Magna Casting and Machine Works Pvt. Ltd., Pune V. ACIT, Circle 11(2), Pune

ITA 1175/PUN/2013

• Counselvise Citation: 117524514 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 28-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Capital asset converted into stock in trade; Capital asset; Depreciation; Search and seizure; Period of limitation; Tangible material; Difference of opinion; Deemed export; Reason to believe; Change of opinion; Reassessment proceedings; Ignorance of law
• Section: 45(2); 143(3); 10B; 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO . 1175 /PN/20 1 3 ASSESSMENT YEAR : 200 7 - 08 MAGNA CASTING AND MACHINE WORKS PVT . LTD., B - 6, NIRANT CONDOMINIUM, BIBAWEWADI, PUNE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 11(2), PMT BUILDING, SWARGATE, PUNE (APPELLANT) (RESPONDENT) PAN NO. AABCM8480G REVENUE BY: SHRI P.S. NAIK ASSESSEE BY: SHRI NIKHIL PATHAK ORDER PER R.S . PADVEKAR , JM : - TH IS APPEAL IS FILED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A) - I, PUNE DATED 07 - 03 - 2013 FOR THE A.Y. 200 7 - 08. THE ASSESSEE HAS FILED THE ABRIDGED GROUNDS IN PLACE OF ORIGINAL GROUNDS WHICH READ AS UNDER: 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE REASST. U/S. 147 IS VALID IN LAW WITHOUT APPRECIATING THAT THE REOPENING U/S. 148 WAS BASED ON A MERE CHANGE OF OPINION AND HENCE, THE REASST. U/S. 147 WAS INVALID IN LAW. 2. THE LEARNED CIT(A) ERRED IN HOL DING THAT THE ASSESSEE COMPANY WAS NOT ENTITLED TO CLAIM DEDUCTION U/S. 10B ON ACCOUNT OF EXPORTS MADE BY IT TO ANOTHER EXPORT ORIENTED UNDERTAKING (EOU) WITHOUT APPRECIATING THAT THE EXPORTS MADE BY THE ASSESSEE COMPANY TO ANOTHER EOU WERE ALSO ENTITLED T O DEDUCTION U/S. 10B. 2. THE FACTS WHICH ARE REVEALED FORM THE RECORDS AS UNDER. THE ASSESSEE COMPANY IS A 100% EXPORT ORIENTED UNIT (EOU) ENGAGED IN MANUFACTURE OF STEEL CASTINGS. IT IS STATED THAT THE ASSESSEE COMPANY IS 2 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE EXPORTING ITS 100% OF PRODUCTI ON TO USA THROUGH ANOTHER EOU. THE ASSESSEES ASSESSMENT FOR THE A.Y. 2007 - 08 HAS BEEN COMPLETED U/S. 143(3) OF THE ACT VIDE ASSESSMENT ORDER DATED 24 - 12 - 2009 . THE ASSESSEE HAD CLAIMED THE DEDUCTION U/S. 10B OF RS.4,26,30,184/ - WHICH WAS ALLOWED IN THE S CRUTINY ASSESSMENT PASSED U/S. 143(3) OF THE ACT. IN THE REGULAR ASSESSMENT U/S. 143(3) , THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS MADE DIRECT EXPORTS OF RS.40,53,728/ - AND EXPORTS TO EOU TO THE EXTENT OF RS.10,12,61,099/ - AND THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S. 10B OF RS.4,26,30,184/ - WHICH IS IN RESPECT OF SALE TO THE ANOTHER EOU. DURING THE REGULAR ASSESSMENT PROCEEDINGS IT WAS CLAIMED BY THE ASSESSEE THAT THE SALE S BY AN EOU TO ANOTHER EOU ARE DEEMED TO BE EXPORTS AS PER CHAPTER 8 OF THE FOREIGN TRADE POLICY . THE ASSESSING OFFICER ALLOWED THE ASSESSEES CLAIMED. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED THE PROCEEDINGS U/S. 147 OF THE ACT AND ISSUED THE NOTICE U/S. 148 OF THE ACT. THE ASSESSING OFFICER HAS RECORDED THE FOL LOWING REASONS AS MENTIONED IN THE ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S. 147 OF THE ACT FOR ISSUING NOTICE U/S. 148 OF THE ACT . IN THIS CASE COMPANY IS A 100% EXPORT ORIENTED UNIT AND REGISTERED AS SUCH WITH SEEPZ SEZ AND IS HOLDING A GREEN CARD WH ICH IS VALID UP TO 31/03/2010. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. ALLOWED DEDUCTION U/S. 10B IN THE ORDER U/S. 143(3) DATED 24/12/2009 AT RS.4,26,30,184/ - ON TOTAL EXPORT TURNOVER OF RS.10,35,06,894/ - AFTER EXCLUDING FREIGHT & INSURANCE. THE DEDUCTION U/S. 10B HAS BEEN CLAIMED ON DIRECT EXPORTS OF RS.40,53,728/ - AND EXPORTS MADE TO ANOTHER EOU VIZ. MAGNA CASTING & MACHINE WORKS PVT. LTD. OF RS.10,12,61,099/ - . THE ABOVE DEDUCTION WAS ALLOWED BY THE A.O. RELYING ON HON'BLE ITAT AHMEDABAD BENCH DECISION IN THE CASE OF ANITA SYNTHETIC PVT. LTD. (2006) 100 TTJ AHD. 277 AND AS PER THE PROVISIONS OF CHAPTER 8; OF FOREIGN TRADE POLICY. 3 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE AT THE TIME OF FOLLOWING THE SAID DEDUCTION THE AO WAS NOT AWARE OF THE HON'BLE ITAT ANGALORE A BENCH DECISION IN THE CASE OF TATA ELXI LTD. VS. ACIT DATED - 16/10/2007 WHEREIN IT HAS BEEN HELD THAT SALE OF SOFTWARE BY ONE STP TO ANOTHER STP WITHIN THE COUNTRY IS TREATED AS DEEMED EXPORT ONLY FOR THE PURPOSE OF DUTY DRAW BACK AND EXEMPTION FROM TERMINAL EXCISE DUTY . FOR THE PURPOSE INCOME - TAX WHAT IS TO BE TREATED AS DEEMED EXPORT IN RESPECT OF SUCH SALE IS PROVIDED IN SECTION 10A ITSELF. THEREFORE THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION U/S. 10B IN RESPECT OF SALES WITHIN INDIA. IN VIEW OF THE ABOVE, THE DEDUCT ION U/S. 10B HAS BEEN WRONGLY ALLOWED ON DIRECT EXPORTS AS WELL AS DEEMED EXPORTS. THE ALLOWABLE DEDUCTION ON DIRECT EXPORTS AMOUNTS TO RS.9,24,950/ - . HENCE, FOR THE ABOVE REASONS THE ORDER U/S. 143(3) DATED - 30/12/2009 IS ERRONEOUS BEING PREJUDICIAL TO TH E INTEREST OF REVENUE. I HAVE THEREFORE REASONS TO BELIEVE THAT INCOME OF RS.4,26,30,184/ - HAS ESCAPED ASSESSMENT FOR A. Y. 2007 - 08, ON ACCOUNT OF DEDUCTION U/S. 108 CLAIMED BY THE ASSESSEE. THE CASE SATISFIES CONDITIONS LAID DOWN IN SECTIONS 149(L)(A) A ND 151(2) OF THE INCOME - TAX ACT, 1961. ISSUE NOTICE U/S. 148 FOR A. Y. 2007 - 08.' 3. THE ASSESSEE FILED THE LETTER TO THE ASSESSING OFFICER STATING THAT THE RETURN FILED U/S. 139 SHOULD BE TREATED AS A RETURN IN RES PONSE TO THE NOTICE U/S. 148 OF THE ACT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT WITHDRAWING THE ENTIRE DEDUCTION OF RS. 4,26,30,184/ - U/S. 10B WHICH WAS EARLIER ALLOWED WHILE COMPLETING THE REGULAR ASSESSMENT U/S. 143(3) OF THE ACT. THE ASSESSEE CHALLENGED THE REASSESSMENT PROC EEDINGS BEFORE THE LD. CIT(A) BY TAKING THE PLEA THAT THE ENTIRE REASSESSMENT IS VITIATED AS THE PROCEEDINGS ARE INITIATED U/S. 147 MERELY ON THE CHANGE OF THE OPINION. THE ASSESSEE PLEADED BEFORE THE LD. CIT(A) 4 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE THAT WHILE COMPLETING THE REGULAR ASSESSMEN T U/S. 143 OF THE ACT. THE ASSESSING OFFICER HAS CONSIDERED THE CLAIM OF THE ASSESSEE AFTER EXAMINING THE FOREIGN TRADE POLICY. IT WAS PLEADED BY THE ASSESSEE THAT THE ASSESSING OFFICER WHILE PASSING THE REVISED ASSESSMENT ORDER DATED 07 - 12 - 2011 RE - APPLI ED HIS MIND TO THE SAME ISSUE WHICH AMOUNTS TO BE MERELY CHANGE OF OPINION AND WHICH IS NOT PERMISSIBLE FOR INITIATING PROCEEDINGS U/S. 147 OF THE ACT. THE ASSESSEE ALSO RELIED ON THE FOLLOWING DECISIONS BEFORE LD. CIT(A) : I. CIT VS. KELVINATOR OF INDIA LTD. 320 ITR 561 (SC). II. CIT VS. EICHER LTD. 294 ITR 310 (DEL). III. REPLIKA PRESS PRIVATE LIMITED AND ANR VS. ACIT (WRIT PETITION NO. (C) 13838/2009) (DEL). IV. METAL ALLOYS CORPORATION VS. ACIT 77 DTR (GUJ). V. SIEMENS INFORMATION SYSTEM LTD. VS. ACIT & ORS . 214 CTR (BOM) 16. VI. RITU INVESTMENTS (P) LTD. VS. DCIT 51 DTR (DEL) 162. 4. THE LD. CIT(A) WAS NOT CONVINCED WITH THE ARGUMENT OF THE ASSESSEE AND HE DISMISSED GROUNDS OF THE ASSESSEE CHALLENGING THE REOPENING PROCEEDINGS U/S. 147 OF THE ACT. THE OPERATIVE PART OF THE FINDINGS OF THE LD. CIT(A) ARE AS UNDER: 3.4 THE APPELLANT HAS RELIED UPON THE HON'BLE SUPREME COURTS DECISION IN CIT VS. KELVINATOR OF INDIA LTD. REPORTED IN 320 ITR 561. A CAREFUL READING OF THIS DECISION SHOWS THAT THE COURT WAS ENGAGED IN INTERPRET ING THE AMENDMENT MADE IN SEC. 147 BY THE DIRECT TAX LAWS (AMENDMENT) ACT 1987 W.E.F. 1.4.1989, WHEREBY THE WORDS 'FOR REASONS TO BE RECORDED BY HIM IN WRITING, IS OF THE OPINION THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR' WERE REPLACED WITH THE WORDS 'REASON TO BELIEVE. THE COURT HELD THAT THE LANGUAGE USED POST 1.4.1989 SHOWS THAT THE POWER TO REOPEN WAS MUCH WIDER PRIOR TO 1.4.1989 AND IF LEFT UNCHANGED, WOULD LEAD TO ABUSE OF POWER BY THE ASSESSING OFFICER. 5 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE IT WA S THEREFORE, HELD THAT AFTER 1.4.1989, ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION 11 AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS POWER TO REOPEN PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE C ONCLUSION REGARDING THE ESCAPEMENT OF INCOME. IN DOING SO, THE HON'BLE COURT RELIED UPON CIRCULAR NO. 545 OF CBDT WHICH EXPLAINED THAT THE AMENDMENT TO REINTRODUCE THE EXPRESSION 'HAS REASON TO BELIEVE' IN PLACE OF THE WORDS 'FOR REASONS TO BE RECORDED IN WRITING, IS OF THE OPINION', WAS DONE TO PREVENT GIVING ARBITRARY POWER TO THE ASSESSING OFFICER TO REOPEN PAST ASSESSMENTS ON THE BASIS OF MERE CHANGE OF OPINION. IT WAS OBSERVED BY THE SUPREME COURT THAT THERE SHOULD BE SOME 'TANGIBLE MATERIAL COMING INTO THE POSSESSION OF THE AO IN SUCH CASES TO ENABLE HIM TO RESORT TO SECTION 1 47. DESPITE BEING A CASE OF FULL AND TRUE DISCLOSURE, TANGIBLE MATERIAL COMING TO THE POSSESSION OF THE AO AFTER HE MADE THE ORIGINAL ASSESSMENT UNDER SECTION 143 (3), WOULD IN FLUENCE THE OPINION, FORMED OR PRESUMED TO HAVE BEEN FORMED EARLIER, OF THE ASSESSING AUTHORITY; HE CAN WITH JUSTIFICATION CHANGE IT, BUT THAT WOULD NOT BE A CASE OF A 'MERE CHANGE OF OPINION' UNGUIDED BY NEW FACTS OR CHANGE IN THE LEGAL POSITION. IT WILL BE A CASE OF THE ASSESSING AUTHORITY HAVING 'REASON TO BELIEVE', NOTWITHSTANDING THAT FULL AND TRUE PARTICULARS WERE FURNISHED BY THE ASSESSEE WHICH WERE EXAMINED, OR PRESUMED TO BE EXAMINED, BY HIM. THE OBSERVATIONS OF THE SUPREME COURT ARE A PROTECTION A GAINST ABUSE OF POWER; THEY ALSO PROTECT THE REVENUE WHICH CAN, IN THE LIGHT OF SUBSEQUENT COMING INTO LIGHT OF FACTS OR LAW, REOPEN THE ASSESSMENT. 3.5. IN THE PRESENT CASE, WE ARE DEALING WITH THE POST 1.4.1989 AMENDED SEC. 147. WHAT IS TO BE SEEN IS WH ETHER THE CONDITIONS UNDER SEC. 147 READ WITH THE PRO VISO TO SEC. 147 ARE MET. THE ASSESSMENT YEAR INVOLVED IS 2007 - 08. THE ASSESSMENT WAS REOPENED VIDE ISSUE OF NOTICE U/S 148 ON 23.11.2011 AND DULY SERVED ON THE APPELLANT, WHICH IS WELL WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, WHICH IS 31.3.2012. THEREFORE, EVEN IF THERE WAS NO FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESS MENT, THE ASSESSING OFFICER UNDER THE PROVISO TO SECTION 147, WAS COM PETENT TO REOPEN THE ASSESSMENT CONCLUDED U/S 143(3), PROVIDED THERE WAS 'TANGIBLE 6 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE MATERIAL' OR 'REASONS TO BELIEVE' THAT INCOME HAD ESCAPED ASSESSMENT. 3.6. FROM THE REASONS RECORDED, IT IS CLEAR THAT THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT. AS WE HAVE ALREADY SEEN ABOVE, THE ASSESSMENT WAS REOPENED FOLLOWING THE BANGALORE ITAT DECISION ON DEEMED EXPORTS. IT IS WELL SETTLED THAT ORDERS OF SUPERIOR COURTS CONSTITUTE INFORMATION OR TANGIBLE MATERIAL FOR REOPENING U /S 147. THE FOLLOWING JUDICIAL PRECEDENTS ARE AVAILABLE ON THE ISSUE. I. CIT VS RAGHUNATH PODAR (CAL) 96 ITR 316 II. CIT VS MAKKHANSING (RAJ) 154 ITR 121 III. MANAKLAL PORWAL VS CIT (RAJ) 155 ITR 648 IV. KUMAR ENGINEERS VS CIT (P&H) 223 ITR 18 V. CIT VS NOVOPAN INDIA LTD. ( AP) 236 ITR 746 IN FACT THE ANDHRA PRADESH HIGH COURT IN THE DECISION CITED ABOVE AT SR. NO. (V) HELD THAT A DECISION OF NON JURISDICTIONAL HIGH COURT, EVEN IF RENDERED SUBSEQUENT TO THE PASSING OF ORIGINAL ASSESSMENT ORDER, CAN BE A GROUND FOR REOPENING O F THE ORIGINAL ASSESSMENT ORDER. 3.7 IT IS ALSO SEEN THAT THE APPELLANT HAS RELIED UPON THE DELHI HIGH COURT DECISION IN EICHER LTD. REPORTED IN 2 94 ITR 310 PERTAINING TO A.Y. 1993 - 94. IN THE FACTS OF THE CASE, WHERE EVEN AFTER ENTIRE MATERIAL WAS PLACED B EFORE THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT, IT WAS FOUND THAT THE ASSESSING OFFICER CHOSE NOT TO GIVE ANY FINDING IN THIS REGARD. REOPENING THE ASSESSMENT SUBSEQUENTLY ON THE BASIS OF THE SAME FACTS WAS HELD TO BE 'CHANGE OF OPINION' WH ICH IS NOT PERMISSIBLE. 3.8. THE HON'BLE KERALA HIGH COURT WAS EXAMINING THE CASE OF REOPENING ARISING OUT OF IGNORANCE OF LAW AND OMISSION ON THE PART OF THE ASSESSING OFFICER WITHIN 4 YEARS OF THE ORIGINAL ASSESSMENT ( FACTS ARE THUS, IDENTICAL TO THE PR ESENT CASE) IN CIT VS NATIONAL TYRES AND RUBBER CO. OF INDIA LTD. REPORTED IN 15 TAXMANN.COM 3. 'EVEN THOUGH THE GROUNDS FOR REOPENING ARE NOT EXHAUSTIVELY PROVIDED UNDER EXPLANATION 2 TO SECTION 147, AMONG OTHER THINGS 7 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE IT STATES THAT ASSESSMENT CAN BE RE OPENED IN CASES WHERE INCOME CHARGEABLE TO TAX HAS NOT BEEN ASSESSED OR ASSESSMENT IS MADE AT TOO LOW A RATE OR IF THE INCOME HAS BEEN MADE SUBJECT TO EXCESSIVE RELIEF UNDER THE ACT. ALL THESE SITUATIONS GO TO ESTABLISH THAT REASSESSMENT CAN BE MADE UNDER SECTION 147 IF THE ASSESSING OFFICER HIMSELF HAS COMMITTED A MISTAKE OR OMISSION IN THE ASSESSMENT COMPLETED BY HIM. THE STATUTE VISUALIZES RECONSIDERATION AND REVISION OF REGULAR ASSESSMENT BY THE ASSESSING OFFICER HIMSELF IF HE FINDS THAT FOR ANY REASON THERE IS ESCAPEMENT OF INCOME CHARGEABLE TO TAX IN THE ORIGINAL ASSESSMENT. THE AMENDED PROVISIONS OF SECTION 147 IS SUFFICIENTLY ELASTIC TO COVER ALL CASES OF NON - ASSESSMENT OR UNDERASSESSMENT OF INCOME CHARGEABLE TO TAX AND THE ONLY CONDITION FOR REOPENI NG OR INITIATING AN ASSESSMENT UNDER SECTION 147 IS REASONABLE BELIEF OF THE ASSESSING OFFICER ON ESCAPEMENT OF INCOME CHARGEABLE TO TAX. [PARA 7] IN THE INSTANT CASE, ADMITTEDLY, INCOME CHARGEABLE TO TAX, UNDER SECTION 45(2) HAS ESCAPED REGULAR ASSESSMENT FOR THE ASSESSMENT YEAR 1995 - 96 BECAUSE NEITHER THE ASSESSEE FILED RETURN OF INCOME TAXABLE UNDER THE SAID PROVISION NOR THE OFFICER ASSESSED LIABILITY UNDER THE SAID SECTION. THE AUDIT PARTY ONLY BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT INCOME CHARGEABLE TO TAX UNDER SECTION 45(2) HAS NOT BEEN ASSESSED FOR THE ASSESSMENT YEAR 1995 - 96 BECAUSE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR THE ASSESSEE HAD SOLD MAJOR PORTION OF THE LAND AND BUILDING THEREON HELD BY IT AS CONVERTED STOCK - IN - TRADE, WHICH WAS ORIGINALLY CAPITAL ASSET TRANSFERRED OR CONVERTED INTO STOCK - IN - TRADE IN THE YEAR 1992 - 93 LEADING TO A GOOD AMOUNT OF PROFIT TO THE ASSESSEE. REOPENING OF REGULAR ASSESSMENT, THEREFORE, IS FOR THEI REASON THAT AT THE TIME OF REGULAR ASSESS MENT THE ASSESSING OFFICER WAS EITHER UNAWARE OF THE PROVISION OF THE ACT ATTRACTING LIABILITY FOR THE ASSESSEE/TO PAY TAX OR WAS UNAWARE OF THE FACTUAL SITUATION THAT LED TO LIABILITY FOR THE ASSESSEE FOR TAX WHEN SALE MADE DURING THE PREVIOUS YEAR RELEVA NT FOR THE ASSESSMENT YEAR. IT IS IMMATERIAL WHETHER THE ESCAPEMENT IS EITHER ON ACCOUNT OF IGNORANCE OF LAW OR OMISSION ON THE PART OF THE ASSESSEE OR THE ASSESSING OFFICER. SO LONG AS INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND THE ASSESSING OFFI CER HAS REASON TO 8 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE BELIEVE SO, WHETHER SUO MOTU FOUND BY HIM FROM RECORDS OR WHETHER BROUGHT TO HIS NOTICE BY THE AUDIT PARTY OR ANY OTHER AGENCY, THE ASSESSING OFFICER WILL BE JUSTIFIED IN REVISING THE ASSESSMENT WITHIN THE PERIOD OF LIMITATION PROVIDED TH EREIN. THE FACT THAT ENTIRE FACTS WERE ON RECORD AND THE ASSESSEE IS NOT ENGAGED IN SUPPRESSION HAS RELEVANCE ONLY IF REASSESSMENT IS INITIATED BEYOND 4 YEARS PROVIDED UNDER THE SECTION, WHICH IS NOT THE CASE HERE. IF REASSESSMENT WAS NOT MADE WITHIN FOUR YEARS, IT WOULD HAVE BEEN INVALID ON THIS GROUND RAISED BY THE ASSESSEE. IN VIEW OF THE ABOVE FINDINGS, THE ORDER OF THE TRIBUNAL AND THE FIRST APPELLATE AUTHORITY ARE TO BE REVERSED AND REASSESSMENT COMPLETED UNDER SECTION 147 IS TO BE RESTORED. [PARA 8]' 3.9. THE PRESENT CASE RELATES TO THE PROVISIONS OF SEC. 147 READ WITH PROVISO TO SECTION 147. ON THE FACTS OF THE CASE THEREFORE, IT IS HELD THAT DEDUCTION U/S 10B COULD NOT HAVE BEEN ALLOWED IN VIEW OF THE ITAT BANGALORE DECISION WHICH WAS ADMITTEDLY ON THE ISSUE OF DEEMED EXPORT FOR PURPOSES OF EXEMPTION U/S 10A (AND WHICH IS PARI MATERIA TO SEC. 10B) AND THE ASSESSING OFFICER WAS PERFECTLY JUSTIFIED IN REOPENING THE ASSESSMENT U/S 147. GROUND NO 1 IS DISMISSED. 5. NOW, THE ASSESSEE HAS TAKEN THE GROU ND NO. 1 RAISING THE GRIEVANCE AGAINST THE FINDINGS OF THE LD. CIT(A). THE LD. COUNSEL VEHEMENTLY ARGUES THAT EVEN IF THE REASSESSMENT PROCEEDINGS ARE INITIATED WITHIN FOUR YEARS FROM THE END OF THE A.Y. 2007 - 08 BUT AT THE SAME TIME THE ASSESSING OFFICER LACK S THE JURISDICTION TO INITIATE THE PROCEEDINGS U/S. 147 FOR THE REASON THAT IN THE REGULAR ASSESSMENT COMPLETED U/S. 143(3) OF THE ACT , T HE ASSESSING OFFICER HAS EXAMINED THE CLAIM OF THE ASSESSEE VIS - - VIS IN THE CONTEXT OF FOREIGN TRADE POLICY. HE R EFERRED TO THE COPY OF THE ASSESSMENT ORDER U/S. 143(3) OF THE ACT AND SUBMITS THAT THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE , APPLIED HIS MIND CONSIDERING ALL THE FACTS AND THEN ALLOWED THE DEDUCTION TO THE ASSESSEE. HE REFERRED TO THE REASONS RECOR DED BY THE ASSESSING OFFICER 9 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE AND SUBMITS THAT THE ASSESSING OFFICER HIMSELF H AS OBSERVED THAT DEDUCTION WAS ALLOWED TO THE ASSESSEE RELYING ON THE DECISION OF THE ITAT, AHMEDABAD IN THE CASE OF ITO VS. ANITA SYNTHETICS (P) LTD. 100 TTR (AHD) 277 . HE FURTH ER S UBMITS THAT THERE IS A REFERENCE OF THE ITAT, BANGALORE IN THE CASE OF TATA ELXSI LTD. VS. ACIT AND AS NOTED BY THE ASSESSING OFFICER IN THE REASONS FOR REOPENING T HE ASSESSING OFFICER WAS NOT AWARE OF THE SAID DECISION WHICH WAS AGAINST THE ASSESSEE. 6. THE LD. COUNSEL REFERRED TO SEC. 147 AND SUBMITS THAT THE PROVISIONS OF SEC. 147 HAS COME FOR THE JUDICIAL SCRUTINY IN THE PLETHORA OF DECISION S. AS PER THE INTERPRETATION GIVEN TO PROVISION OF SEC. 147 BY THE DIFFERENT HIGH COURTS AND AS WELL AS HON 'BLE SUPREME COURT , THERE IS A UNANIMITY ON THE LEGAL PRINCIPLES LAID DOWN THAT REASSESSMENT PROCEEDINGS CANNOT BE INITIATED MERELY ON THE CHANGE OF THE OPINION. HE REFERS TO THE IMPUGNED ORDER OF THE LD. CIT(A) AND SUBMITS THAT EVEN IF AMENDED SEC. 147 B ROUGHT ON THE STATURE BOOK W.E.F. 01 - 04 - 1989 BUT THE LEGISLATURE IN HIS WISDOM HAS NOT CHANGED THE EXPRESSION REASON TO BELIEVE EVEN THOUGH DIFFERENT EXPRESSION WAS PROPOSED TO REPLACE THOSE WORDINGS. THE LD. COUNSEL PLACED HIS HEAVY RELIANCE ON THE FOL LOWING DECISIONS: I. KELVINATOR OF INDIA LTD. 320 ITR 561 (SC). II. NYK LINE (INDIA) LTD. VS. DCIT 346 ITR 361 (BOM) III. PARVEEN P. BHARUCHA VS. DCIT AND ANOTHER 348 ITR 325 (BOM) HE PLEADED FOR QUASHING THE REASSESSMENT PROCEEDINGS. PER CONTRA, THE LD. DR SUPPORT ED THE IMPUGNED ORDER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. IN THIS CASE, THE FACTS ARE NOT IN DISPUTE. THE ASSESSEE IS A 100% EOU. THE ASSESSEE ALSO SOLD GOODS TO ANOTHER EOU TO THE EXTENT 10 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE OF RS.10,12,61,099/ - AND DEDUCTION U/S. 10B OF THE ACT TO THE EXTENT OF RS.4,26,30,184/ - WAS CLAIMED. ON PERUSAL OF THE ORIGINAL ASSESSMENT ORDER PASSED U/S. 143 IT IS SEEN THAT THE ASSESSING OFFICER DISCUSSED ISSUE OF DEDUCTION IN PARA NO. 4 WHICH READS AS UNDER: 4. THE A SSESSEE HAS MADE DIRECT EXPORT OF RS.40,53,728/ - AND EXPORT TO EOU OF RS.10,12,61,099/ - AND DEDUCTION U/S. 10B OF RS.4,26,30,184/ - HAS BEEN CLAIMED ON RS.10,35,06,894/ - (TOTAL EXPORT TURNOVER AFTER EXCLUDING FREIGHT AND INSURANCE) RECEIVED IN FOREIGN EXCHA NGE. IT IS CLAIMED THAT THE SALE FROM THE EOU TO ANOTHER EOU ARE DEEMED TO BE EXPORTS. AS PER CHAPTER 8 OF THE FOREIGN TRADE POLICY. AS PER SEC. 8.2 - CATEGORIES OF SUPPLY OF GOODS TO EOU SHALL DEEMED TO BE EXPORTS, PAYMENT FOR WHICH IS RECEIVED EITHER IN INDIAN RUPEES OR IN FOREIGN EXCHANGE. THE EQUIVALENT INVOICE VALUE OF FOREIGN EXCHANGE IN US - S 22,04,611.75/ - HAS BEEN REALIZED WITHIN DUE DATES, AS PER BANK REALIZATION CERTIFICATES. AS REGARDS DIRECT EXPORT THE EQUIVALENT VALUE IS US - $ 89,422/ - HAS BEEN REALIZED WITHIN DUE DATES, AS PER BANK REALIZATION CERTIFICATES. COPIES OF BILLS, SHIPPING BILLS AND AIRWAY BILLS ARE FURNISHED BY ASSESSEE. 8. HENCE, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NOT MADE AN ENQUIRY OR APPLIED HIS MIND TO THE ISSUE W HICH WAS THE SUBJECT MATTER OF THE REASSESSMENT PROCEEDINGS AND ISSUANCE OF THE NOTICE U/S. 148 OF THE ACT. IN THIS CASE THE ASSESSEE IS NOT PROTECTED BY THE PROVISO TO SEC. 147 AS ADMITTEDLY THE REASSESSMENT PROCEEDINGS ARE INITIATED WITHIN FOUR YEARS F R OM THE END OF THE RELEVANT ASSESSMENT YEAR. THE OBJECTION OF THE LD. COUNSEL IS THAT ONCE THE ASSESSING OFFICER HAS EXAMINED THE ISSUE , CONSIDERED ALL THE FACTS AND EXAMINED THE ISSUE APPLIED HIS MIND , THUS MERELY BECAUSE THERE IS SOME CONTRARY DECISION O F THE ANOTHER CO - ORDINATE BENCH OF THE ITAT THAT CANNOT BE THE REASONS TO USE SEC. 147 FOR WITHDRAWING THE LEGITIMATE DEDUCTION. ON PERUSAL OF THE REASONS RECORDED BY THE ASSESSING OFFICER THERE IS NO QUARREL IN RESPECT OF THE FACT THAT WHILE COMPLETING T HE ASSESSMENT THERE WAS A DECISION OF THE ITAT, AHMEDABAD WHICH WAS CONSIDERED BY THE ASSESSING OFFICER IN THE 11 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE CASE OF ANITA SYNTHETICS (P) LTD. (SUPRA). IT APPEARS THAT THERE WAS ALSO CONTRARY DECISION BY THE ITAT, BANGALORE IN THE CASE OF TATA ELXSI LTD . (SUPRA). THE ONLY REASON FOR INITIATING THE PROCEEDINGS U/S. 147 IS THAT THERE WERE TWO CONTRARY DECISIONS , ONE IS IN FAVOUR OF THE ASSESSEE AND ANOTHER IS AGAINST THE ASSESSEE AND THE DECISION WHICH IS AGAINST THE ASSESSEE WAS NOT AWARE OF THE SAME WHI LE FRAMING ASSESSMENT U/S. 143(3) OF THE ACT. 9. THE RELEVANT PART OF S EC. 147 OF THE ACT READS AS UNDER: 147 . IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT 8 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 E SCAPED 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 I N 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 ASS ESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE 9 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 9 NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. 10. AS PER THE HISTORY OF SEC. 147 WHICH IS RECASTED SECTION , BROUGHT ON STATURE BOOK W.E.F. 01 - 08 - 1989 , THE INITIA L WORDS THE REASON TO BELIEVE HAVE BEEN RETAINED BY THE PARLIAMENT E VEN IF IN THE BILL WORDS IN 12 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE THE OPINION OF THE ASSESSING OFFICER WERE PROPOSED FOR THE CONSIDERATION . THE ENTIRE SCHEME OF SEC. 147 OF THE ACT CONTEMPLATES TO BRING TO TAX ESCAPE D INC OME. IT IS TRUE THAT THERE MAY BE OCCASION IN WHICH THE ASSESSEE HAS CLAIMED THE DE DUCTION AND THERE MAY BE TWO DIFFERENT DECISIONS, ON E IS IN FAVOUR & ANOTHER AGAINST THE ASSESSEE, W HETHER THAT CAN BE THE GROUND FOR REOPENING AS IN PRESENT CASE IF THE AS SESSING OFFICER HAS NOT CONSIDERED THE DECISION WHICH IS AGAINST THE ASSESSEE. IN THIS CASE IN THE REASONS ITSELF THE ASSESSING OFFICER HAS RECORDED THAT THE DECISION OF THE ITAT, BANGALORE WAS NOT CONSIDERED AND IN OUR OPINION CANNOT BE THE REASON TO REO PEN COMPLETED ASSESSMENT BY TAKING SHELTER OF SEC. 147 TO WITHDRAW THE DEDUCTION. 11. IN THE CASE OF PARVEEN P. BHARUCHA (SUPRA) IT IS HELD AS UNDER: 10 FURTHER THE REASONS RECORDED BY RESPONDENT NO.1 FOR REOPENING THE ASSESSMENT DO NOT STATE THAT THE D EDUCTION UNDER SECTION 54E WAS NOT CONSIDERED IN THE ASSESSMENT PROCEEDINGS. IN FACT FROM THE REASONS, IT APPEARS THAT ALL FACTS WERE AVAILABLE ON RECORD AND ACCORDING TO THE RESPONDENTS WAS ONLY ERRONEOUSLY GRANTED. THIS IS A CLEAR CASE OF REVIEW OF AN OR DER. THE APPLICATION OF LAW OR INTERPRETATION OF A STATUE LEADING TO A PARTICULAR CONCLUSION CANNOT LEAD TO A CONCLUSION THAT TAX HAS ESCAPED ASSESSMENT FOR THIS WOULD THEN CERTAINLY AMOUNT TO REVIEW OF AN ORDER WHICH IS NOT PERMITTED UNLESS SO SPECIFIED I N A STATUE. THE ORDER DATED 14.11.2011 DISPOSING OF THE PETITIONERS OBJECTION TO INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE SAID ACT ALSO PROCEEDS ON THE VIEW THAT THERE HAS BEEN NON APPLICATION OF MIND DURING THE ORIGINAL PROCEEDINGS FOR ASSESSME NT. THIS IS UNSUSTAINABLE AND AS HELD THIS COURT IN ASIAN PAINTS LTD. V. DY. C.I.T. 308 ITR 195 A FRESH APPLICATION OF MIND BY THE ASSESSING OFFICER ON THE SAME SET OF FACTS AMOUNTS TO A CHANGE OF OPINION AND DOES NOT WARRANT REOPENING. IN FACT OUR COURT F OLLOWED THE FULL BENCH DECISION OF THE DELHI HIGH COURT IN THE MATTER OF KELVINATOR (SUPRA) WHEREIN IT HAS BEEN HELD AS UNDER: 13 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE 'WE ALSO CANNOT ACCEPT THE SUBMISSION OF MR. JOLLY TO THE EFFECT THAT ONLY BECAUSE IN THE ASSESSMENT ORDER, DETAILED REASONS HAVE NOT BEEN RECORDED AN ANALYSIS OF THE MATERIALS ON THE RECORD BY ITSELF MAY JUSTIFY THE ASSESSING OFFICER TO INITIATE A PROCEEDING UNDER SECTION 147 OF THE ACT. THE SAID SUBMISSION IS FALLACIOUS. AN ORDER OF ASSESSMENT5 CAN BE PASSED EITHER IN TERMS OF SUB SECTION (1)OF SECTION 143 OR SUB - SECTION (3) OF SECTION 143. WHEN A REGULAR ORDER OF ASSESSMENT IS PASSED IN TERMS OF THE SAID SUB - SECTION (3) OF SECTION 143 A PRESUMPTION CAN BE RAISED THAT SUCH AN ORDER HAS BEEN PASSED ON APPLICATION OF MIND. IT IS WELL KNOWN THAT A PRESUMPTION CAN ALSO BE RAISED TO THE EFFECT THAT IN TERMS OF CLAUSE (E) OF SECTION 114 OF THE INDIAN EVIDENCE ACT JUDICIAL AND OFFICIAL ACTS HAVE BEEN REGULARLY PERFORMED. IF IT BE HELD THAT AN ORDER WHICH HAS BEEN PASSED PURPORTEDLY WITHOUT APPLICATION OF MIND WOULD ITSELF CONFER JURISDICTION UPON THE ASSESSING OFFICER TO REOPEN THE PROCEEDING WITHOUT ANYTHING FURTHER, THE SAME WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI JUDICIAL FUNCTION TO TAKE BENEFIT OF ITS OWN WRON G'. 11 ONE MORE POINT VERY STRENUOUSLY URGED BY MR. GUPTA FOR THE REVENUE WAS THAT THE COURT SHOULD NOT AT THIS STAGE QUASH THE PROCEEDINGS AS THE ONLY OBLIGATION OF THE REVENUE IS TO ESTABLISH THAT PRIMA FACIE MATERIAL EXISTS TO SHOW THAT INCOME HAS ESCAP ED ASSESSMENT AND THE PARTY CAN THEREAFTER ESTABLISH IN REASSESSMENT PROCEEDINGS THAT THE DEDUCTIONS AS ALLOWED IN THE ORIGINAL ASSESSMENT PROCEEDINGS ARE VALID. 12 THE ISSUE HERE IS ONE OF JURISDICTION TO ISSUE NOTICE AND NOT SUFFICIENCY OF REASONS IN ISS UING A NOTICE FOR REASSESSMENT. WE ARE CONSIDERING THE JURISDICTION TO ISSUE A NOTICE UNDER SECTION 148 TO REOPEN PROCEEDINGS. IN VIEW OF WHAT IS STATED EARLIER, WE DO NOT FIND ANY MERIT IN THIS CONTENTION . 12. IN THE CASE OF NYK LINE (INDIA) LTD. (SUPRA) IT IS HELD AS UNDER: 12. THE REOPENING OF THE ASSESSMENT IN THE PRESENT CASE HAS TAKEN PLACE WITHIN A PERIOD OF FOUR YEARS OF THE END OF THE RELEVANT ASSESSMENT YEAR. THE POWER OF THE AO TO REOPEN AN ASSESSMENT WITHIN A PERIOD OF FOUR YEARS OF THE RELEVAN T ASSESSMENT YEAR IS 14 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE UNDOUBTEDLY WIDER THAN WHERE A PERIOD OF FOUR YEARS HAS ELAPSED. ONCE A PERIOD OF FOUR YEARS HAS ELAPSED, THE PROVISO TO S. 147 STIPULATES THAT THERE MUST BE A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIA L FACTS NECESSARY FOR ASSESSMENT AS A RESULT OF WHICH INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. BUT, THAT IS NOT TO SAY THAT WITHIN A PERIOD OF FOUR YEARS, THE POWER OF THE AO TO REOPEN AN ASSESSMENT IS UNTRAMMELLED. EVEN WITHIN A PERIOD OF FOUR YEA RS, IT IS NOW A SETTLED PRINCIPLE OF LAW THAT AN ASSESSMENT CANNOT BE REOPENED ON THE BASIS OF A MERE CHANGE OF OPINION. THE SUPREME COURT HAS EMPHASIZED THAT THE AO HAS NO POWER TO REVIEW, BUT HIS POWER IS A POWER TO REASSESS. IF A MERE CHANGE OF OPINION CANNOT FURNISH A GROUND FOR REOPENING OF AN ASSESSMENT, THEN, UNDER THE GARB OF REOPENING AN ASSESSMENT, A REVIEW WOULD NOT EQUALLY BE PERMISSIBLE. CONSEQUENTLY, THE TEST IS THAT THERE SHOULD BE TANGIBLE MATERIAL TO COME TO A CONCLUSION THAT THERE IS AN ES CAPEMENT OF INCOME FROM ASSESSMENT. 13. THESE PRINCIPLES HAVE BEEN EMPHASIZED IN THE JUDGMENT OF THE SUPREME COURT IN CIT VS. KELVINATOR OF INDIA LTD. (2010) 228 CTR (SC) 488 : (2010) 34 DTR (SC) 49 : (2010) 320 ITR 561 (SC). THE SUPREME COURT HAS OBSERVE D AS FOLLOWS : '6. ........... THEREFORE, POST 1ST APRIL, 1989, POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, S. 147 WOULD GIVE ARBITRARY POWERS TO THE A O TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE AO HAS NO POWER TO REVIEW; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRECONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE M UST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN INBUILT TEST TO CHECK ABUSE OF POWER BY THE AO. HENCE, AFTER 1ST APRIL, 1989, THE AO HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR VIEW GETS SUPPORT FROM THE CHANGES MADE TO S. 147 OF THE 15 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE ACT, AS QUOTED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BELIEVE' BUT ALSO INSERTED THE WORD 'OPINION' IN S. 147 OF THE ACT. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES AGAINST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIAMENT REINTRODUCED THE SAID EXPRESSION AND DELETED THE WORD 'O PINION' ON THE GROUND THAT IT WOULD VEST ARBITRARY POWERS IN THE AO. ......' 14. NOW, UNDOUBTEDLY AN ORDER OF ASSESSMENT WHICH HAS BEEN PASSED FOR A SUBSEQUENT ASSESSMENT YEAR MAY FURNISH A FOUNDATION TO REOPEN AN ASSESSMENT FOR AN EARLIER ASSESSMENT YEAR . HOWEVER, THERE MUST BE SOME NEW FACTS WHICH COME TO LIGHT IN THE COURSE OF ASSESSMENT FOR THE SUBSEQUENT ASSESSMENT YEAR WHICH EMERGE IN THE ORDER OF ASSESSMENT. OTHERWISE, A MERE CHANGE OF OPINION ON THE PART OF THE AO IN THE COURSE OF ASSESSMENT FOR A SUBSEQUENT ASSESSMENT YEAR WOULD NOT BY ITSELF LEGITIMISE THE REOPENING OF AN ASSESSMENT FOR AN EARLIER YEAR. 15. IN RAYMOND WOOLLEN MILLS LTD. VS. ITO (1999) 152 CTR (SC) 418 : (1999) 236 ITR 34 (SC), THE CASE OF THE REVENUE WAS THAT THE ASSESSEE WAS CHA RGING TO ITS P&L A/C, FISCAL DUTIES PAID DURING THE YEAR AS WELL AS LABOUR CHARGES, POWER, FUEL, WAGES, CHEMICALS ETC. HOWEVER, WHILE VALUING ITS CLOSING STOCK, THE ELEMENTS OF FISCAL DUTY AND THE OTHER DIRECT MANUFACTURING COSTS WERE NOT INCLUDED BY THE A SSESSEE. THIS RESULTED IN UNDERVALUATION OF INVENTORIES AND UNDERSTATEMENT OF PROFITS. THIS INFORMATION, AS THE SUPREME COURT EMPHASIZED, WAS OBTAINED BY THE REVENUE IN THE ASSESSMENT PROCEEDINGS OF A SUBSEQUENT YEAR. CONSEQUENTLY, THE REOPENING OF THE ASS ESSMENT WAS HELD TO BE VALID. THE POINT TO BE EMPHASIZED IS, THEREFORE, THAT WHERE IN THE CASE OF ASSESSMENT PROCEEDINGS FOR A SUBSEQUENT YEAR CERTAIN ADDITIONAL INFORMATION IS OBTAINED BY THE REVENUE WHICH WAS NOT AVAILABLE TO IT IN THE COURSE OF AN ASSES SMENT FOR AN EARLIER YEAR, THAT MAY LEGITIMATELY BE UTILIZED AS A GROUND FOR REOPENING AN ASSESSMENT OF THE EARLIER YEAR. WHERE THE REOPENING HAS TAKEN PLACE WITHIN FOUR YEARS THAT MAY LEGITIMATELY GIVE RISE TO AN INFERENCE OF ESCAPEMENT OF INCOME. THE NEW INFORMATION WHICH HAS COME TO THE KNOWLEDGE OF THE REVENUE WOULD, THEREFORE, CONSTITUTE TANGIBLE MATERIAL. 16 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE 16. THE JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN MULTISCREEN MEDIA (P) LTD. VS. UNION OF INDIA (2010) 38 DTR (BOM) 14 : (2010) 324 ITR 54 (B OM) ADVERTS TO A DECISION OF THE SUPREME COURT IN ESS KAY ENGINEERING CO. (P) LTD. VS. CIT (2001) 166 CTR (SC) 396 : (2001) 247 ITR 818 (SC) AS LAYING DOWN THE PRINCIPLE THAT MERELY BECAUSE THE CASE OF THE ASSESSEE WAS ACCEPTED AS CORRECT IN THE ORIGINAL A SSESSMENT FOR THE ASSESSMENT YEAR IN QUESTION THAT WOULD NOT PRECLUDE THE AO TO REOPEN AN ASSESSMENT OF AN EARLIER YEAR ON THE BASIS OF A FINDING OF FACT MADE ON THE BASIS OF FRESH MATERIAL IN THE COURSE OF AN ASSESSMENT FOR A SUBSEQUENT ASSESSMENT YEAR. T HIS COURT IN ITS JUDGMENT IN MULTISCREEN MEDIA (SUPRA) ALSO ADVERTED TO A DECISION OF THE DIVISION BENCH IN SIEMENS INFORMATION SYSTEM LTD. VS. ASSTT. CIT (2008) 214 CTR (BOM) 16 : (2007) 295 ITR 333 (BOM). THE DIVISION BENCH HELD THAT THE JUDGMENT IN SIEM ENS INFORMATION SYSTEM LTD. (SUPRA) WOULD NOT PRECLUDE THE AO TO REOPEN AN ASSESSMENT FOR AN EARLIER YEAR ON THE BASIS OF FRESH MATERIAL WHICH HAS COME IN THE COURSE OF ASSESSMENT FOR A SUBSEQUENT ASSESSMENT YEAR. 17. NOW, IN THIS BACKGROUND AND CONSIDERI NG THESE TESTS, THE FACTS OF THE PRESENT CASE WOULD HAVE TO BE EVALUATED. THE ASSESSEE IN THE PRESENT CASE HAD MADE A DISCLOSURE IN THE NOTES FORMING PART OF THE ACCOUNTS OF THE NATURE OF PAYMENTS REQUIRED TO BE MADE TO THE FOREIGN PRINCIPAL ON ACCOUNT OF CDC. A REFERENCE WAS MADE TO THE FACT THAT AS A RESULT OF A CIRCULAR ISSUED BY THE RBI, THE ASSESSEE WAS NOT PERMITTED TO REMIT A CERTAIN PROPORTION EQUIVALENT TO US $ 1.5 FOR EACH CONTAINER. THE STATUTORY AUDITORS HAD ALSO INCLUDED A NOTE IN THE REPORT. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE ADDRESSED A COMPREHENSIVE LETTER DT. 18TH NOV., 2009 MAKING A FULL DISCLOSURE OF FACTS. NOW IT IS IN THIS BACKGROUND THAT THE ORDER OF ASSESSMENT UNDER S. 143(3) MUST BE CONSIDERED. THE AO SPECIFICAL LY DISCUSSED IN THE COURSE OF THE ASSESSMENT ORDER THE MATTERS IN RESPECT OF WHICH HE HAS MADE A DISALLOWANCE EITHER FULLY OR IN PART. SINCE THE AO DID NOT FIND ANY JUSTIFICATION TO REJECT THE CLAIM OF THE ASSESSEE IN RESPECT OF THE ISSUE OF CDC, THERE WAS NO SPECIFIC DISCUSSION IN THE COURSE OF ORDER. IN THIS REGARD THE FOLLOWING OBSERVATIONS OF A DIVISION BENCH OF THIS COURT IN IDEA CELLULAR LTD. VS. DY. CIT (2008) 215 CTR (BOM) 288 : (2008) 3 DTR (BOM) 179 : (2008) 301 ITR 407 (BOM) HAVE RELEVANCE : 17 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE '9. IT WAS ALSO SOUGHT TO BE CONTENDED THAT SINCE THE AO HAD NOT EXPRESSED ANY OPINION REGARDING THIS MATTER IN HIS ORIGINAL ASSESSMENT ORDER, IT COULD NOT BE SAID THAT THERE WAS ANY CHANGE OF OPINION IN THIS CASE. IN OUR VIEW, ONCE ALL THE MATERIAL WAS BEFOR E THE AO AND HE CHOSE NOT TO DEAL WITH THE SEVERAL CONTENTIONS RAISED BY THE PETITIONER IN HIS FINAL ASSESSMENT ORDER, IT CANNOT BE SAID THAT HE HAD NOT APPLIED HIS MIND WHEN ALL MATERIAL WAS PLACED BY THE PETITIONER BEFORE HIM.' 18. CONSEQUENTLY AND IN T HIS BACKGROUND THE MERE FACT THAT THE AO FOR ASST. YR. 2007 - 08 HAD COME TO A DIFFERENT CONCLUSION WOULD NOT JUSTIFY THE REOPENING OF THE ASSESSMENT FOR ASST. YR. 2006 - 07. IN ORDER TO ESTABLISH THAT THE REOPENING OF THE ASSESSMENT FOR ASST. YR. 2006 - 07 IS N OT A MERE CHANGE OF OPINION, THE REVENUE MUST DEMONSTRATE BEFORE THE COURT THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR THE SUBSEQUENT YEAR I.E. ASST. YR. 2007 - 08 SOME NEW INFORMATION OR MATERIAL HAD BEEN BROUGHT ON RECORD WHICH WAS NOT AVAILAB LE WHEN THE ASSESSMENT ORDER WAS PASSED FOR ASST. YR. 2006 - 07. THAT INDEED IS NOT THE CASE OF THE REVENUE. ALL MATERIAL WHICH WAS RELEVANT TO THE DETERMINATION WAS AVAILABLE WHEN THE ASSESSMENT WAS COMPLETED FOR ASST. YR. 2006 - 07. CONSEQUENTLY, THE MERE FO RMATION OF ANOTHER VIEW IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASST. YR. 2007 - 08 WOULD NOT JUSTIFY THE REVENUE IN REOPENING THE ASSESSMENT FOR ASST. YR. 2006 - 07 THOUGH THE REOPENING OF THE ASSESSMENT HAS TAKEN PLACE WITHIN A PERIOD OF FOUR YEARS. THE POWER TO REOPEN ASSESSMENTS IS STRUCTURED BY LAW. THE GUIDING PRINCIPLES WHICH HAVE BEEN LAID DOWN BY THE SUPREME COURT IN KELVINATOR (SUPRA) MUST BE FULFILLED. IN THE PRESENT CASE THERE WAS NO TANGIBLE MATERIAL, NO NEW INFORMATION AND NO FRESH MATERIAL WH ICH CAME BEFORE THE REVENUE IN THE COURSE OF ASSESSMENT FOR ASST. YR. 2007 - 08 WHICH CAN JUSTIFY THE REOPENING OF THE ASSESSMENT FOR ASST. YR. 2006 - 07. 13. IN THE PRESENT CASE THE ASSESSING OFFICER HAS CONSIDERED THE CLAIM OF THE ASSESSEE BY APPLYING HIS MIND. IT IS ALSO NOT DISPUTED IN THIS CASE THAT THERE WAS A DECISION ON THIS ISSUE IN FAVOUR OF THE ASSESSEE WHEN THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT. M ERELY BECAUSE SUBSEQUENTLY ANOTHER DECISION OF THE CO - ORDINATE BENCH OF THE ITAT IS 18 ITA NO . 1175 /PN/2013, MAGNA CASTING AND MACHINE WORKS PVT. LTD., PUNE NOT ICED BY THE ASSESSING OFFICER , IN OUR OPINION THAT WILL NOT VESTS THE JURISDICTION IN THE ASSESSING OFFICER TO EXERCISE HIS POWERS U/S. 147 OF THE ACT. WE, THEREFORE, HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED AT ALL ON THE FACTS OF THIS CASE TO IN ITIATE THE PROCEEDINGS U/S. 147 AND ISSUED THE NOTICE U/S. 148 OF THE ACT. WE, ACCORDINGLY, QUASH THE PROCEEDINGS INITIATED BY THE ASSESSING OFFICER U/S. 14 7 OF THE ACT AND CANCEL THE ASSESSMENT . A S THE ASSESSEE HAS SUCCEEDED ON THE ISSUE OF VALIDITY OF THE REASSESSMENT PROCEEDINGS , W E DO NOT DECIDE THE GROUND NO. 2 WHICH IS TAKEN ON MERIT. 14. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 21 - 11 - 201 4 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT M EMBER JUDICIAL MEMBER PUNE, DATED : 21 ST NOVEMBER, 201 4 RK/PS COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - I , PUNE 4 THE CIT - I, PUNE 5 6 THE DR, ITAT, B BENCH, PUNE. GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE