M/S. DIGITAL MESH SOFTECH INDIA (P) LTD. V. THE UNION OF INDIA

WP(C)/4689/2015

AI Insights

The case involves M/S. Digital Mesh Softech India (P) Ltd., which filed writ petitions challenging the re-opening of their income tax assessments for the years 2006-2007, 2007-2008, and 2008-2009 under Section 148 of the Income Tax Act, 1961. The assessments were initially completed accepting their claims for exemption under Section 10B as 100% Export Oriented Undertakings. However, later re-assessments were initiated based on a Delhi High Court decision in CIT Vs. Regency Creations Ltd., which allegedly clarified the requirements for such exemptions. The petitioners contended that the re-opening was unjustified as there was no failure on their part to disclose material facts during the original assessments. The court agreed with the petitioners, noting that the re-opening was based on a change of opinion and a subsequent legal interpretation, rather than any omission or failure to disclose by the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 688931 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 12-10-2023
• Assessment Year: misc
• Other Referred Cases: CIT Vs.Regency Creations Ltd, Magadh Sugar & Energy Ltd. v. State of Bihar, ACIT Mumbai & Others v. ICICI Securities Primary Dealership Limited, CIT Gujarat II v. Kurban Hussain Ibrahimhi Mithiborwala, Raza Textiles Ltd v. Income Tax Officer, Rampur, GKN Driveshafts (India) Ltd. v. Income Tax Officer and Ors, Calcutta Discount Co.Ltd v. Income Tax Officer, Companies District I Calcutta and another, Parashuram Pottery Works Co. L.t.d v. Income Tax Officer, Commissioner of Income Tax and Another v. Foramer France, Commissioner of Income Tax v. Kelvinator of India Ltd., ACIT and Others v. Marico Limited, Commissioner of Income Tax v. P . Krishnakutty Menon
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH; CHRISTOPHER ABRAHAM
• Assessee Lawyers: M NAMBIAR; P THOMAS; P GOPINATH; K MATHAI; JOSON MANAVALAN; KURYAN THOMAS
• Keywords: 100% Export Oriented Undertakings; Exemption under Section 10B; High Court of Kerala; Income Tax; Re-opening of assessment
• Section: 147; 148; 10B

Judgement Text

"W.P.(C).No.4689/15 & con.cases 1 'CR' IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN THURSDAY, THE 12TH DAY OF OCTOBER 2023 / 20TH ASWINA, 1945 WP(C) NO. 4689 OF 2015 PETITIONER: M/S. DIGITAL MESH SOFTECH INDIA (P) LTD. AGED 51 YEARS 52, SHENOY ROAD,KALOOR, KOCHI-682 017, REPRESENTED BY ITS DIRECTOR & CEO, MR.RAJI JOHN KARUTHEDATH. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS RESPONDENTS: 1 THE UNION OF INDIA REPRESENTED BY THE SECRETARY, MINISTRY OF FINANCE (DEPARTMENT OF REVENUE), NORTH BLOCK, NEW DELHI- 110 001. 2 THE INCOME TAX OFFICER WARD 1(1), 4TH FLOOR, C.R.BUILDINGS, I.S.PRESS ROAD, KOCHI-682 018. 3 THE ADDITIONAL COMMISSIONER OF INCOME TAX CORPORATE RANGE, C.R.BUILDINGS, I.S.PRESS ROAD, KOCHI-682 018. W.P.(C).No.4689/15 & con.cases 2 BY ADVS. SRI.JOSE JOSEPH, SC, FOR INCOME TAX CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06.07.2023, ALONG WITH WP(C).4709/2015, 7849/2014, THE COURT ON 12.10.2023 DELIVERED THE FOLLOWING:- W.P.(C).No.4689/15 & con.cases 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN THURSDAY, THE 12TH DAY OF OCTOBER 2023 / 20TH ASWINA, 1945 WP(C) NO. 4709 OF 2015 PETITIONER: M/S.DIGITAL MESH SOFTECH INDIA (P) LTD. AGED 51 YEARS 52, SHENOY ROAD, KALOOR, KOCHI - 682 017, REPRESENTED BY ITS DIRECTOR & CEO, MR.RAVI JOHN KARUTHEDATH. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS RESPONDENTS: 1 THE UNION OF INDIA REPRESENTED BY THE SECRETARY, MINISTRY OF FINANCE (DEPARTMENT OF REVENU), NORTH BLOCK, NEW DELHI - 110 001. 2 THE INCOME TAX OFFICER WARD 1(1), 4TH FLOOR, C.R.BUILDINGS, I.S.PRESS ROAD, KOCHI - 682 018. 3 THE ADDITIONAL COMMISSIONER OF INCOME TAX CORPORATE RANGE, C.R.BUILDINGS, I.S.PRESS ROAD, KOCHI - 682 018. W.P.(C).No.4689/15 & con.cases 4 BY ADVS. SRI.JOSE JOSEPH, SC, FOR INCOME TAX CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06.7.2023, ALONG WITH WP(C).4689/2015 AND CONNECTED CASES, THE COURT ON 12.10.2023 DELIVERED THE FOLLOWING: W.P.(C).No.4689/15 & con.cases 5 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN THURSDAY, THE 12TH DAY OF OCTOBER 2023 / 20TH ASWINA, 1945 WP(C) NO. 7849 OF 2014 PETITIONER: M/S. U.S TECHNOLOGY INTERNATIONAL (P) LTD 721, NILA, TEHNOPARK, KARYAVATTOM P.O.,THIRUVANANTHAPURAM - 695 581REPRESENTED BY ITS SENIOR MANAGER (FINANCE),MR.SAJISH KOCHATTIL. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI. RAJA KANNAN SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.K.JOHN MATHAI SRI.KURYAN THOMAS RESPONDENTS: 1 UNION OF INDIA REPRESENTED BY THE SECRETARY, MINISTRY OF FINANCE(DEPARTMENT OF REVENUE), NORTH BLOCK, NEW DELHI -110 001. 2 THE COMMISSIONER OF INCOME TAX AAYAKAR BHAVAN, KOWDIYAR, THIRUVANANTHAPURAM -695 003. 3 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 1(1), AAYAKAR BHAVAN, KOWDIYAR,THIRUVANANTHAPURAM - 695 003. W.P.(C).No.4689/15 & con.cases 6 BY ADVS. CHRISTOPHER ABRAHAM SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 6.7.2023, ALONG WITH WP(C).4689/2015 AND CONNECTED CASES, THE COURT ON 12.10.2023 DELIVERED THE FOLLOWING: W.P.(C).No.4689/15 & con.cases 7 “CR” ANU SIVARAMAN, J. = = = = = = = = = = = = = = = W.P.(c).Nos.4689 of 2015, 4709 of 2015 & 7849 of 2014 = = = = = = = = = = = = = = = = Dated this the 12th day of October, 2023 JUDGMENT 1.The issue raised in these writ petitions is with regard to the validity of an order re-opening an assessment under Section 147 of the Income Tax Act, 1961 after the period of four years from the end of the assessment year. 2.W .P .(C).Nos.4689 of 2015 and 4709 of 2015 are filed by the very same assessee and the assessment years in question are 2007-2008 and 2008-2009 respectively, while W .P .(C).No.7849 of 2014 is in respect of assessment year 2006-2007. The assessees had availed exemption under Section 10B of the Income Tax Act as 100% Export Oriented Undertakings (EOU for short) for a block of ten years. Their assessments had been completed accepting their claim for exemption by Exhibit P1 orders. In W .P .(C).No.4689/2015 Exhibit P1 is dated W.P.(C).No.4689/15 & con.cases 8 10.12.2009 and exemption under Section 10B for income under the head “business derived from export of software” was allowed to the petitioner. However, it was found that the assessee had not excluded the interest income and had claimed exemption under Section 10B in respect of interest income also. The interest income received from Bank deposit and short term deposits was therefore assessed as income from other sources and the exemption under Section 10B was limited to profits from the export of software and tax was demanded for interest income. It is submitted that the demand was met by the petitioner. 3.In W .P .(C).No.4709/2015 also, the assessment was finalised by Exhibit P1 for the assessment year 2008-2009 on 13.12.2010. 4. In W .P .(C).No.7849/2014 an assessment order was passed, as evidenced by Exhibit P1 for the assessment year 2006-2007, which was a non-speaking order assessing a total income of 30,42,228/-. The 2nd respondent had thereafter initiated proceedings under Section 263 of the Act and set aside Exhibit W.P.(C).No.4689/15 & con.cases 9 P1 order for the reason that the exemption claimed by the petitioner under Section 10B of the Act was granted without following the due procedure and for other reasons. The assessment order was set aside and the assessment was remanded to the assessing officer to go into all the materials and to revise the assessment accordingly. Thereafter Exhibit P3 assessment order was passed assessing the total income as Rs.30,42,228/- and disallowing the excess deduction claimed under Section 10B for an amount of Rs.40,62,940/-. The revised total income of Rs.71,05,170/- was arrived at and tax was computed accordingly. The said demand was met by the petitioner. It is specifically stated in Exhibit P3 revised assessment order that the assessee has filed the relevant report under Section 10B of the Act in Form No.56G and that since the procedure for allowance of deduction is fulfilled, no further interference is required. 5.However, in all the three cases, after a period of four years from the last day of the asessment year, notices were issued for re-opening the assessment under Section 148 of the W.P.(C).No.4689/15 & con.cases 10 Income Tax Act, 1961 by Exhibit P2 in the first two writ petitions and Exhibit P4 in W .P .(C).No. 7849/2014. The notices are seen dated 26.3.2014 in all the three cases. The petitioner submitted requests seeking reasons recorded for re-opening of the assessment. The reply given by the assessing authority is Exhibit P4 in the first two cases is as follows:- “The assessee's claim for exemption u/s.10B of the Act was based on the approval as 100 percent EOU granted under STPI scheme. In the case CIT Vs.Regency Creations Ltd, the Honourable High Court of Delhi made it clear that approval granted to a 100 percent EOU set up under STPI scheme cannot be claimed to be an approval under Section 10B of the Act. Hence, I have reason to believe that assessee's income has escaped assessment within the meaning of section 147 of IT Act,1961.” 6. In W .P .(C).No.7849 of 2014, Exhibit P6 is the reply. In Exhibit P6, apart from relying on the decision in M/s.Regency Creations case for invoking re-assessment under Section 147 of the Act, it was stated that since there is failure on the part of the assessee to disclose true and correct income, the assessing officer has reason to believe that income chargeable to tax has escaped assessment within the meaning of Section 147 of the Act. W.P.(C).No.4689/15 & con.cases 11 7.The petitioners filed their objections to the re-opening of the assessment on the specific ground that a subsequent decision rendered by the Delhi High Court cannot be a reason for re- opening of an assessment, especially after four years has elapsed from the end of the assessment year in question, since from the material on record, there was no case that it was on account of any failure on the part of the assessee to disclose true and correct facts that the income escaped assessment. It was submitted that the assessees had produced all the relevant documents before the assessing officer and any error on the part of the assessing officer in drawing correct inferences cannot be a reason for re-opening the assessment, especially since admittedly, the period of four years had elapsed. However, without considering the said contentions, the re-assessment was finalised, which is under challenge in these writ petitions. 8.The learned counsel for the petitioner contends that the exemption under Section 10B was extended to the petitioners on their producing all the relevant records before the W.P.(C).No.4689/15 & con.cases 12 assessing officer and after conducting all due verification and following due procedure provided for grant of such exemptions. It is contended that the exemption is granted for a block of ten years and that the reasons stated for re-opening the assessment is only that the Delhi High Court in Regency Creations Ltd. had held that exemption can be granted to a 100% EOU set up under the STPI scheme and approved by the Board appointed by the Central Government under the Industries Development and Regulation Act, 1951. It is submitted that in the absence of any specific allegation that the assessees had withheld any material or information from the assessing officer at the time of the original assessment, the assessment could not be reopened even on the ground that the assessment completed was erroneous on any account. It is submitted that it is only in case there is any failure on the part of the assessee to disclose any relevant material that the assessment could be reopened after four years. 9.The learned counsel for the petitioner took me through the provisions of Section 147 of the Income Tax as it stood at the W.P.(C).No.4689/15 & con.cases 13 relevant time, which reads as follows:- “147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year:” 10.The learned counsel would specifically contend that a reading of the provision would make it clear that it is only in a case where income has escaped assessment due to the failure on the part of the assessee to disclose fully and truly all material W.P.