Income Tax Appellate Tribunal - Chandigarh
M/S Valco Industries Ltd., Chandigarh vs Dcit-Cc-1, Chandigarh on 11 May, 2022
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'B, CHANDIGARH
BEFORE: SHRI N.K. SAINI, VICE PRESIDENT
AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
ITA No. 305/Chd/2021
(Assessment Year: 2012-13
M/s Valco Industries Ltd., बनाम The Asstt. Commissioner of
SCO: 37, Sector 26, Income Tax,
Chandigrh. Central Circle, Chandigrh.
थायी लेखा सं./PAN NO: AAACV5195J
नधा रती क ओर से/Assessee by: Shri Tej Mohan Singh, Adv.
राज व क ओर से/ Revenue by : Dr.Ranjeet Kaur, Sr. DR
सन
ु वाई क तार ख/Date of Hearing: 07.04.2022
उदघोषणा क तार ख/Date of Pronouncement: 11.05.2022
आदे श/ORDER
Per Sudhanshu Srivastava, Judicial Member:
This appeal is preferred by the assessee against the order dated 31.08.2021 of Learned Commissioner of Income Tax (A pp e a ls )-3 , Gurgaon [i n sh or t t h e 'Ld .C I T(A ) '], passed u/s 250(6) of the Income Tax Act, 1961 (in short 'the Act') for the assessment year 2012-13.
2. 0 Th e b r i e f fac ts of th e ca se ar e th a t the a s se sse e i s the ma nu fa c tur e r of A lu min u m E xtr us ion h a vi ng it s u ni t-II a t B a dd i , Hi ma ch a l P r a de sh . Th e r e tur n d e cl a r i ng tota l i nc ome of R s.4 , 8 3, 8 3 ,6 2 0 /- w a s or i gi na l l y fi l e d on 28 . 0 9. 2 0 12 a f te r 2 ITA No.305/Chd/2021 A.Y.2012-13 cl a imi n g d e d uc ti on of Rs. 5 ,7 5 ,6 4 , 7 8 9 /- u /s 8 0 I C of th e Act . Th e a ss e ss me n t w a s c omp le te d u/s 1 4 3( 3 ) of th e Ac t on 27 . 03 . 2 01 5 a t a n i nc ome of Rs. 8 ,0 7 , 03 , 62 0 /- a f te r ma k in g a n a d d it ion of Rs. 3 ,2 3 ,2 0 ,0 0 0 /- on a ccou n t of s ha r e of a sse sse e co mpa n y i n i nd u str i a l p r op e r ty b y ma k i ng th e ca l cul a ti on of the s ha re of the a ss e ssee c ompa ny a t 20 %.
2. 1 S ub se q ue n tl y, noti c e u/s 1 48 of the A ct d a ted 10 . 03 . 2 01 7 was i ssu e d a f te r r e co rd i ng the fol l ow in g re a son s:
Reasons recorded for re-opening of case u/s 147 of the I.T. Act, 1961 Name of assessee M/s Valco Industries Limited Address 27, Madhya Marg, Sector 26, Chandigarh PAN AAACV5195J Status Company Assessment Year 2012-13 Previous Year 2011-12 The original assessment in this case was made u/s '43(3) of the Income Tax Act, 1961 at income of Rs, 8,07,03,620/- by making an addition of Rs. 3,23,20,000/- in returned income of the assessee. The assessee company has two manufacturing units, Unit No-I is located at 184, Industrial Area, Phase-I, Chandigarh, which was set up in the year 1998 and the Unit No- ll is located at Village Katha, Baddi setup in year 2004, The assessee is 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 3 ITA No.305/Chd/2021 A.Y.2012-13 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 deduction for ten years. A deduction of 100% is allowed for the first 5 years and 30% of deduction is allowed for the subsequent five years from the assessment year (Initial Assessment Year) in which such enterprise/undertaking begins its operations.
4. On going through the assessment records of the assessee company it is seen from the Report u/s 10CCB that the assessee started its manufacturing activities in F.Y. 2004-05 relevant to 2005-06 and claimed 100% deduction for A.Y. 2005-06, 2006-07 & 2007-08. As per provisions of the Act the assesses was eligible for 100% deduction for A.Y. 2008-09 & 2009- 10 also and the assessee was eligible for 30% deduction from A.Y. 2010-11 to 2014-15eligible for 30% deduction from A. Y. 2010-11 to 2014-15. Further is seen that the assessee has undertaking substantial expansion during the F.Y.2 008- 09 relevant to A.Y. 2009-10 and again started claiming 100% deduction from the A.Y. 2010-11 on wards re-shifting the initial assessment year from 2005-06 to 2009-10. By doing So the assessee enhanced the time period for 100% deduction upto A.Y. 2013-14, for which it was not eligible as, only the existing units which were in existence before coming in force the provisions for 80IC were eligible deduction on the grounds of substantial expansion. It is pertinent to mention here that the Unit No-II, located at Baddi was started after commencement of the provisions of section 801C.
