CIT vs. LLOYED INSULATION (INDIA) LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . 27.05.2011 . Present: Mr.Sanjeev Sabharwal, Advocate for the appellant. . +ITA No.771/2011 . The assessment which was completed under normal provisions was reopened under Section 147 on the ground that the order?s scrutiny reveals that the profit and loss account of the assessee showed profit on job contract of `14,68,02,744/- above against net profit of `6,92,41,165/-. On that basis reassessment order was passed and additions made rejecting the explanation of the assessee. The CIT(A) quashed the reassessment proceedings holding that the notice under Section 147 was invalid and wrongly issued as it was a case of mere change of opinion. The CIT(A) relied upon the judgment of this Court in CIT v. Goetze (India) Ltd., 34 DTR (Del) 140. The ITAT has upheld the order of the CIT(A). The Order passed by CIT(A) as well as ITAT would clearly demonstrate that the issue in question was adequately and properly discussed by the Assessing Officer while passing the reassessment order and it was in fact a case of mere change of opinion. Following facts in this behalf as disclosed by the ITAT would clinch the issue: ?6. Thus, as per the reasons recorded it was the audit scrutiny which has made the A.O. to initiate the reassessment proceedings. In the regular assessment the A.O. had dealt with the issue of deduction u/s 80 IB and assessee made following submissions. . ITA No.771/2011 Page 1 of 3 . . ?Assessee has claimed deduction u/s 80 IB of Rs.112.46 lakhs in respect of two of its divisions ? Liquid Polymer division and polyurethane division at Pitampur. The separate profit and loss account and balance sheet of different units have already attached. We are also enclosing chart in respect of profit/loss earned along with the claim of deduction u/s 80 IB claimed year wise from the initial A.Y. upto the current A.Y. The assessee has also taken due care of the provisions of sub section (5) of Section 80 IB and the computation of deduction u/s 80 IA is made as if such eligible business was the only source of income of the assessee during the P.Y. relevant to the initial A.Y. and to every subsequent A.Y.? . From the above, it is clear issue of S.80 IB was considered at the time of regular assessments. The reopening proceeding against the assessment made u/s 143(3) of the Act can be initiated only when the income has escaped assessment for the reasons failure on the part of assessee to disclose fully and truly all material facts necessary for assessment. Only in such a condition the A.O. can invoke the jurisdiction for reopening of the assessment. In this case the facts were made available by the assessee in the original return of income. The A.O. considered the relevant material at the time of original assessment proceedings u/s 143(3). The reasons recorded for reopening also shows that there was no fault on the part of the assessee in disclosing all material facts fully and truly at the stage of original assessment proceedings. All material facts relevant to the issue of deduction u/s 80 IB of the Act were made available to the A.O. which is evident by way of filing the audited profit and loss account, balance sheet and auditor?s report and form 10 CCB along with the return of income. The A.O. has made enquiries and asked information on the aspects of deduction u/s 80 IB and has applied his mind while framing the original assessment u/s 143(3). Thus the order passed u/s 143(3) on 28.2.2006 was made after applying mind and appreciating facts available on record by the A.O. There was no new material acts came before the A.O. which can lead to form a belief that income has escaped assessment. . . . ITA No.771/2011 Page 2 of 3 Thus A.O. was not in possession of any new material where reassessment proceedings are necessary u/s 148 of the Act. The A.O. had changed his opinion on the same set of facts.? . No question of law arises and the appeal is accordingly dismissed. . . A.K. SIKRI, J. . . . . MAY 27, 2011 M.L. MEHTA, J. Dev . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ITA No.771/2011 Page 3 of 3 . . #28