JEL FIANANCE & INVESTMENTS LIMITED,(FORMERLY KNOWN AS JUBILIANT ENGINEERING LIMITED), HYD, HYD,SECUNDERABAD vs. DCIT, CIRCLE-2(1), HYDERABAD, HYDERABAD

The grounds raised

1. The CIT(A) ought to have held that the Assessing Officer erred in law and facts of the case in issue of notice under section 148 of the Income Tax Act, 1961.

Brief facts of the case are that, the assessee is a Company , engaged in the business of manufacturing and trading of Engineering Goods, filed its return of income for A.Y.2008-09 on 27-09-2008 admitting total income of Rs.1,38,32,986/-under the normal provisions of the income tax Act,1961(“ the Act”) and Book Profits of Rs. 6,77,32,892/- u/s 115JB of the Act.

Feeling aggrieved by the order passed by the Ld. AO, assessee filed an appeal before the Ld. CIT(A), who provided partial relief to the assessee.

Feeling aggrieved with the order of Ld. CIT(A) on the issue on which no relief had been given by the Ld. CIT(A), the assessee is now in appeal before us on as many as 5 grounds.

Per contra, the Ld. DR placed heavy reliance on the order of authorities below and requested to uphold the order of the Ld. CIT(A).

We have heard the rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. There is no dispute on the fact that there was no discussion on the issue in the original assessment order passed u/s. 143(3) of the Act and when there is no finding either positive or negative arrived at during the course of assessment proceedings, it cannot be stated that an opinion was formed by the Ld. AO originally and hence there is no question of any change of opinion subsequently. Further audit objection can be part of information which after proper analysis and investigation can form basis of the reasons for reopening. In the present case the Ld. AO based on the audit objection which served as information, formed his own opinion that the income has escaped assessment and hence the decision in the above case is not merely on the basis of an audit objection. Hence we are of the considered opinion that the assessment was reopened as the Ld. AO had reasons to believe based on the information available that income had escaped assessment and there was no question of change of opinion as no opinion was originally formed by the Assessing Officer in this regard. Therefore, we dismiss this ground of the assessee on this count.

Ground No.2 related to the objection raised against reopening were not disposed off by the Ld. AO by speaking order. The Ld. AR submitted that the Ld. AO did not address to the objections raised by the assessee vide his letter dated 19/09/2012 with regard to the reasons recorded by the Ld. AO for issue of notice u/s 148 of the Act , failing which the assessment under section 143(3) r.w.s. 147of the Act is bad in law and hence he prayed before the Bench to quash the order passed by the Ld. AO.

Per contra, the Ld. DR placed heavy reliance on the order of authorities below and requested to uphold the order of the revenue authorities.

We have heard the rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. The Ld. AR submitted that the Ld. AO did not address to the objections raised by the assessee vide his letter dated 19/09/2012 with regard to the reasons recorded by the Ld. AO for issue of notice u/s 148 of the Act. We have gone through the said letter dated 19/09/2012(as per page Nos. 3 to 5 of the PB). The letter was towards the submission of information for the purpose of reassessment proceedings made by the assessee before the Ld. AO. Hence we are of the opinion that the assessee did not raise any objection to the reopening during the assessment proceedings and hence the Ld. AO had no necessity to deal with the objections and dispose them off by a speaking order. Therefore, we dismiss this ground of the assessee on this count also.

Ground no.3 to 5 relates to the disallowance of exemptions made of Rs. 68,31,048/- towards foreign exchange gain on account of reinstatement of trade debtors and creditors.

Per contra, the Ld. DR placed heavy reliance on the order of authorities below and requested to uphold the order of the revenue authorities.

We have heard the rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. The gain of Rs. 68,31,048/- is on account of reinstatement of debts and creditors, arrived as a result of accounting entry and therefore is only a notional gain. Hence in our considered opinion such notional gain which is a result of only accounting entry, cannot be stated to be a business profit derived from the export business eligible for exemption u/s.10B. Hence we are of the opinion that assessee is not eligible for exemption u/s 10B on account of notional gains and dismiss the appeal of the assessee on this count also.

To sum up the appeal of the assessee is dismissed.