5. It is seen from the ITR, Computation and 10CCB Report that the assessee has claimed 100% deduction of the profit & gains derived by the undertaking/enterprises (Unit No-II, Baddi) from the eligible business at Rs. 5,84,94,739/-, whereas as per the above detailed discussion the assessee was eligible for only 30 % deduction at Rs. 1,75,48,422/-. Therefore, I have reason to believe that assessee has claimed excessive deduction u/s 80IC and income of Rs.4,09,46,317/- has been escaped assessment as per provisions of section 147 of the Income Tax Act, 1961.
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A.Y.2012-13
6. Further, it is again clarified that I have gone through the complete case records and the perused the details available and I am satisfied that this is a fit case to issue notice u/s 148 as the amount of Rs.4,57,79,317 (Rs.48,43,000 + Rs.4,09,46,317/-) has not been offered for tax. Therefore, in view of the above, I have reason to believe that the amount of Rs.4,57,79,317/- has escaped assessment within the meaning of Section 147 of the Income Tax 1961."
2. 2 . I n re sp on se to the n oti ce i ss ue d u/s 1 4 8 of th e Ac t, the a sse sse e i n ti ma te d the Asse s sing Of f ic e r ( AO ) th a t the re tur n a l re a d y f ile d u /s 1 3 9 (1 ) of th e Ac t ma y be tr e a te d a s re tur n i n re s p ons e to not ice u /s 1 4 8 o f th e A ct a nd a l so re q ue ste d the AO to s up p ly th e co py of r e a s ons r e co rd e d for re ope n in g of the ca se . The re a ft e r , the a s se sse e f iled obj e c ti ons a ga i n st t he is su a nc e of n oti ce u/s 14 8 of th e A ct wh i ch w e re d i spose d of f b y th e AO r e je cti ng the a s se s see 's obj e c ti on a ga i nst th e i ssu a nc e of n oti ce u /s 1 4 8 o f the Ac t. Th e r e a fte r, the asse ssme nt w a s f in a l iz e d i n te r ms of s e c tion 14 7 r .w .s . 1 4 3 (3) o f the Ac t a fte r ma k i ng a d i sa l lo wa nce of Rs. 4, 0 9 ,4 5 ,3 1 7 /- b e i n g a l le ge d ex ce s s c l a im of d e d uc tio n u/s 8 0I C of the Ac t. An oth e r a d di ti on of Rs. 4 8, 4 3,0 0 0 /- w a s ma de on a cc oun t of d if fe re n ce in sh a r e of the a s se ssee comp a ny in in d ust r ia l p ro pe r ty. Th e a s se s sme n t was comp l e te d a t Rs.1 2, 6 4, 9 3 ,0 0 0 /-.
2. 3 . Ag gr i e ve d, the asse ssee c a r r ie d the ma tte r be f ore the Le a r ne d Fi r st App e l l a te Aut hor i ty ch a ll e n gi ng the in voc a ti on of j ur i sd ic ti on u/s 14 7 of th e Ac t on le ga l gr ound s. Th e 5 ITA No.305/Chd/2021 A.Y.2012-13 a sse sse e a l so ch a ll e n ge d the d is a ll ow a n ce s /a dd i ti on s on me r it s. The Ld .C I T( A) d i s mi ss e d the a sse ssee 's le g al cha ll e n ge t o the i nv oca ti on of ju r is di c tio n u /s 1 4 8 of the Act . On me r its , t he Ld . C I T( A) up h e l d the ad di ti on on a ccou nt of d i ff e re n ce i n the sh a re pe rce n ta ge i n i nd us tr i a l pr op e r t y. The Ld . C I T( A) a l so up h e l d the d is a ll ow an ce ma de u/s 8 0I C of th e Act.
2. 4 . Ag gr i e ve d, the a sse ssee has now a p p ro a ch e d t hi s Tr i b un a l a nd h a s ch a l le nge d th e a c tio n of th e Le a r ne d F i r st Ap p e l la te A ut hori ty b y r a i si n g f ol lo wi n g gr oun d s of a p pe a l:
"1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law in upholding the reopening of the already completed assessment by issuance of notice u/s 148 of the Act without complying with the mandatory statutory requirements and as such the order passed is illegal, arbitrary and unjustified.
2. That there was no reason to believe that the income already assessed under section 143(3) had escaped assessment and as such the assessment framed and upheld by the Commissioner of Income Tax(Appeals) based on a mere change of opinion is illegal, arbitrary and unjustified.
3. That the Ld. .Commissioner of Income Tax (Appeals) has erred in holding that the notice issued on the basis of an audit objection is a valid one which is contrary to the settled legal position and as such the order passed is illegal, arbitrary and unjustified.
4. That the mechanical approval given by the Ld. Principal Commissioner of Income Tax does not tantamount to application of mind and as such the reopening based on such a mechanical approval is illegal, arbitrary and unjustified.6 ITA No.305/Chd/2021
A.Y.2012-13
5. Without prejudice to the above, the Ld. Commissioner of Income tax (Appeals) has erred in upholding the addition of Rs.48,43,000/- taking share in the property at 23% as against 20% which is arbitrary and unjustified.
