 ITR 0956 held that no case under section 148 is made out that the facts that were known all along to the Revenue while making the original assessment. In the case of Carlton Overseas (P) Ltd. vs. Income Tax Officer & Ors. [2009] 318 ITR 0295 Hon'ble Delhi High Court held that in the absence of new material reassessment proceeding therefore not valid and change of opinion and being no new or fresh material before the AO cannot form the basis for reopening of the assessment.
15. The above case laws are squarely applicable to the instant case
16. The Ld. CIT(A) and the AO / Ld. DR have relied upon the case of ACIT Vs. Rajesh Jhaveri Stock Brokers(P)Ltd. [2007] 291 ITR 500 where it has held that there has to be reason to believe and the question is whether there was a relevant material on which the reasonable person could formed a requisite believe. In the instant case after going through the reasons recorded by the AO it cannot be said that there has been any no new material that necessitate neither 12 reopening nor any new fact should have been brought to the notice. The AO has arrived at his satisfaction from the material available on record namely the export of gold to Dubai and the job work done by the assessee to two concerned persons present at Dubai.
17. The similar facts on record have been examined and accepted by the department earlier. In the satisfaction recorded by the AO at best it said to be a change of opinion. Hence the notice issued under section 147 does not survive in the eyes of law.
18. Since the notice issued under section 147 is treated as invalid and since the vary reopening of the assessment is held bad in law, the consequential additions are ordered to be deleted. Since the assessee succeeds on legal issue, hence there is no need to deliberate on merits at this stage.
19. In the result the appeal of the Revenue stands dismissed and cross objection by the assessee are allowed.
Sd/- Sd/- (SANJAY GARG) (B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 28/08/2017 AG
Copy to: The Appellant, The Respondent, The CIT, The CIT(A), The DR