(C).No.4689/15 & con.cases 14 facts necessary for that assessment year that the re-opening can be attempted after four years at the relevant time. It is further contended that a re-opening of assessment under Section 147 cannot be on the basis of any change of opinion as to the position of law or facts and that the exercise is possible only if the conditions provided under the statutory mandate are satisfied. The learned counsel for the petitioner would place reliance on the decisions of the Apex Court in Magadh Sugar & Energy Ltd. v. State of Bihar and others, reported in [(2021) 5 KLT 667], ACIT Mumbai & Others v. ICICI Securities Primary Dealership Limited [(2012) 13 SCC 514], CIT Gujarat II v. Kurban Hussain Ibrahimhi Mithiborwala [1971 82 IT 821] Raza Textiles Ltd v. Income Tax Officer, Rampur [AIR 1973 SC 1362], GKN Driveshafts (India) Ltd. v. Income Tax Officer and Ors [(2003) 1 SCC 72], Calcutta Discount Co.Ltd v. Income Tax Officer, Companies District I Calcutta and another [AIR 1961 SC 372] , Parashuram Pottery Works Co. L.t.d v. Income Tax Officer [(1977)106 ITR 0001] , DCIT and Ors v. Simplex Concrete Piles (India) Pvt [(2012)254 CTR 221], W.P.(C).No.4689/15 & con.cases 15 Commissioner of Income Tax and Another v. Foramer France [(2003)264 ITR 567 (SC)] ,Commissioner of Income Tax v. Kelvinator of India Ltd. [(2010)320 ITR 561 (SC)] , , ACIT and Others v. Marico Limited [(2020)16 SCC 354] and of the High Courts in Commissioner of Income Tax v. P . Krishnakutty Menon [(1990) 18 ITR 237], Marico Ltd. v. Assistant Commissioner of Income Tax and Others (2020) 425 ITR 177 (Bom) , Commissioner of Income Tax v. Kelvinator of India Ltd. [(2002)174 CTR 617 ( FB)] and Foramer France v. Commissioner of Income Tax and Another [(2001)247 ITR 36 (All). 11.The proposition of law in support of which these decisions are relied on are as follows:- 1. The notices issued for re-assessment were bad as they were only on the basis of a change of opinion and as the said notices were without jurisdiction, the assesse should not be relegated to the alternative remedy. Commissioner of Income Tax and Another v. Foramer France [(2003)264 ITR 567 (SC)], Commissioner of W.P.(C).No.4689/15 & con.cases 16 Income Tax v. Kelvinator of India Ltd.[(2010)320 ITR 561 (SC)], ACIT and Others v. Marico Limited [(2020)16 SCC 354], Foramer France v. Commissioner of Income Tax and Another [(2001)247 ITR 36 (All), Marico Ltd. v. Assistant Commissioner of Income Tax and Others (2020) 425 ITR 177 (Bom) and Commissioner of Income Tax v. Kelvinator of India Ltd. [(2002)174 CTR 617 (FB)]. 2.The subsequent reversal of the legal position by the judgment of Supreme Court does not authorise the Department to reopen the assessment which stood closed on the basis of law as it stood at the relevant time. DCIT and Ors v. Simplex Concrete Piles (India) Pvt [(2012)254 CTR 221]. 3.High Courts have the power to issue an order prohibiting an executive authority from acting in a fit case without jurisdiction. Calcutta Discount Co. Ltd v. Income Tax Officer, Companies District I Calcutta and another [AIR 1961 SC 372]. 4.No authority, much less a quasi judicial authority can W.P.(C).No.4689/15 & con.cases 17 confer jurisdiction on itself by deciding a jurisdictional fact wrongly. The question whether the jurisdictional fact has been rightly decided or not is a question that is open for examination by the High Court in an application for a writ of ceritorari. Raza Textiles Ltd v. Income Tax Officer, Rampur [AIR 1973 SC 1362]. 5. An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily a writ petition should not be entertained when an efficacious alternate remedy is provided by law. Magadh Sugar & Energy Ltd. vs. State of Bihar and others, [(2021) 5 KLT 667] is relied on. 6. So far as Income tax assessment orders are concerned, they cannot be reopened on the source of income escaping assessment under Section 147 of the Act after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of assesse to disclose fully and truly all material facts necessary for the assessment. Parashuram Pottery Works Co. L.t.d v. W.P.(C).No.4689/15 & con.cases 18 Income Tax Officer [(1977)106 ITR 0001], Commissioner of Income Tax v. P . Krishnakutty Menon [(1990) 18 ITR 237] and ACIT Mumbai & Others v. ICICI Securities Primary Dealership Limited [(2012) 13 SCC 514]. 7. When a notice under S. 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of the reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose the same by passing a speaking order, before proceeding with the assessment. GKN Driveshafts (India) Ltd.v. Income Tax Officer and Ors [(2003) 1 SCC 72] is relied on. 8. If the notice issued is invalid for any reason, the entire proceedings taken would become void for want of jurisdiction. CIT Gujarat II v. Kurban Hussain Ibrahimhi Mithiborwala [1971 82 IT 821] . W.P.(C).No.4689/15 & con.cases 19 12.A statement has been placed on record by the respondents in W .P .(C).No.4709 of 2015. It is contended that the assessee had e-filed his return of income and the assessment order had been passed accepting the returned income. Subsequently, based on the decision of the Hon’ble High Court of Delhi in CIT v. Regency Creations Ltd. [(2013) 255 CTR 63), the assessment for the year had been re-opened by issuance of a notice under Section 148, which was served on the assessee. The gist of the reasons for reopening was also given to the assessee specifically stating that the approval granted to a 100% EOU set up under STPI scheme cannot be claimed to be an approval under Section 10B of the Act. It is stated that Section 10B specifically provided for deduction of profits and gains derived by a 100% export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software as the case may be from the total income of the assessee. W.P.(C).No.4689/15 & con.cases 20 13.Clause (iv) of explanation (2) to Section 10 B specifically provides that hundred percent export-oriented undertaking means, an undertaking which has been approved as a hundred percent export-oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers confirmed by Section 14 of the Industries (Development and Regulation) Act, 1951. It is submitted that sub clause (iii) of clause (c) of Explanation 2 to Section 147 states that where income has been made subject to excessive relief under the Act, such income also constitutes income chargeable to tax which has escaped assessment. It is stated that in the assessee’s case, the assessee had been granted excessive relief under Section 10B where the assessee was not eligible for the same and therefore, the petitioner’s case is not covered by the 1st proviso to Section 147, but by sub-clause (iii) of clause (c) of Explanation 2 to Section 147 read with the exemption provided in the 1st proviso to Section 147. 14.It is further stated that clause (b) of sub-section (1) of Section 149 as it existed at the time of reopening the assessment provided as follows:- W.P.(C).No.4689/15 & con.cases 21 “If four years but not more than 6 years have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year.” 15.It is stated that the notice under Section 148 could have been issued till the end of 6 years from the close of the relevant assessment year and the notice was issued within the 6 years, it is well within the time as provided in clause (b) of sub- section (1) to section 149. It is, therefore, contended that the income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment year and that the reopening of the assessment was, therefore, proper and valid. 16.The learned counsel for the respondent has placed reliance on the decision reported in Income Tax Officer v. M.Pirai Choodi [2011] 334 ITR 262 (SC)] contenting that, even in case there is any error in the procedure of the assessing authority, the High Court should not set aside the entire assessment W.P.(C).No.4689/15 & con.cases 22 order but should direct the assessing officer to rectify the defects. The decision of the Apex Court in Phool Chand Bajrang Lal and another v, Income- Tax Officer and another [1993] 203 ITR 456] and Sri Krishna Pvt.Ltd etc v. Income- Tax Officer and others [(1996) 221 ITR 538] are also relied on. 17.It is further contended that the re-assessment proceedings being appealable, the writ petition should not have been entertained without availing the efficacious alternate remedy of appeal. The decisions in Commissioner of Income- Tax and others Vs. Chhabil Dass Agarwal [(2013) 357 ITR 357 (SC)] and State of Maharashtra Vs. Greatship (India) Ltd. [ AIR 2022 SC 4408] are also relied on. 18.The learned counsel for the respondent relies on the decision reported in Joshi Technologies International Inc v. Union of India and others [2015] 7 SCC 728] in support of the contention that recording of reasons by themselves will not W.P.(C).No.4689/15 & con.cases 23 affect the validity of the re-opening and that if jurisdictional facts are present the re-opening cannot be set aside. 19.I have considered the contentions advanced on either side. From a careful perusal of the provisions of law, it is clear that the provision of law, as it existed at the relevant time, permitted the reopening of an assessment after 4 years from the close of the assessment year only in case the twin requirements of the provision are met. The requirements are that the income chargeable to tax should have escaped assessment or loss or depreciation allowance or other allowance should have been wrongly granted. In the case of reopening of the assessment beyond a period of 4 years, the 1st proviso specifically provides that no action shall be taken after the expiry of 4 years from the end of the relevant assessment year, unless income chargeable to tax has escaped assessment for the year by reason of the failure on the part of the assessee to make a return or in response to a notice under sub-section (1) of Section 42 or Sub-Section 148 or to disclose fully and truly all material facts necessary for his assessment for that W.P.(C).No.4689/15 & con.cases 24 assessment year. Plainly put, for re-opening an assessment after 4 years, the income ought to have escaped assessment for the reason of the failure on the part of the assessee to disclose fully and truly, all material facts relevant for the assessment. 20.In the instant case, the reason for the re-assessment is that the assessee was not entitled to the exemption under Section 10B of the IT Act by reason of it not having an approval from the relevant authority, as provided in the explanation to the section. There is no contention that the assessee had originally withheld any information from the assessing authority. It is not contended that the assessee had suppressed any material or had not made available the approvals during the assessment or had induced the assessing authority to come to a wrong conclusion by any failure on the part of the assessee to disclose the relevant details. Apparently, what has occurred was a mistake on the part of the assessing authority in accepting the approval produced by the assessee to be an approval as required under Explanation 2 to Section 10B. It appears that later, the High Court of Delhi had held that the W.P.(C).No.4689/15 & con.cases 25 approval for the purpose of Section 10B can only be an approval granted by the Board constituted by the Central Government under the provisions of Industries (Development and Regulation) Act. This judgment of the Delhi High Court is the reason cited in respect of all the re-assessments. In WP(C) No.7849 of 2014, it is additionally stated in the reasons that there was a failure on the part on the assessee to disclose fully and truly all relevant materials required for the assessment. However, neither in the notices or the assessment orders, nor in the counter affidavit is it stated that the assessee had failed to disclose any relevant information or had produced any fraudulent material during the assessment proceedings. The Apex Court in Parashuram Pottery Works Co. L.t.d v. Income Tax Officer [(1977)106 ITR 0001] has specifically considered the issue and has held that the responsibility of the assessee is only to place the materials before the assessing officer and the assessee would not be responsible for the inferences made by the assessing authority on the basis of the materials that he has placed before the concerned authority. W.P.(C).No.4689/15 & con.cases 26 21.It has been further held by the Apex Court that a change in the opinion or a later decision on the legal aspects cannot be a reason for re-opening an assessment which has been concluded on the basis of the material which is made available in cases where the re-opening is attempted after 4 years, unless the assessee failed to disclose relevant information. In the cases before me the respondents have no case that the income chargeable to tax during the relevant assessment years had escaped assessment because of the failure on the part of the assessee to disclose any relevant material. It apparently is a case where the assessing authority had gone wrong in granting exemptions which were not liable to be granted in terms of the provisions of the statutes. If that be so, the 1st proviso would prevent the authorities from re- opening the assessment after 4 years from the close of the assessment year, unless the income had escaped assessment on account of the failure of the assessee. 22.From the discussion above, it is clear that in a case where there is no failure on the part of the assessee to disclose the W.P.(C).No.4689/15 & con.cases 27 materials and the failure was on the part of the assessing authority in drawing inferences on the basis of the materials placed the re-opening of the assessment after 4 years would be incompetent. The re-opening of the assessment in all these 3 cases are therefore found to be incompetent. The notices and the assessment orders are resultantly set aside. The assessments made under Section 143 for the relevant assessment years shall stand confirmed. The writ petitions are ordered accordingly. sd/- Anu Sivaraman, Judge sj W.P.(C).No.4689/15 & con.cases 28 APPENDIX OF WP(C) 4689/2015 PETITIONER EXHIBITS P1 : COPY OF THE ORDER OF ASSESSMENT DTD.10.12.2009 PASSED BY THE 2ND RESPONDENT U/S.143(3) OF THE ACT FOR THE AY 2007-08. P2 : COPY OF THE NOTICE DTD.26.3.2014 ISSUED TO THE PETITIONER BY THE 2ND RESPONDENT UNDER SECTION 148 OF THE ACT. P3 : COPY OF THE LETTER DTD.7.4.2014 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. P4 : COPY OF THE LETTER DTD.22.4.2014 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. P4(A): COPY OF THE LETTER DTD.27.10.2014 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. P5 : COPY OF THE PETITION DTD.12.1.2015, FILED U/S. 144(A)OF THE ACT BY THE PETITIONER BEFORE THE 3RD RESPONDENT. P6 : COPY OF THE INTERIM ORDER DTD.6.6.2014 PASSED BY THIS HON'BLE COURT IN WPC NO.7849/2014. W.P.(C).No.4689/15 & con.cases 29 APPENDIX OF WP(C) 4709/2015 PETITIONER EXHIBITS EXHIBIT P1. TRUE COPY OF THE ORDER OF ASSESSMENT DATED 13.12.2010 PASSED BY THE 2ND RESPONDENT U/S.143(3) OF THE ACT FOR THE A.Y.2008-09. EXHIBIT P2. TRUE COPY OF THE NOTICE DATED 26.03.2014 ISSUED TO THE PETITIONER BY THE 2ND RESPONDENT UNDER SECTION 148 OF THE ACT. EXHIBIT P3. TRUE COPY OF THE LETTER DATED 07.04.2014N FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. EXHIBIT P4. TRUE COPY OF THE LETTER DATED 22.04.2014 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P4(A). TRUE COPY OF THE LETTER DATED 27.10.2014 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. EXHIBIT P5. TRUE COPY OF THE PETITION DATED 12.01.2014 FILED U/S.144A OF THE ACT BY THE PETITIONER BEFORE THE 3RD RESPONDENT. EXHIBIT P6. TRUE COPY OF THE INTERIM ORDER DATED 06.06.2014 PASSED BY THIS HON'BLE COURT IN W.P.(C)NO.7849/2014. W.P.(C).No.4689/15 & con.cases 30 APPENDIX OF WP(C) 7849/2014 PETITIONER ANNEXURES EXT.P-5: TRUE COPY OF THE LETTER DATED 30.4.2013 SENT BY THE PETITIONER TO THE 3RD RESPONDENT (WITHOUT ANNEXURES) EXT.P-7: TRUE COPY OF THE OBJECTION LETTER DATED 20.9.2013 FILED BY THE PETITIONER (WITHOUT ANNEXURES) EXT.P-1: TRUE COPY OF THE ORDER DATED 30.12.2008 PASSED BY THE 3RD RESPONDENT EXT.P-2: TRUE COPY OF THE ORDER C.NO.412/J/R-1/2010-11 DATED 16.3.2011 PASSED BY THE 2ND RESPONDENT EXT.P-3: TRUE COPY OF THE ORDER DATED 30.12.2011 PASSED BY THE 3RD RESPONDENT EXT.P-4: TRUE COPY OF THE NOTICE DATED 26.3.2013 ISSUED BY THE 3RD RESPONDENT UNDER SECTION 148 OF THE IT ACT. EXT.P-6: TRUE COPY OF THE LETTER NO.CIR- I(I)TVM/147/13-14 DATED 6.8.2013 ISSUED BY THE 3RD RESPONDENT EXT.P-8: TRUE COPY OF THE ORDER NO.CIR- 1(1)/TVM/U/S147/13-14 DATED 8.10.2013 ISSUED TO THE PETITIONER BY THE 3RD RESPONDENT EXT.P-9: TRUE COPY OF THE LETTER DATED 23.10.2013 SUBMITTED BY THE PETITIONER TO THE 3RD RESPONDENT "