6. That the Ld. Commissioner of Income Tax (Appeals) has further erred in law as well as on f acts in upholding the addition of Rs.4,09,46,317/- made by restricting the deduction claimed under section 80IC to 30% as against 1 00% claimed by the assessee which is arbitrary and unjustified.
7. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
8. That the order of the Ld.CIT(A) is erroneous, arbitrary, opposed to the facts of the case and thus untenable."
3. 0 . At the outse t th e Ld . A ut hor i ze d Re p re se nt a ti ve sub mi tte d th a t g r oun d N os .3 , 4 a nd 5 w e re n ot be ing pr e sse d. Ac cor d in gl y, the se th r ee g r oun d s a r e di s mis se d a s not p r e sse d .
3. 1 . Th e Ld . Au th or iz e d Re p re se n tati ve su b mitt e d th a t gr oun d N os. 1 a nd 2 ch a lle n ge the re ope n in g of th e a l re a dy comp l e te d a sse s sme n t b y i ssu a nc e of n oti ce u/s 1 4 8 of th e Act , w h e re a s grou nd N o. 6 ch a ll e n ge s the u p ho ld i ng of a dd i ti on on me r i ts. Th e Le a r ne d Au th or iz e d Re p re se nt a tive sub mi tte d th a t th e a sse ssee c omp a ny h a d c omm e n ce d i ts ope r a ti ons i n Ba dd i p la n t d u r in g f i na n ci a l ye ar 2 0 0 4 -05 re le va n t to a s se ssme n t ye a r 2 0 0 5 -0 6 a n d ha d a va i l e d 10 0 % de du cti on u /s 8 0 I C of th e Ac t for a s se s sme n t ye a r s 2 0 05 - 06 , 2 0 0 6- 07 a nd 20 0 7 -0 8 . The r e a fte r , d ue to su b sta n ti a l 7 ITA No.305/Chd/2021 A.Y.2012-13 e xp a ns io n in th e fi n a nc ia l y e a r 2 0 0 8 -09 , th e a ss ess ee ha d a ls o cl a ime d 100 % d e d u cti on in a ss e ss me n t ye a r 2 0 0 9 -10 onw a r d s. I t w a s s ub mi tte d tha t th e a d d i tio n to p l a nt & ma ch in e r y ha d st a r te d in fi na n ci a l ye a r 2 0 06 -0 7 a nd f ur th er a dd i ti ons and d e p lo yme n t of a d d it ion a l w or k in g c a p it a l re q ui re d to use th e e nh a nce d c a pa c it y w a s do ne du r ing fi na n ci a l y e a r 20 0 8 -0 9 w h ic h r es ul te d i n e n ha nce me n t of the p r od uc ti on/ou tp ut f r om a sse ssme nt ye a r 2 0 0 8 -0 9 onw a r d s. I t wa s su b mit te d th a t e ve n th e De p ar tme nt of I nd u str ie s , H ima ch a l Pradesh vi d e ce r ti fica t e d a te d 17 . 12 . 2 00 8 h a d ce r ti f ie d the ad d iti on /e xp a n si on du r in g fi na n ci a l ye a r 2 00 8 -0 9 w hi ch s up p or ts the a ss e s see 's con te n ti on of subs ta n tia l e xp a ns io n d u r in g t ha t ye a r . I t w a s sub mi tte d tha t , t he re fore , in vi e w of t he su b sta n ti a l e xp a ns io n ca r r ied out in a ss e ssme n t ye a r 2 009 -1 0 , the a sse sse e w a s e l ig ib l e f or cl a i m of de d uct ion u /s 8 0 I C of th e Act @ 1 00 % i n t he c a pt io ne d a s se s sme n t ye a r a l so ( i .e . the ye a r un de r a p p ea l ) . The Le a r n e d Au tho ri z e d R e p re se nta tive a ls o d r e w ou r a tte n ti on to t he or de r of the I TA T C ha n d i ga r h B e n ch in a sse s see 's o wn ca se f or a s se s sme n t ye a rs 2 0 1 0 -11 a nd 2 0 1 3- 14 w h e re i n the I TA T h a d h e l d th a t the a sse ssee wa s e nti tle d to c la im d e d uct io n @ 10 0 % of i ts e l ig ib l e pr of i ts in vi e w of t he s ub st a nti a l e xp a n si on u nder t a ke n by fol l ow in g th e l a w l a i d d ow n i n C i v i l Ap p e a l N o. 1 78 4 of 2 0 19 8 ITA No.305/Chd/2021 A.Y.2012-13 da t e d 2 0 .0 2 .2 0 19 i n th e ca se of Pr . C I T, S hi ml a Vs . M /s Aa r ha m Sof tr on i c s by th e H on 'b le Ape x C ou rt. It was sub mi tte d th a t si nc e the I TA T ha d up h e l d the a ss e s see 's cl a im f or d e d u cti on i n s ub se q ue n t a sse s sme n t ye a r i .e . a sse ssme nt ye a r 2 0 1 3 -14 , th e a s se s se e 's cl a im c oul d n ot b e ne g a te d in a s se ssme nt ye a r 2 0 1 2-1 3 .
3. 2 Th e Le a r ne d A uth or i ze d Re pre se nta ti ve a rg ue d tha t a s fa r wa s t he a s ses se e 's cl a i m f or de d uct ion u/s 8 0 I C of the Act i s con ce r ne d, a ll the d oc u me n ta r y e v id e nce s i n r e sp e ct of s ub st a nti a l e xp a n si on a lon gw i th ce r t if ic a te fr om th e De pa r tme nt of In du str i e s ha d dul y b e e n sub mi tte d du r ing the cou rse of ori gi na l a ss e ss me nt p r oce e d in gs whi ch w e re comp l e te d u /s 14 3 ( 3) o f t he Ac t a n d w e re a l re a d y on r e c or d. I t w a s a r g ue d t ha t a t no p oi n t of time th e re w a s a do ub t i n the mi n d of t he A O , a t the t ime o f th e or ig in a l as se s sme n t pr oc ee d i ng s, w ith r e g a rd to th e da te of su bs ta n tia l e xp a ns io n. Th e Le a r n e d Aut hor i z e d Re p re se nt a ti ve a l so sub mi tte d th a t i t is se t tle d law th a t th e a sse s see s a re e nt itle d to de d u cti on u/s 8 0I C of th e A ct @ 100 % f or th e fi r st f i ve ye a r s ev e n i n c a se of su b sta n ti a l e xp a n sion a nd h e pl a ce d re li a nce on pl e t hor a of ju di ci a l p r e ce de nts i n t his re ga r d . I t w a s su bmi tt e d t ha t, the re fo re , on ce th e AO ha d du ly e xa mi ne d th e cl a im of t he a s se s se e du r in g th e cou rse of or ig in a l a ss ess me n t p r oce e d ings , r e vi si ti ng th e s a me 9 ITA No.305/Chd/2021 A.Y.2012-13 is sue a ga i n w as a me re ch a nge of op in io n as all the ne ce s sa r y e vi den ce s a nd e xp la na ti on s ha d a lre a dy bee n e xa mi ne d a nd ve te d b y t he AO d ur i ng the cou r se of o ri gi n a l a sse ssme nt p r oce e d in gs a n d th a t h e , on l y a f te r be i ng d uly sa ti sf ie d , h a d a cc e p te d the a s se sse e 's cl a i m a t that p oi nt of time . I t w a s su b mit te d th a t the r e w a s not f re sh or c oge n t ma te r i a l a va i la b l e w i th the A O at the ti me o f re cord in g of re a son s w hi ch w oul d e mp ow e r h i m t o i ss ue n oti ce u /s 1 4 8 of the A ct. I t w a s s ub mi tte d tha t , the re fo re , re ope ni ng of th e a sse ssme nt be i ng on l y a ch a nge of op in i on w a s le ga l ly n ot sus ta i na b l e . The Le a r n e d A uth or i ze d Re p re se n ta ti ve f ur th e r sub mi tte d th a t t h e a s se s see comp a n y ha d tr u ly a n d fu ll y di sc lo se d a ll t he ma te r ia l f a ct s wh i le f il i ng i ts re tu r n of in come a nd a l so du r in g t he cou rs e of or i gi na l a s se s sme nt pr oc ee d i ng s w h ic h h a d d ul y b e e n c ons id e re d by th e AO wh i le fr a mi n g th e a s se ssme nt a nd t he re w a s n o s up p r e ss ion of ma te r ia l fa cts a n d fu r the r the re w a s n o fa i l ur e o n the pa r t of the a s se sse e comp a n y to f u ll y d i scl os e the ma t e r i a l fa ct s ne ce s sa r y f or t he p u rp o s e of th e a ss e ssme n t and fu rt he r the AO di d n ot h a ve any ta n gi b le ma te r ia l or in d e pe n de nt re a son i ng to j us ti fy t he re o pe ni n g of a con cl ud e d a sse ssme nt a n d , the re for e , the re ope n ing w a s ba d in l a w a n d d e se rv e t o be se t a si de.
