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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
ORDER
Per Shri A.T.Varkey, JM
1. This appeal filed by the revenue is against the order of Ld. CIT(A)-VIII, Kolkata, dated 17.01.2013 for AY 2005-06.
The main issue involved in this appeal of revenue is against the order of Ld. CIT(A) in holding the reopening of assessment u/s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) as invalid.
Brief facts of the case as observed by the AO are that the assessment was originally completed u/s. 143(3) of the Act. Thereafter, notice u/s. 148 of the Act dated 10.09.2010 was issued and duly served on the assessee. The assessee company vide its letter dated 13.10.2010 requested to treat its return filed u/s. 139 of the Act on 27.11.2006 as its return in compliance to notice u/s. 148 of the Act. Thereafter, notices u/s. 143(2) and 142(1) of the Act were issued to the assessee company. The AO further observed that assessee company engaged in the business of constructing roads, highways, bridges and railway tracks etc. on contract with various state governments, railways, BRTF etc. He also observed that as per the clause 8(a) of the Tax Audit Report filed by the assessee along with the return of ABCI Infrastructure Pvt. Ltd., AY 2005-06 income, the company was engaged in the business of “Civil Construction and manufacturing of Construction Materials.” According to AO, as per explanation below section 80IA(13) of the Act, which was inserted by Finance Act, 2009 with retrospective effect from 01.04.2000, the assessee was not entitled for claim of deduction u/s. 80IA of the Act, as the assessee could not satisfy the requisite conditions laid down in sec. 80IA of the Act. Aggrieved against the said order of AO, assessee preferred an appeal before the Ld. CIT(A), who quashed the reassessment proceedings by relying on judicial precedents laid down in the various orders of Hon’ble High Court and Hon’ble Supreme Court. Aggrieved, revenue is in appeals before us.
We have heard rival submissions and gone through the facts and circumstances of the case. We find that assessment was originally completed u/s. 143(3) of the Act. Thereafter, notice u/s. 148 of the Act dated 10.09.2010 was issued and duly served on the assessee. The assessee company vide its letter dated 13.10.2010 requested to treat its return filed u/s. 139 of the Act on 27.11.2006 as its return in compliance to notice u/s. 148 of the Act. Thereafter, notices u/s. 143(2) and 142(1) of the Act were issued to the assessee company. We also note that according to the AO, the assessee company stated that it was engaged in the business of constructing roads, highways, bridges and railway tracks etc. on contract with various state governments, railways, BRTF etc. and as per the clause 8(a) of the Tax Audit Report filed by the assessee along with the return of income, the company was engaged in the business of “Civil Construction and manufacturing of Construction Materials.” Therefore, according to AO, as per explanation below section 80IA(13) of the Act, which was inserted by Finance Act, 2009 wr.e.f. 01.04.2000, the assessee was not entitled for claim of deduction u/s. 80IA of the Act as the assessee could not satisfy the requisite conditions laid down in sec. 80IA of the Act. Against the said order of AO, assessee preferred an appeal before the Ld. CIT(A), who quashed the reassessment proceedings relying on various judicial precedents of Hon’ble High Court and Supreme Court. Revenue is aggrieved by the action of Ld. CIT(A) quashing the reopening itself. We are of the considered opinion that ‘reason to believe’ postulates a foundation based on information and belief based on reason. After a foundation based on information is made, there still must be some reason which should warrant holding a belief that income
ABCI Infrastructure Pvt. Ltd., AY 2005-06 chargeable to tax has escaped assessment. When the original assessment is concluded by scrutiny u/s. 143(3) of the Act and four years have expired from the end of the relevant assessment year, then the twin conditions needs to be satisfied before assuming jurisdiction to reopen that (i) the Assessing Officer must have reason to believe that income or profits or gains chargeable to income-tax had escaped assessment and (ii) the Assessing Officer must also have reason to believe that such escapement had occurred by reason of either omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment of that year or failure on the part of the assessee to make a return of income under section 139 or in response to notice issued under section 142(1) or 148. The settled law is that both the conditions should be satisfied if the original assessment was made under section 143(3)/147 and the Assessing Officer wants to take action after the expiry of 4 years from the end of the assessment year. The assessment relates to assessment year 2005-06. The notice u/s. 148 of the Act for re-assessment was issued on 10.09.2010, clearly after expiry of four years. In this case, along with the return of income filed originally by the assessee the assessee had filed the audited accounts, tax audit report and auditor’s certificates certifying the amounts eligible for deductions u/s. 80IA of the Act. Later on, the assessment was completed u/s. 143(3) of the Act after thorough examination of the details, documents and evidences furnished in the course of scrutiny assessment proceedings and the total income was determined at Rs.19,58,610/- after allowing deductions of Rs.12,549,066/- and Rs.18,228,528/- under sections 80IA and 80IC of the Act respectively. Subsequently, notice u/s. 148 of the Act was issued by the AO on 10.09.2010 which is undisputedly after expiry of four years from the end of the relevant assessment year. When all the facts have been disclosed which were necessary for the assessment at the original stage itself, after four years after scrutiny assessment has been done in this case, cannot be revisited by the AO without pointing out specifically as to which primary evidence was non-disclosed by the assessee during original 143(3) proceedings. Since the AO has failed to even point out remotely as to the failure of the assessee in not disclosing of primary facts during original assessment which was completed u/s. 143(3) of the Act, which is sine qua non and essential jurisdictional fact, for the AO to reopen after four years the scrutiny assessment, thereby in this case, the A.O lacks jurisdiction to reopen and so is fragile in the eyes of law and we do not find any infirmity in the order of Ld. CIT(A) in ABCI Infrastructure Pvt. Ltd., AY 2005-06 quashing the same and, therefore, we confirm the same and dismiss the appeal of the revenue.
In the result, the appeal of revenue is dismissed.
Order is pronounced in the open court on 20th December, 2017. Sd/- Sd/- (M. Balaganesh) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 20th December, 2017 Jd.(Sr.P.S.) Copy of the order forwarded to:
Appellant – DCIT, Circle-8, Kolkata. 2 Respondent – M/s. ABCI Infrastructure Pvt. Ltd., 4, Shakespeare Sarani, Kolkata-700 071. 3. The CIT(A) , Kolkata.