M/S. LEBEN LABORATORIES PVT. LTD.,,AKOLA vs. ACIT, AKOLA CIRCLE, AKOLA, AKOLA

The brief facts of the case as emanating from records are : The assessee company is engaged in manufacturing of pharmaceuticals. The assessee filed its return of income for the impugned assessment year on 01-12-2003 declaring total income of Rs.33,85,472/-. The assessment order u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was passed for assessment year 2003-04 on 27-03-2006 assessing the

Shri C.J. Thakar and Shri S.C. Thakar appearing on behalf of the assessee submitted that the Assessing Officer has erred in reopening the

On the other hand Shri R.K. Baral representing the Department vehemently defended the action of Assessing Officer in reopening the assessment. The ld. DR submitted that the assessee has wrongly claimed deduction u/s. 80IB of the Act. Thus, the claim of assessee has been rightly rejected by the Assessing Officer in reassessment proceedings.

We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The assessee in appeal has raised additional grounds challenging the validity of reassessment proceedings u/s. 147 of the Act. The assessee in its return of income has claimed deduction of Rs.20,29,798/- u/s. 80IB in respect of Unit Nos. III, IV, and V. A perusal of the assessment order for the assessment year 2003-04 dated 27-03-2006 passed u/s. 143(3) reveals that the Assessing Officer after detailed examination of assessee‟s claim of deduction u/s. 80IB restricted the claim to Rs.5,12,429/-. Thus, it is evident that the Assessing Officer computed assessee‟s claim of deduction u/s. 80IB after thoroughly verifying all the facets of assessee‟s claim.

It is a well settled law that the Assessing Officer cannot reopen assessment merely on the basis of „change of opinion‟. The Assessing Officer is vested with the powers of reopening u/s. 147 only where the

The Hon‟ble Supreme Court of India in the case of CIT Vs. Kelvinator of India Ltd. (supra) explaining the scope of section 147 and circumstances under which the Assessing Officer can invoke the jurisdiction under the said section held as under : “ 4. On going through the changes, quoted above, made to section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987 , re- opening could be done under above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1-4-1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post 1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1-4-1989, Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that

The Hon‟ble Bombay High Court in the case of Direct Information (P) Ltd. Vs. ITO (supra) has held : “15. ………The power of the Assessing Officer to reopen an assessment under Section 148 is even within a period of four years conditioned by the requirement that there must be reason to believe that income has escaped assessment. The Assessing Officer cannot in the guise of formulating a reason to believe exercise a jurisdiction to review an earlier determination. The power to reopen an assessment is not a power to review an assessment already made, but a power to reopen where there is reason to believe that income has escaped assessment. Consequently, unless the Assessing Officer has tangible material before him on the basis of which he comes to that conclusion, the reopening of an assessment cannot be permitted merely on the ground that there is a change in the view of the Assessing Officer and he subsequently believes that the earlier view was incorrect. If that were to be permitted, the Assessing Officer would exercise the power to reopen assessments arbitrarily. That the law does not countenance.”

As regards ground Nos. 1 to 3 raised on merits of the addition, they have become academic as the assessee has been granted relief on legal grounds of jurisdiction.

In the result, the impugned order is set aside and the appeal of assessee is allowed.

This appeal has been filed by the Revenue assailing the order of Commissioner of Income Tax (Appeals) in allowing assessee‟s claim of deduction u/s. 80IB(4) of the Act.

The ld. AR submitted that the in assessment years 2005-06, 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11 the assessee‟s claim of deduction u/s. 80IB of the Act was denied by the Revenue. The assessee carried the issue in appeal before the Tribunal. The Tribunal vide order dated 30-04-2013 common for the assessment years 2005-06, 2006-07 and 2007-08 allowed assessee‟s claim of deduction u/s. 80IB of the Act.

On the other hand the ld. DR vehemently defended the order of Assessing Officer and prayed for reversing the order of Commissioner of Income Tax (Appeals).

Both sides heard. Orders of the authorities below perused. The assessee‟s claim of deduction u/s. 80IB has been allowed by the Tribunal in the earlier assessment years. The Assessing Officer denied benefit of deduction u/s. 80IB to the assessee in respect of Unit No. V in the impugned assessment year. The Commissioner of Income Tax (Appeals) following the order of Tribunal for earlier assessment years has granted relief to the assessee. We do not find any infirmity in the impugned order in granting benefit of deduction u/s. 80IB to the assessee. The appeal of Revenue is devoid of any merit, the same is dismissed, accordingly.

To sum up, the appeal of assessee is allowed and the appeal of Revenue is dismissed.