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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R PER MAHAVIR SINGH, VP:
This appeal by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-1, Chennai in ITA No.9/CIT(A)-1/18-19, vide order dated 15.06.2019. The original
I.T.A. No.2620/Chny/2019 2 assessment was completed by the ACIT, Corporate Circle 1(2), Chennai u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) for the relevant assessment year 2010-11 vide order dated 10.01.2013. The re-assessment was framed by the ACIT (OSD), Corporate Range 1, Chennai u/s.143(3) r.w.s. 147 of the Act, vide order dated 30.11.2017.
The only issue in this appeal of Revenue is against the order of CIT(A) quashing the reassessment proceedings. For this, Revenue has raised the following effective Ground Nos.2,3,4 & 5:- 2. The Ld. CIT(A) erred in quashing the reassessment proceeding by holding that reassessment proceeding was change of opinion but not regarding any factual finding or information, whereas in this assessee's case, based on HAP objection the case was reopened arid new material fact brought on record that the assessee has claimed u/ s l0A deduction for a unit which is not located in a Export Processing Zone, free Trade Zone or Special Economic Zone, hence, the assessee failed to disclose fully & truly this material fact and wrongfully claimed deduction u/ s 10A which is not allowable.
The learned CIT(A) erred in quashing the reassessment proceeding by holding that reassessment proceeding was change of opinion but not regarding any factual finding or information, without appreciating the fact that as per explanation 1 to the provided clause of section 147 — 'Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure"
The learned CIT(A) erred in quashing the reassessment proceeding in light of the decision of the Hon'b1e Supreme Court, in the
I.T.A. No.2620/Chny/2019 3 ease of M / s P.V.S. Beedies (P.) Ltd VS CIT, in CA No. 1564-65 of 1987 dated October 1st 1997, held that - where audit party had merely pointed out a fact which had been overlooked by Assessing Officer and this was not a case of information on a question of law, hence, reopening of case under section 149(b) on basis of factual information given by internal audit party was valid in law”
The learned CIT(A) erred in quashing the reassessment proceeding light of the decision of the Hon'b1e Jurisdictional High Court of Madras, in the case of M/s Sword G1oba1 India (P.) Ltd. VS ACTT, Co. Circle VI(4) in Writ Petition No. 1738 of 2O15 dated July 15, 2015, held that " Under section 147 cases having wilfully made false or untrue statements at the time of original assessment and when that falsity comes to notice, it is not fair on the part of the petitioner to turn around and say you accepted my lie, now your hands are tied and you can do nothing”
We have heard rival contentions and gone through facts and circumstances of the case. The brief facts are that the assessee is a unit registered with STPI, Chennai as a 100% EOU vide approval letter dated 27.08.2008 granted by the STPI. During the course of original assessment proceedings, the assessee vide letter dated 19.10.2012 submitted copy of Form No.56F to support claim of deduction u/s.10A of the Act. Further, the assessee filed copy of approval from STPI, computation sheet for claim of deduction u/s.10A of the Act and copies of Foreign Inward Remittance Certificate (FIRC) for all inward receipt of foreign currency for export of services to the AO vide letter dated 03.01.2013. The AO after going through these documents and scrutinizing the same
I.T.A. No.2620/Chny/2019 4 allowed the claim of deduction u/s.10A of the Act vide his original assessment order dated 10.01.2013. Subsequently, due to audit objection i.e., RAP objection, the assessment was reopened by issuing notice u/s.148 of the Act dated 27.02.2017. The AO recorded the following reasons for issuance of notice u/s.148 of the Act:- “The assessee company filed the Return of Income for the AY 2010-11 on 27/09/2010 admitting Nil income. The assessment u/s 143(3) was completed on 10/01/2013 assessing Nil income.
The assessee had claimed deduction u/s 10A to the extent of Rs.41,30,132/- for the AY 2010-11 while the 100% EOU is located at T.Nagar, Chennai ie., it is not a unit in Special Economic Zone. Deduction u/s.10A is available only for units setup in Export Processing Zone / Free Trade Zone or SEZ Units in Special Economic Zone before SEZ Act came into force.
As per Explanation 2(iv) to section 10A, 100% EOU means an undertaking which has been approved as a 100% EOU by the Board appointed in this behalf by the Central Govt. in exercise of powers conferred by Section 14 of Industries (Development & Regulation Act 1951) and the rules made under the Act.
It has been held in the case of Regency Creation Ltd and Valiant Communications Ltd., (ITA 69-2009, 783 of 2009, 239 of 2011) as under:
There is no notification or official document suggesting that either the Inter- Ministerial Committee or any other officer or agency was nominated to perform the duties of the Board constituted u/s 14 of the IDR Act for the purpose of approvals u/s.10B. Though the consideration which apply for granting approval u/s.10A and 10B may to an extent overlap yet the deliberate segregation of these two benefits by the Statute reflect the Parliamentary intention that the specific procedure enacted for the purpose under either has to be followed to qualify for benefit. There is nothing in any of the circulars or instructions implying that approval for purpose of an STP/EOU/EPZ also entitled a unit to benefit/s. 10B.
I.T.A. No.2620/Chny/2019 5 The Director, STPI, Chennai in letter dated 27.08.2007 informed the assessee that the application for setting up 100% EOU under the STPI Scheme has been approved under the delegated powers to the Directors of STPI by IMSC. The assessee company has been claiming the benefit of section 10A since the STP Unit was granted approval by the Director of STPI. But it is to be noted that the main object of the formation of EPZ in 1981 was to consider it as exclusive Customs area. However, STPI cannot be considered on par with EPZ since the units in STPI are under the administrative control of Development Commissioner. Therefore, the assessee is not eligible to claim deduction u/s.10A and hence there has been an excessive claim to the tune of Rs.41,30,132/- for the AY 2010-11. In the instant case, the assessee has failed to fully and truly disclose all material facts relevant to the claim of deduction u/s.10A which has led to escapement of income for the AY 2010-11.
In view of the above discussion, I have reason to believe that income chargeable to tax has escaped assessment within the meaning of section u/s.147 of the Income Tax Act, 1961.”
3.1 The assessee raised objections before the AO for reopening of assessment beyond 4 years but the AO rejected objections by relying on Explanation 1 to section 147 of the Act and stated that the reopening initiated by issuing notice u/s.148 of the Act is valid in law and accordingly, framed reassessment u/s.143(3) r.w.s. 147 of the Act by disallowing the claim of deduction u/s.10A of the Act amounting to Rs.41,30,132/-. Aggrieved, assessee preferred appeal before CIT(A).
The CIT(A) quashed reassessment proceedings by stating that the assessee’s case falls under first proviso to section 147 of the Act and original assessment was completed u/s.143(3) of the Act
I.T.A. No.2620/Chny/2019 6 and further in view of the reasons recorded, there is no failure pointed out by the AO to disclose fully and truly all material facts necessary for its assessment for the assessment year 2010-11. The CIT(A) noted that the details pertaining to claim of deduction u/s.10A of the Act by issuing notice u/s.142(1) of the Act and these were considered while completing the original assessment proceedings u/s.143(3) of the Act, vide order dated 10.01.2013 for the assessment year 2010-11. Accordingly, the CIT(A) quashed the reassessment proceedings and allowed the appeal of the assessee. Aggrieved, now Revenue is in appeal before us.
We noted that the original assessment was completed u/s.143(3) of the Act vide order dated 10.01.2013. The relevant assessment year involved is AY 2010-11. The notice u/s.148 of the Act was issued by the AO on 27.02.2017 after recording the reasons. The assessee before AO during the course of original assessment proceedings filed copy of Form No.56F for claim of deduction u/s.10A of the Act, filed copy of approval from STPI, computation sheet for claim of deduction u/s.10A of the Act and copies of Foreign Inward Remittance Certificate (FIRC) for all inward receipt of foreign currency for export of services to the AO vide letter dated 03.01.2013. The AO after going through these
I.T.A. No.2620/Chny/2019 7 documents and scrutinizing the same allowed the claim of deduction u/s.10A of the Act, to the extent of Rs.41,30,132/-. We have gone through the reasons recorded for reopening of assessment and noted that there is no whisper about any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year 2010-11. Admittedly, the assessee’s case falls under the first proviso to section 147 of the Act. Once, the reopening of assessment is beyond 4 years and falls under the first proviso to section 147 of the Act, we find no infirmity in the order of CIT(A) quashing the re-assessment. Hence, the appeal of the Revenue is dismissed.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the court on 15th February, 2022 at Chennai.
Sd/ Sd/- (महावीर �सह ) (मनोज कुमार अ�वाल) (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा�य� /VICE PRESIDENT लेखा सद�य /ACCOUNTANT MEMBER चे�ई/Chennai, �दनांक/Dated, the 15th February, 2022 RSR आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु� (अपील)/CIT(A) 4. आयकर आयु� /CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF.