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Income Tax Appellate Tribunal, DEHRADUN BENCH, NEW DELHI
Before: SHRI M. BALAGANESH & SHRI SATBEER SINGH GODARA
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in DDN/2024 for AY 2013-14, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] dated 10.01.2024 against the order of assessment passed u/s 147 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 28.03.2022 by the Assessing Officer, NFAC, Delhi (hereinafter referred to as „ld. AO‟).
At the outset, there is a delay in filing of appeal by the assessee before us by 41 days. Considering the reason adduced in the condonation petition, we are inclined to condone the delay in the interest of substantial justice and admit the appeal of the assessee for adjudication.
The assessee has raised the following grounds of appeal:- Page | 1
1. The initiation of re-assessment proceedings is bad in law as well as facts of the case and the re-assessment order passed u/s 147 should be quashed.
2. The Ld. CIT(A) has erred in law as well as facts of the case in upholding the re-assessment order passed by the Ld. AO even though the re-assessment proceeding is time barred.
3. The Ld. CIT(A) has erred in upholding the action of Ld. AO in carrying out a review of his order under the guise of re-assessment.
The Ld. CIT(A) has erred in law as well as facts of the case in upholding the re-assessment by Ld. Ld. AO despite the fact that no new information / material came to Ld. AO's knowledge to reopen the case.
5. The Ld. CIT(A) as well Ld. AO has erred on facts and in law in not allowing the deduction u/s 80 IC in respect of sale of scrap and job work.
6. The Ld. CIT(A) has erred on facts in stating that no disclosure of the process of generation of scrap was made so as to work out whether the scrap was generated from his eligible manufacturing business or not.
7. The above grounds are all independent and without prejudice to one another.
8. The appellant craves leave to supplement, cancel, amend. add and/or otherwise alter/ modify any or all the grounds of appeal
stated hereinabove.”
4. We have heard the rival submissions and perused the materials available on record. The assessee derives income from manufacturing and trading of auto parts and having its manufacturing unit at plot number B- 155, ELDICO SIDCUL, Sitarganj, U S Nagar. During the year under consideration, the assessee had declared total sales in its profit and loss account to the tune of Rs. 3.63 crores, which includes sale of scrap and job work done by the assessee company. Books of accounts, bills and vouchers were duly produced before the Learned AO in the course of original scrutiny assessment proceedings completed under section 143(3) of the Act dated 5-2-2016. The assessee had claimed deduction under section 80-IC of the Act in respect of profits derived from the manufacturing activity of the eligible undertaking. The Learned AO having satisfied with the entire claim made by the assessee and also being satisfied that the year under Page | 2 consideration is the second year of claim of deduction under section 80-IC of the Act, allowed the complete deduction under section 80-IC of the Act and determined the total income at Rs. Nil. However, the Learned AO computed the book profit under section 115JB of the Act at Rs 46,92,486/- and calculated the tax liability thereon.
During the course of assessment proceedings under section 143(3) of the Act, the Learned AO raised specific query vide notice dated 8-12-2015 with regard to sale of scrap amounting to Rs 9,27,086/- and its eligibility for deduction under section 80IC of the Act. The assessee submitted the details vide letter dated 12-12-2015. The assessee drew the attention similarly with regard to receipts from job work amounting to Rs 2,37,192/- and its eligibility to claim deduction under section 80IC of the Act. The Learned AO raised specific question vide notice dated 8-12-2015 which was replied by the assessee vide letter dated 12-12-2015. The assessee also furnished Form No. 10CCB vide submission dated 12-12-2015 again before the Learned AO during the course of original scrutiny assessment proceedings. The Learned AO having been satisfied with these evidences and explanations given by the assessee, proceeded to accept the claim of deduction under section 80 IC of the Act as stated supra .
This assessment was sought to be reopened by the Learned AO vide issuance of notice under section 148 of the Act dated 28-3-2021. Further we find that the Learned AO had sought to reopen the assessment only on perusal of the assessment records. This itself goes to prove that there was absolutely no tangible material available with the Learned AO which would enable him to form a belief that income of the assessee had escaped assessment. The Learned AO had sought to reopen the assessment merely on re-appraisal of the materials already on record in the assessment folder. In any event, the assessment year 2013-14 is sought to be reopened beyond the expiry of 4 years from the end of the relevant assessment year. Hence the first proviso to section 147 of the Act would come into operation, wherein the Learned AO is duty bound to bring out the failure on the part of the assessee to make full and true disclosure of all material facts relevant for the purpose of assessment. In the instant case, as stated supra, the assessee had already given detailed submissions dated 12-12- 2015 in respect of sale of scrap and receipts from job work during the original scrutiny assessment proceedings itself pursuant to the specific query raised by the Learned AO thereon vide notice dated 8-12-2015. Hence there cannot be any failure that could be attributed on the part of the assessee to make full and true disclosure of all material facts relevant for the purpose of assessment within the meaning of the proviso to section 147 of the Act. Hence we hold that the proviso to section 147 of the Act does not get satisfied at all in the instant case. Further on perusal of the explanation given by the assessee, the Learned AO had indeed formed an opinion in the original scrutiny assessment proceedings. The Learned AO in the reassessment proceedings had merely sought to re-examine the very same materials already on record and had tried to change his opinion. This clearly tantamounts to change of opinion on the part of the Learned AO in the reassessment proceedings on the materials already on record. It is trite law that no reopening of assessment could be made based on change of opinion. Reliance in this regard is placed on the decision of Hon‟ble Supreme Court in the case of Kelvinator of India limited reported in 320 ITR 561 (SC).
In view of the aforesaid observations, we have no hesitation to conclude that-
(a) there was no tangible material available with the Learned AO to form a belief that income of the assessee had escaped assessment ;
(b) there was no failure on the part of the assessee to make full and true disclosure of all material facts relevant for the purpose of assessment, which had been brought out by the Learned AO as admittedly the entire details were filed by the assessee in the original assessment proceedings itself ; (c ) the reopening has been made on the basis of change of opinion by the Learned AO.
For these reasons, the reopening of assessment fails and hence we have no hesitation to quash the entire assumption of jurisdiction under section 147 of the Act by the Learned AO. Since the reassessment is quashed, the other grounds raised by the assessee on merits need not be gone into and they are left open.
In the result, the appeal of the assessee is hereby allowed.
Order pronounced in the open court on 02/04/2025.