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4. 0 . P e r c ont ra ,, The Ld .C I T D R s ub mi tte d t ha t b y w a y of is sua n ce of notic e u /s 1 48 of th e Act , the A O h imse l f w a s di sp u tin g th e in i tia l ye a r of s ub sta n ti a l e x pa n si on b e ca use it w a s not cl e a r f r om th e r e cor d w h e n th e pl a n t & ma ch in e r y a fte r su b sta n ti a l e x pa n si on w a s e i the r re a d y to use or p ut use . The Ld .C I T DR sub mi tte d th a t s in ce th e in i tia l ma nu fa c tur i ng a c ti vi tie s h a d c om me n ce d fr om a s se s sme n t ye a r 2 0 0 5 -06 , th e a sse ssee wa s e l i gi b le fo r d ed uc ti on @ 10 0 % fo r a s se s sme n t ye a r s 2 0 0 5 -0 6, 20 0 6 -0 7 , 2 00 7 -0 8 , 20 0 8 -0 9 & 2 00 9 -1 0 a n d he re a fter @ 3 0 % f r om a s se s sme nt ye a r 2 0 1 0 -11 onw a r d s for fi ve ye a rs . It w as f ur th er sub mi tte d th a t th e a s se s se e ha d cl a i me d su b sta n ti a l e xp a ns io n d ur i n g a ss e ss me n t ye a r 20 0 9 -1 0 a nd ha d s ta r ted cl a imi n g de du cti on @ 1 0 0 % a g a i n for th e ne xt fi ve ye a r s a lth ou gh th e a s se s se e w a s e l i gi ble for d e d uct ion onl y @ 30 % in t he c a pt ioned a ss e ss me n t ye a r (i .e . a sse s sme n t ye a r 20 1 2 -1 3) . The Ld . C I T D R a r g ue d t ha t t hi s w a s a f i t c a se for the p u rp ose of iss ui ng n oti ce u/s 1 4 8 of t he Act a s the a sse sse e 's cl a im u /s 80 I C of th e Ac t w a s no t pr op e r l y ve r i fi a b le . The L d .C I T D R a l so dr e w our a tte n ti on to the f a ct tha t t he Ld . Pr . C I T ( C e n tr a l ) G ur ga on h a d p a s se d th e or der u/s 263 of th e A ct in th e c a se of th e a ss e s see for a sse ssme nt ye a r 2 0 1 3-1 4 in w h i ch th e a sse ss me n t or d e r ha d be e n se t a s ide on th e i ss ue of tak i ng a ss e ss me n t ye a r 2 0 09 - 11 ITA No.305/Chd/2021
A.Y.2012-13 10 a s t he in it ia l a ss e ss me n t ye a r o n a c coun t of su bs ta n ti a l e xp a ns io n f or the p ur p ose of de du cti on u/s 8 0 I C o f th e A ct a nd h a d d i r e ct e d th e AO to modi f y th e a sse s sme n t or d e r b y ta k in g a s se s smen t y e a r 2 00 7 -0 8 a s t he in it ia l as se s sme n t ye a r for th e pu rp ose of sub s ta nt ia l e xp a ns i on. R e fe r r in g to the o rde r p a sse d by t he I TA T a ga i nst t he or de r p a ss e d u /s 26 3 of th e Ac t i n a s se s sme nt ye a r 2 0 1 3-1 4 , th e Ld .CI T D R sub mi tte d t ha t n o fa c tu a l f in d in g h a d be e n re cor de d b y th e I TA T a n d , th e r e for e , the i ss ue of i n it ia l a ss e s sme nt ye a r for sub s ta nt ia l e xp an si on w a s sti l l d e b a ta b le . I t w a s s ub mi tte d tha t by ta k i ng t he in i ti a l a s se ssme nt ye a r a s 2 00 7 -0 8 for sub s ta nt ia l e xp an si on, the a s se sse e 's c la i m for d e d uc ti on u/s 8 0I C o f the A ct i n the p res e n t a s se ssme nt ye a r i .e . a sse ssme nt ye a r 2 0 12 -1 3 ha d r i gh tly b ee n cu rt a ile d to 3 0 % in ste a d of 1 0 0% as cl a i me d by the a sse ss ee . W hile sup p or ti ng the or d e r of t he Ld . C IT( A) th e Ld .C I T DR a rg ue d tha t th e Ld .C I T(A ) had r i ght ly d i smi ss e d the a s se s see 's a pp e a l on the le ga l g ro un ds a s w e ll a s o n me r i ts.
5. 0 . W e ha ve he a r d th e ri va l su bmi ss io ns a n d h a ve a l so pe r use d the ma te r ia l a v a il a b le on r e c or d . We ha ve a ls o gon e thr ou gh th e c opy of r e a son s re cor d e d f or re o pe ni n g of th e ca se a nd h a ve al so g one th ro ugh th e ob je c ti ons r a is e d by the a s se s se e i n th i s r e ga r d a s we l l a s the or de r of t he AO re je cti n g the ob j e c tio ns. Th e b a si c q u e s tio n f or us to 12 ITA No.305/Chd/2021 A.Y.2012-13 con si de r i s wh et he r the a s se sse e 's a l lo wa n ce of c lai m of de du cti on u /s 8 0 I C of the A ct ca n b e re vi si te d by i ssu in g noti ce u /s 1 4 8 of th e A ct e spe c i all y w h e n the re ha s b ee n no cha nge in f a cts a nd c ir cu msta nc e s of the c a se . The p ri ma r y fa ct s a r e n ot i n di s pu te . Th e a ss e ssee comp a n y s ta r te d i ts pr od u cti on in a s se s sme n t ye a r 2 0 05 -0 6 , and th us , a sse ssme nt ye a r 2 0 0 5-0 6 wa s t he i ni ti a l a ss e s sme nt ye a r for the p u rp os e of cla i m of d e d uc ti on u /s 8 0 I C of t h e A ct a nd the a s se sse e w a s e l i gi ble f or s uch d e d uc ti on @ 10 0 % up to a sse ssme nt ye ar 2 0 0 9 -1 0. Th e re a f te r, the a sse ssee un de r took s ub sta nti a l e xp a ns ion a nd i t is t he a ss e s see 's cl a im tha t th e su bs ta nt ia l exp a ns i on took p l a ce in a sse ssme nt ye a r 2 00 9 -1 0 a n d, th e re fore , t he a ss e ssee w as e l igi b le for cl a i m o f d e d uc ti on u/ s 8 0 I C of the Act a g a in @ 10 0 % fr o m a s se s sme nt ye a r 2 00 9 -1 0 to a s se ssme nt ye a r 20 1 3 -1 4. Th e a ss e ssee 's cl a im, bo th i n a ss e ss m e n t ye a r s 20 1 0 -1 1 a n d 2 0 1 2- 13 ( i. e . t he y e a r u nd e r c onsid e ra t ion ) , wa s in i tia l l y a ll o w e d b y th e AO by a cce p tin g th e a ss e s see 's cl a im u /s 1 4 3 ( 3 ) of th e A ct. How e ve r , la te r on, the AO re a che d a co nc lu si on th a t the ini ti a l a s se s sme nt ye a r w it h re spe c t to su b stan ti a l e xp a n si on w a s a sse ss me nt ye a r 2 0 07 - 08 . Th e a s se s sme nts for a s se ssme n t ye a r s 2 010 -1 1 a nd 20 1 2 -1 3 w e re s ub se q ue ntl y re ope ne d a n d the a p pe a l o f the a sse sse e for a ssess me n t y e a r 2 0 10 -11 w a s a l l ow e d on me r i ts 13 ITA No.305/Chd/2021 A.Y.2012-13 by f ol lo wi n g th e j ud gme n t of the Hon 'b l e Ape x C our t i n th e ca se of P r .C I T, Sh i ml a Vs. M /s Aa r h a m S of tr oni cs i n C iv il Ap p e a l N o.1 7 8 4 of 2 0 1 9 d a te d 20 . 0 2. 2 0 19 . Si mi l a r l y, , the a sse sse e 's a p pe al for a sse ssme nt ye a r 2 0 1 3 -1 4 wa s a l so a ll ow e d b y C oord in a te Be nc h of t he I TA T C ha n d i g a rh . B o th the se a ppe a ls we re de ci de d i n fa vou r of the a sse s see vide or de r d a te d 14 . 0 6. 2 01 9 i n I TA N os. 1 22 & 1 23 / C h d /20 1 9 . Th e D e p a r tme nt h a s n ot gon e int o fu r the r a p pe a l a ga i n st the or de r s of th e Tr i b un a l in a sse ssee 's own ca se in a sse ssme nt ye a rs 2 0 1 0 -1 1 a nd 201 3 -1 4 a s a f ore sa id . Thu s for a l l p r a c tic a l pu r po se s , t he De pa rt me nt ha s a cce p te d the a sse sse e 's cl a im t ha t i t w a s e li gi ble for de d u cti on u /s 8 0 I C of t he Act @ 10 0 % b oth i n a s se ssme nt ye a r 2 0 1 0-1 1 a s w e l l a s i n a s se s sme n t ye a r 2 01 3 -1 4 .
5. 1 I n the ye a r un der a p p e a l i .e . a sse ss me nt ye a r 2 012 -1 3 , a lth ou gh the r e aso ns for r e op e nin g w e re r e cor de d i n M a r ch , 20 1 7 a nd t he a ss e ss me n t or de r u/s 1 4 7 r .w .s . 14 3 ( 3) of the Act w a s p a ss e d on 2 7. 1 1 .2 0 1 7, a p e r u sa l of the re a sons wo ul d sh ow th a t t he AO h a d n o f r e sh ma te r i a l b e f or e h i m to e sta b l i sh tha t the re was any ta n gi b le ma te ri a l in hi s pos se ssi on or tha t the re was any su p pr e ssi on of any ma te r i a l i nf or ma ti on o n th e p a r t of the a sse ssee w h ic h wo ul d j ust if y t he i nv oca ti on of jur i sd i cti on u /s 1 4 7 of the Act e spe c i a ll y wh e n the AO h a d a l r e a d y e xa mi ne d t he cl a im 14 ITA No.305/Chd/2021 A.Y.2012-13 of th e a ss e ssee re g a r di n g de d uct ion u/s 8 0 I C of t he A ct i n the o ri gi n a l a sses sme n t or d e r p as se d u/s 14 3 ( 3) of t he A ct How e ve r , i n sp ite of a ss e ssee 's ch a ll e n ge to the a ssu mp ti on of j ur i sd i cti on u /s 1 4 8 o f th e A ct, th e Ld . C I T( A) ch ose to ign or e i ts su bmi ss io ns a n d w e n t a he a d w it h up h o ld i ng th e sa me to ta ll y i gn o r in g th e f a ct th a t w h e n h e h a d p a s se d the imp ug ne d or d e r on 3 1. 0 8 .2 0 2 1, th e or de r of t he Tr i b un a l da t e d 1 4 .0 6 . 20 19 f or a sse ssme nt ye a r s 2 0 1 0 -1 1 a n d 2 0 13 - 14 h a d a lre a dy b ee n p r ono un ce d w he re i n the a ss e ssee 's cl a im for d e d uc tio n u/s 8 0 I C of th e A ct @ 1 0 0 % h a d b ee n a cce pte d by the Tr i b un a l a n d a ls o b y the De p a r tme n t in a s much a s th e r e w a s no f ur th e r a p p e a l b y the De p a r tme nt a ga i nst th i s o rd e r of th e Tr ib un a l . I f the a sse ssee ' s cl a im for de du cti on is he ld to b e a l l ow a b le i n a sse ss me nt ye ar 2 0 13 - 14 , th e re i s no r e a son w hy the a sse s see 's c la i m i s n ot a ll ow a b le i n a sse ssme nt ye a r 201 2 -1 3 ( i. e . the ye a r u nder a pp e a l) w he n t he S ta tu te spe c if ica l ly p r ovi d e s a ll ow a nc e of cl a im of d e d uc ti on @ 1 0 0 % f or t he i ni ti a l f ive as se s sme n t ye a r s. As far as the is sue of h a vi ng mu lt i p l e in i ti a l a sse ssme nt ye a rs f or th e p u r pos e of cl a im of de d uct ion i s con ce r ne d , the sa me s ta n ds h a vi n g a tta i ne d f in a l ity b y the or de r of the Hon 'b l e Ape x C ou rt in th e c a se of P r .CI T, Sh iml a Vs. M /s A a r ha m Sof tr on i c s (s up r a ) a n d th e re i s no di sp u te a bou t t ha t . I t i s a ls o to be me nt ione d a ga in, e ve n a t 15 ITA No.305/Chd/2021 A.Y.2012-13 the cos t of re pe titi on , th a t t he AO h ims e l f h a d a cce p te d the a sse sse e 's cl a i m for d e d u cti on @ 100% on s u bs ta n ti a l e xp a ns io n in the or ig in a l a sse ssme nt pr ocee di n gs and, the re fo re , w it hout r e cor d in g a ny co ge n t re a son , w hi ch w ou ld ju sti fy th e re o peni n g, w ith ou t p ointi n g ou t a n y d i ff e re n ce in the f a ct s and c ir c umst a nc e s of th e ca se a nd w i tho ut e sta b l i sh in g tha t the re ha s been s ome fr a u d or mis re p re se n ta ti on on p a r t of the a s se s se e , the cl a i m on ce a ll ow e d ca n not be re vi si te d.
5. 2 S e ct ion 1 4 7 of the Act a u thor i ze s th e re - ope ni n g o f a ny a sse ssme nt o f a p r e v iou s y e a r . Se c ti on 1 4 8 , w h ic h c ont a in s the con d it ion s for re -ope n in g asse ssme nt s, in clu di n g th e li mi ta ti on p e r i od w it hi n w h ic h n oti ce s ca n be i ss ue d , b y i ts pr ov is o, e n a ct s tha t :
" Prov id ed th a t n o no tic e u n d er th is se c ti on sh al l be i ssu ed u nl e s s th ere i s inf orma ti on wi th th e As se ss ing Of f ic er wh ich su gge sts th at the in co me c harg e a ble to ta x h as e sc a ped a sse ssmen t in th e c ase of th e a sse sse e f or th e rel e v an t a sse ssmen t ye ar and th e As se s sing Of f ice r ha s o bta i ne d pr ior a p prov al of th e spe c if ied au th or i ty to i ssue su ch n o tic e. "
5. 3 Long a g o, i n i ts d e c i si on re por t e d a s C a l cut ta Di s cou nt C omp a ny Ltd vs . I nc ome Ta x Of fi ce r re p or te d in 19 61 ( 2 )S C R 24 1 , the H on 'bl e Ap e x C our t ha d u nd e rs core d the ob l ig a tio n of e ve r y a s se sse e to ma k e a t rue a n d fu ll d is closu r e a nd sa i d th a t:
16 ITA No.305/Chd/2021
A.Y.2012-13 "T h ere c an be n o d ou b t th a t th e d u ty of disc l o sin g al l th e pr im ar y f ac ts rel ev an t to th e de ci sion of th e qu es ti on bef o re the a sse s sin g au t h ori ty l ie s o n th e a sse sse s."
Th e H on 'bl e C ourt fu r the r he l d tha t on ce the d ut y i s di sc ha r ge d , it i s up to th e a s se ssin g o ff ic e r t o i nq ui r e f ur the r a nd d r a w the ne ce ssa r y in fe re nce s w hi le co mpl e ti n g the a sse ssme nt .
5. 4 As to w ha t ca n b e t he va l id g r oun d s f or re -ope n ing a n a sse ssme nt ha s been th e s ub j e ct ma tt e r of s e ve r a l de ci si ons . In In come Ta x Of fi c e r , C a l cu tta & O r s. vs .
La kh ma ni Me w a l Da s re p or te d in 1 9 7 6 (3 ) SC R 9 56 , the Hon 'b l e Ape x C our t h e l d th a t the "r e a s ons to be l ie ve " mu st be b a se d on o bjec ti ve ma te ri a l s, an d on a r e a s ona bl e vie w .
5. 5 A t hr ee j ud ge B e n ch of t he Hon' bl e Ape x C ourt i n C om mis si on e r of I nc ome Ta x, D e l h i v . Ke lv in a tor of I n d ia Ltd . re p or te d i n 1 9 9 3 S up p (1 ) SC R 2 8 a f te r con si d e r i ng the pr e vi ous de c is io ns , re -sta te d t he cor re ct p osi ti on as f oll ow s:
" 5 .. . . whe re the Asse ssin g Of f icer h as re a so n to bel ieve th a t in c ome h a s e sc a pe d a s se ss men t, c onf ers ju r isd ic tion to re -o pe n th e as se ss men t. T h eref ore, po st- 1 st A pr il , 1 9 89 , po we r to re-o pen i s mu c h wi de r. H o weve r, o ne n e ed s to g ive a sc h e ma tic in ter p re tati on to th e wo rd s "re ason t o bel ieve ". .. . .
S ec tion 1 4 7 wo u l d give ar b itr ar y po we r s to th e As se ss ing Of f icer to re- o pen a sses sme n ts on th e b a si s of " mere chan ge of o pin ion ", wh ic h c an n o t be per se re ason to r e- open .17 ITA No.305/Chd/2021
A.Y.2012-13 6 . W e mu st al so kee p in m in d th e co nc ep tu al d if f e ren ce be t we e n p o we r to re v i e w an d po we r to re- a sse ss. T h e Asse ssin g Of f ic er h a s no po we r to rev ie w; h e h a s th e po we r to r e -a sse ss. B u t re - a sse ssmen t h a s to be b a sed on f u lf ill men t of c er ta in pre- co nd i ti on an d if th e c o n cep t of " ch an g e of o pin ion " i s re mo ved , a s co n te n d ed on beh alf of the D e p ar tmen t, t he n, in th e g ar b of re -ope n in g th e a sse ssmen t, re v i e w wo ul d ta k e pl ac e.
7 . O ne mu st tr ea t th e c on cep t of "ch an ge of op in ion " as an in - bu il t te s t to ch ec k ab u se of po wer b y th e A s se ss in g Of f ice r. H en c e, af ter 1 st A pr il, 1 9 89 , A sse ssin g Of f ic er h a s po we r to re -o pe n, prov id ed th ere i s " tan g i bl e ma ter i al" to c o me to th e c on cl u sion th at t he re i s esc ape me n t of inc ome f ro m a sse ssmen t. Re a son s mu s t h ave a l iv e l in k wi th the f orma tio n of th e bel ief . "
5. 6 I t i s th e re fore , c le a r th a t th e ba s is f or a v a li d r e - ope ni n g of a sses sme n t s hou ld b e a va i la b i l ity of ta n gib l e ma te r i a l, w h ic h c a n l e a d th e A O to s cr uti n iz e th e re tur n s for the p re vi ous a sse s sme n t ye a r in q u e s ti on, to de te r mi ne , wh e the r a n oti ce u nd e r Se cti on 1 47 i s ca l l e d f or .
5. 7 Ac cor d i ng ly, in v ie w of th e se ttled j ud i ci a l p re c e de n ts a s n ote d a b ove , w e ca n not e n dor se the re ope n ing of the a sse ssme nt in t he p re se nt cas e . Mor e o ve r , it is our con si de re d v ie w t ha t r e ope ni ng f or the c a pt ione d ye a r a t thi s j u nct ur e w hi ch a ls o no w ru ns a ga i ns t th e or de r p a s se d by the Tr ib un a l ca n not be up he ld. W e u ph ol d the e n ti re re - a sse ssme nt p ro cee d in gs to be b ad in l a w . Ac cor d in gl y, We a ll ow g r oun d N os .1 a nd 2 r a i se d by th e a ss e ssee a n d h old tha t the re ope ni ng vi s-à -v i s th e a s se sse e 's cl a i m for 18 ITA No.305/Chd/2021 A.Y.2012-13 de du cti on u/s 80 I C of t he A ct w a s ba d i n l a w a n d d e se r ve s to b e se t a si de .
10 . I n t he fi n a l r e sult , the a p pe a l of th e a ss e ssee sta n d s pa r tl y a l low e d.
O r d e r p r on o u n ce d o n 1 1 .0 5 . 2 0 21 .
Sd/- Sd/- (N.K. SAINI) (SUDHANSHU SRIVASTAVA) उपा य /Vice President याय क सद य/Judicial Member Dated: 11.05.2022 *रती*
आदे श क % त&ल'प अ*े'षत/ Copy of the order forwarded to :
1. अपीलाथ+/ The Appellant
2. %,यथ+/ The Respondent
3. आयकर आयु-त/ CIT
4. आयकर आयु-त (अपील)/ The CIT(A)
5. 'वभागीय % त न0ध, आयकर अपील य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar