ITO, CHENNAI V. Opti Products Pvt. Ltd., CHENNAI

ITA 1320/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8681 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 11-05-2016
• Court: TRIBUNAL
• Assessee Lawyers: D ANAND
• Keywords: Reopening of assessment; Tangible material; Wrong claim; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 147; 148; 154; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , .. , ! BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER '# ./ I.T.A.NO.1320/MDS./2016 $% &% / ASSESSMENT YEAR :2008-09 THE INCOME TAX OFFICER, COMPANY WARD-5(1), 121,UTHAMAR GANDHI SALAI, CHENNAI. VS. M/S.OPTI PRODUCTS PVT. LTD., NO.81B, II MAIN ROAD, AMBATTUR INDUSTRIAL ESTATE, CHENNAI 600 058. [PAN AAACO 1099 E ] ( / APPELLANT) ( /RESPONDENT) '#'( ) * / APPELLANT BY : MR.A.V.SREEKANTH, JCIT, DR +, '( ) * /RESPONDENT BY : MR.D.ANAND,ADVOCATE - ) ./ / DATE OF HEARING : 25 - 07 - 201 6 01& ) ./ / DATE OF PRONOUNCEMENT : 29 - 07 - 2016 / O R D E R PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-3, CHENNAI DATED 29.02.2016 FOR THE ASSESSMENT YEAR 2008-09. 2. ALL THE GROUNDS RAISED IN THIS APPEAL ARE RELAT ED TO VALIDITY OF REOPENING OF ASSESSMENT U/S.147 OF THE ACT. ITA NO.1320/MDS./2016 :- 2 -: 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A RESIDENT DOMESTIC COMPANY, ENGAGED IN THE BUSINESS OF PROPER TY DEVELOPERS AND FILED ITS RETURN OF INCOME ON 26.09.2008. SUBSE QUENTLY, THIS CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT U/S.1 43(3) OF THE ACT WAS COMPLETED ON 30.04.2010 ACCEPTING THE RETURN OF INCOME. FURTHER, RECTIFICATION U/S.154 WAS ALSO CARRIED OUT, IN WHIC H AO HAD TREATED THE INTEREST INCOME IS NOT ELIGIBLE FOR DEDUCTION U/S.8 0IA(4) OF THE ACT, AS IT IS NOT DERIVED FROM THE UNDERTAKING. THE AO HAD REOPENED THE ASSESSMENT U/S.147 AND NOTICE U/S.148 WAS ISSUED O N 15.03.2012. BEFORE THE AO, THE ASSESSEE CHALLENGED THE REOPENIN G OF ASSESSMENT AS MERE CHANGE OF OPINION AND ARGUED THAT MERE CHAN GE OF OPINION IS NOT PERMISSIBLE FOR THE PURPOSE OF INVOKING JURISDI CTION U/S.148 OF THE ACT. THE AO, AFTER EXAMINING THE OBJECTIONS RAISED BY THE ASSESSEE, COMPLETED THE RE-ASSESSMENT PROCEEDINGS ON 07.11.20 14 BY DISALLOWING CLAIM OF DEDUCTION OF ` 63,73,897/- U/S.80-IA(4) OF THE ACT. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, TH E ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A). 3.1. ON APPEAL, THE LD.CIT(A) EXAMINED THE PLETHOR A OF DECISIONS OF HONORABLE COURTS INCLUDING THE APEX COURT DECISION IN THE CASE OF KELVINATOR INDIA LTD. REPORTED IN (2010)187 TAXMAN3 12 AND ANNULLED THE ASSESSMENT ORDER HOLDING THAT REOPENING WAS A R ELOOK ON THE ITA NO.1320/MDS./2016 :- 3 -: SAME ISSUE WHICH WAS ALREADY EXAMINED IN THE ORIGIN AL ASSESSMENT MADE U/S 143(3) DATED 30/04/2010. 4.0 DURING THE APPEAL HEARING, LD.D.R FURNISHED C HRONOLOGICAL EVENTS OF THE ASSESSMENT, REASSESSMENT AND THE PROCEEDING S U/S.154 OF THE ACT AS UNDER:- EVENT DATE RETURN OF INCOME FILED BY ASE 26.09.2008 ASSESSMENT ORDER U/S.1434(3) (RETURNED INCOME ACCEPTED_ 30.04.2010 ORDER U/S.154 PASSED 30.05.2011 ISUSE OF NOTICE U/S.148 (REASONS BEING WRONG CLAIM U/S.80-IA) 15.03.2012 LD.D.R ARGUED THAT IN THIS CASE THE REOPENING OF A SSESSMENT WAS MADE WITHIN FOUR YEARS FROM THE END OF RELEVANT ASS ESSMENT YEAR AND AS PER PROVISO TO SEC.147 ESCAPEMENT OF INCOME BY REASON OF FAILURE OF THE ASSESSEE IS NOT APPLICABLE. THE LD.D.R SUBMI TTED THAT REGARDING ISSUE OF NOTICE U/S.148 OF THE ACT, THE ASSESSEE FI LED A WRIT PETITION (W.P.NO.7137 & 7138 OF 2013) BEFORE THE JURISDICTIO NAL HIGH COURT AND THE HONBLE MADRAS HIGH COURT ANSWERED THE ISSUES RAISED IN THE WRIT PETITION IN FAVOUR OF THE DEPARTMENT IN PARA 31 OF ITS ORDER AS FOLLOWS:- 31. WE ARE CONCERNED IN ALL THESE CASES HOT ON THE SUFFICIENCY OF REASONS ON THE PART OF THE ASSESSING OFFICER FOR HI S BELIEF AT THIS STAGE. THE LEGISLATIVE INTENT IS TO ALLOW THE ASSES SING OFFICER TO GO THROUGH THE PROCESS OF ASSESSMENT. EVEN UNDER SECTI ON 147 OF THE ACT, A COURT OF LAW CANNOT PRESUME A LACK OF JURISD ICTION, WHEN A FACT IN ISSUE REQUIRES ADJUDICATION. IT HAS TO BE E XERCISED IN TERMS ITA NO.1320/MDS./2016 :- 4 -: OF SECTIONS 139,143(2) AND 143(3). THEREFORE, CONSI DERING THE SCHEME OF THE ENACTMENT, WE ARE OF THE VIEW THAT AN ORDER PASSED ON THE OBJECTIONS OF THE ASSESSEE OVER ADJUDICATING FACTS IS NOT OPEN TO CHALLENGE BY WAY FILING A WRIT PETITION. SUBSEQUENTLY, THE REASSESSMENT WAS COMPLETED MAKING AN ADDITION OF ` 63,73,897/- WHICH WAS WRONGLY CLAIMED BY THE ASSESS EE U/S. U/S.80IA(4)(III) OF THE ACT. IN THE ORIGINAL ASSESS MENT, THE AO HAS ACCEPTED THE RETURNED INCOME, BUT THE AO HAS NOT DE LIBERATED UPON THE ISSUE OF ALLOWABILITY OR OTHERWISE OF THE CLAIM OF ASSESSEE U/S.80IA(4)(III) OF THE ACT. THERE WAS NO DISCUSSI ON ON THE ISSUE IN THE ASSESSMENT ORDER AND THE RECTIFICATION PROCEEDINGS UNDER SECTION 154 OF THE ACT TAKEN UP BY THE AO SUBSEQUENTLY. RECTIFI CATION PROCEEDINGS WERE TAKEN UP ONLY FOR RECTIFICATION OF CERTAIN MIS TAKES APPARENT FROM RECORD AND COMPLETED THE PROCEEDINGS U/S.154 OF THE ACT TO ADDRESS THE OTHER INCOME AND MISCELLANEOUS RECEIPTS INCLUDE D IN TOTAL INCOME FOR THE PURPOSE OF THE DEDUCTION U/S.80IA(4)(III) OF THE ACT. TO SUM UP, THE LD.D.R ARGUED THAT NEITHER IN THE PROCEEDIN GS U/S.143(3) NOR IN THE PROCEEDINGS U/S.154 OF THE ACT, THE ISSUE OF AL LOWABILITY OF DEDUCTION U/S.80IA WAS CONSIDERED BY THE AO. THERE FORE, IT WAS ARGUED THAT WITH REGARD TO SEC.80-IA CLAIM, THE AO HAS NOT FORMED ANY OPINION ON THE MATTER AND HENCE THERE WAS NO OP INION ON THIS ISSUE AND HENCE, THE QUESTION OF CHANGE OF OPINION DOES NOT ARISE AT ITA NO.1320/MDS./2016 :- 5 -: ALL. LD DR PLACED RELIANCE IN THE CASE OF M/S.A.L. A.FIRLM VS. CIT IN 102 ITR 622(MAD), APEX COURT IN THE CASE OF KALYANJI MA VJI VS. CIT IN 102 ITR 287(SC) AND RAYMOND WOOLEN MILLS LLTD. VS. ITO IN 236 ITR 34(SC). 5. ON THE OTHER HAND, LD.A.R REITERATED THE SUBMIS SIONS MADE BEFORE THE LD.CIT(A). LD.A.R ARGUED THAT DURING THE ASSESSMENT PROCEEDINGS AND THE RECTIFICATION PROCEEDINGS U/S 1 54, THE AO HAS CALLED FOR THE REQUISITE DETAILS AND EXAMINED THE I SSUE OF ALLOWABILITY OF DEDUCTION U/S.80IA(4)(III) OF THE ACT. THE AR HAS D RAWN OUR ATTENTION TO PAGE NO.2 OF THE CIT(A)S ORDER WHEREIN THE AO H AS CALLED FOR THE DETAILS OF OTHER INCOME OF ` 5,05,153/- WHICH WAS INCLUDED BY THE ASSESSEE FOR THE PURPOSE OF DEDUCTION U/S.80IA OF THE ACT AND PAGE NO.16 OF THE CIT(A) ORDER WHICH READS AS UNDER: IN VIEW OF THE ABOVE REASONS RECORDED BY THE AO FOR REOPENING ASSESSMENT U/S.147 OF THE ACT, IT IS RELEVANT HERE TO SEE AS TO WHETHER T HE ISSUE WAS CONSIDERED BY THE AO AT THE TIME OF COMPLETION OF ORIGINAL ASSESSMENT MADE U/S .143(3) ON 30.4.2010 AND ALSO PROCEEDINGS COMPLETED U/S.154 ON 30.05.2011. IN THI S REGARD, IT IS NOTICED THAT AO HAD SPECIFICALLY DIRECTED THE ASSESSEE COMPANY TO SUBMI T DETAILS WITH REGARD TO CLAIM U/S. U/S.80IA(4). IN RESPONSE, THE ASSESSEE SUBMITTED IT S REPLY VIDE LETTER DT.25.11.2009 AS FOLLOWS:- IN CONTINUATION OF REPRESENTATION AT YOUR OFFICE AN D AS DETAILS SOUGHT BY YOUR KIND AUTHORITY, WE WISH TO INFORM TH AT THE COMPANY HAVE DEVELOPED MAINTAINS & OPERATES THE IND USTRIAL PARK AT 81B AND MAIN ROAD, AMBATTUR INDUSTRIAL ESTATE, A MBATTUR, CHENNAI-58. THE COMPANY HAD ALREADY APPLIED FOR APP ROVAL WITH ITA NO.1320/MDS./2016 :- 6 -: DIPP UNDER MINISTRY OF COMMERCE AND THE SAID APPLIC ATION IS UNDER PROCESS. THEREFORE, THE LD.A.R. CONTENDED THAT THE AO HAS EX AMINED THE ISSUE IN THE ORIGINAL ASSESSMENT AND HENCE REOPENIN G WAS A MERE CHANGE OPINION WHICH IS NOT PERMISSIBLE AS PER LAW. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE AO INITIATED THE REASSESSMENT PROCEEDIN GS RECORDING THE REASONS AS UNDER ( EXTRACTED FROM THE CIT(A) ORDER PAGE NO.16): THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A. Y UNDER CONSIDERATION ON 19/10/2007 DECLARING TOTAL INCOME OF NIL UNDER NORMAL COMPUTATION METHOD AND TOTAL INCOME OF RS.35 344300/- UNDER BOOK PROFITS METHOD. IT WAS SEEN FROM THE RET URN OF INCOME THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IA(4) (III) OF RS.38901728/-. THIS DEDUCTION WAS CLAIMED DEDUCTION U/S.80IA(4)(III) ON PRINCE TATIA INFO PARK, PURPO RTEDLY DEVELOPED AND OPERATED BY THE ASSESSEE COMPANY. TO CLAIM THE SAID DEDUCTION IN RESPECT OF THE INFO PARK, THE ASSESSEE OUGHT TO HAVE SATISFIED THE FOLLOWING CONDITIONS: I) IT SHOULD DEVELOP, DEVELOP AND OPERATE OR MAINT AIN AND OPERATE AN INDUSTRIAL PARK NOTIFIED BY THE CENTRAL GOVERNME NT IN ACCORDANCE WITH THE SCHEME FRAMED NOTIFIED BY THE CENTRAL GOVE RNMENT FOR SUCH PURPOSE. II) THE INDUSTRIAL PARK SHOULD BEGIN TO OPERATE, DE VELOP, ETC, AT ANY AFTER 1.4.1997 BUT BEFORE 31.3.2007 ( IN ACCORDANCE WITH INDUSTRIAL PARK SCHEME, 2002-THE SCHEME UNDER WHICH THE ASSESS EE HAD CLAIMED DEDUCTION U/S.80-IA(4)(III). DURING THE COURSE OF SCRUTINY PROCEEDINGS FOR THE A .Y.2009-10, IT WAS LEARNT THAT THE ASSESSEE UNDERTAKING HAS NOT BEEN N OTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH INDUSTRIAL PA RK SCHEME,2002.THUS NOT HAVING SATISFIED THE BASIC CON DITION OF BEING ITA NO.1320/MDS./2016 :- 7 -: NOTIFIED BY THE CENTRAL GOVERNMENT ON ACCOUNT OF DE VELOP AND OPERATE THE PRINCE TATIA INFO PARK THE ASSESSEE IS NOT ELIGIBLE FOR THE RELIEF ENVISAGED BY SEC.80IA(4)(III).HENCE THE ASSESSEES CLAIM OF RS.38901728/- UNDER SEC.80IA(4)(III) IS NOT IN ORDE R AND REQUIRES TO BE DISALLOWED. HOWEVER , IN THE SCRUTINY PROCEEDING S U/S 143(3), THE ASSESSEE HAD BEEN ALLOWED THIS DEDUCTION OF RS.3890 1728/-.THIS RESULTED IN ESCAPEMENT OF INCOME TO THE TUNE OF RS. RS.38901728/- IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S.143 (3) ON 30.04.2010 ACCEPTING THE INCOME RETURNED. THOUGH THE AO HAS CA LLED FOR THE DETAILS AS STATED IN THE CIT(A)S ORDER AS REFERRED ABOVE REGARDING CLAIM OF DEDUCTION U/S.80IA(4)(III) OF THE ACT, WE FIND THAT THE AO HAS NOT DISCUSSED THE ISSUE AND GIVEN ANY FINDING IN TH E ORIGINAL ASSESSMENT ORDER, WHICH WAS NOT DISPUTED BY THE ASS ESSEE, AND THE RECTIFICATION PROCEEDINGS U/S.154 WAS ONLY LIMITED TO EXCLUSION OF OTHER INCOME FOR THE PURPOSE OF DEDUCTION U/S.80IA(4)(III ) OF THE ACT. THE AO HAS NOT CONSIDERED THE ISSUE OF DEDUCTION U/S. U/S. 80IA(4)(III) PER SE. AS PER THE PROVISIONS OF THE SECTION 80IA(1), THE A SSESSEE IS ELIGIBLE FOR DEDUCTION SUBJECT TO FULFILLING THE CONDITIONS LAID DOWN IN RELEVANT SECTION 80IA(4) OF THE ACT AS UNDER:- I) IT SHOULD DEVELOP, DEVELOP AND OPERATE OR MAI NTAIN AND OPERATE AN INDUSTRIAL PARK NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME FRAMED NOTIFIED BY TH E CENTRAL GOVERNMENT FOR SUCH PURPOSE. II) THE INDUSTRIAL PARK SHOULD BEGIN TO OPERATE, DE VELOP, ETC, AT ANY DATE AFTER 1.4.1997 BUT BEFORE 31.3.2007 ( IN A CCORDANCE ITA NO.1320/MDS./2016 :- 8 -: WITH INDUSTRIAL PARK SCHEME, 2002-THE SCHEME UNDER WHICH THE ASSESSEE HAD CLAIMED DEDUCTION U/S.80-IA(4)(III ). 6.1 IN ASSESSEES CASE, PRINCE TATIA INFO P ARK, WAS NOT NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SC HEME FRAMED FOR THIS PURPOSE. THOUGH AT THE TIME OF ORIGINAL ASSESS MENT THE ASSESSEE FILED LETTER STATING THAT IT HAD APPLIED FOR APPROV AL WITH DIPP AND IS IN PROCESS, THE FACT THAT PRINCE TATIA INFO PARK W AS NOT NOTIFIED FOR THE PURPOSE OF CLAIMING DEDUCTION U/S.80IA(4)(III) WAS KNOWN TO THE ASSESSEE AT THE TIME OF FILING THE RETURN OF INCOME AS WELL AS DURING THE SCRUTINY PROCEEDINGS. BUT THE ASSESSEE HAS NOT BROU GHT THIS FACT TO THE NOTICE OF THE ASSESSING OFFICER AND CLAIMED THE DED UCTION, KNOWING FULLY THAT IT HAD NOT SATISFIED THE CONDITIONS LAID DOWN FOR DEDUCTION U/S 80IA(4). THOUGH THE ASSESSEE STATED DURING THE ASSE SSMENT THAT IT HAD MADE APPLICATION WITH DIPP, AND IT WAS IN PROCESS T HE ISSUE WAS NOT EXAMINED AND DISCUSSED IN THE ASSESSMENT ORDER AND HENCE, THE AO HAS NOT FORMED ANY OPINION REGARDING THE CONDITIONS LAID DOWN IN THE ACT FOR ALLOWING THE DEDUCTION U/S 80IA. THIS VIEW IS SUPPORTED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S.A.L.A. FIRMS VS. CIT REPORTED IN 102 ITR 622(MAD) WHEREIN IT WAS HELD TH AT:- WHERE THERE IS NO DISCUSSION ON THE ISSUE IN THE ASSESSMENT ORDER AND NO DETAILS WERE CALLED FOR BY THE AO OR FILED BY THE ASSESSEE ON THE ISSUE, NO FINDING E ITHER POSITIVE OR NEGATIVE WAS ARRIVED AT DURING THE COUR SE OF ITA NO.1320/MDS./2016 :- 9 -: THE ORIGINAL ASSESSMENT PROCEEDINGS- HENCE THERE IS NO QUESTION OF CHANGE OF OPINION . 6.2 THE FACT THAT THE APPELLANT HAS NOT SATI SFIED THE CONDITIONS LAID DOWN FOR CLAIMING THE DEDUCTION U/S 80IA HAS COME T O THE NOTICE OF THE AO ONLY DURING THE SCRUTINY ASSESSMENT PROCEEDI NG FOR THE A.Y.2009-10. THE APPELLANT DID NOT SUBMIT THE NOTIF ICATION AS REQUIRED U/S 80IA(4) R.W.RULE 18C BEFORE THE AO OR BEFORE US TILL DATE. UNLESS THE ASSESSEES CASE IS NOTIFIED BY THE CENTRAL GOVE RNMENT FOR THE PURPOSE OF DEDUCTION U/S 80IA(4), THE ASSESSEE IS N OT ENTITLED FOR CLAIMING DEDUCTION U/S 80IA(4) OF THE ACT. HENCE, R EOPENING CANNOT BE HELD AS A MERE CHANGE OF OPINION AND THE HONORABLE APEX COURT DECISION IN THE CASE OF KELIVINATOR INDIA CITED SUP RA IS NOT APPLICABLE IN THIS CASE. 6.3 THE SECOND LEG OF THE ARGUMENT OF THE DR WAS THAT THE REASSESSMENT WAS INITIATED BY THE A.O BEFORE THE EN D OF FOUR YEARS FROM THE END OF ORIGINAL ASSESSMENT AND AS PER PROV ISO TO SEC.147 OF THE ACT, THE FAILURE ON THE PART OF THE ASSESSEE IS APPLICABLE, IN CASE THE NOTICE IS ISSUED U/S.147/148 BEYOND 4 YEARS. FO R READY REFERENCE, WE REPRODUCE HEREIN THE PROVISO TO SEC.147 OF THE ACT. SEC.147 IF THE ASSESSING OFFICER, HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 ITA NO.1320/MDS./2016 :- 10 - : 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 PRO CEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIA TION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE AS SESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 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 R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE O N THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN R ESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVIS O SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE I NDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR : PROVIDED FURTHER THAT THE ASSESSING OFFICER MAY ASSESS OR R EASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTER S WHICH ARE THE SUBJECT-MATTERS OF ANY APPEAL, REFERENCE OR REV ISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. 6.4 WE FIND THAT THE SIMILAR ISSUE CAME FOR CONSID ERATION BEFORE THE JURISDICTION HIGH COURT IN THE CASE SWORD GLOBAL INDIA (P.) LTD. V.ACIT ) REPORTED IN [2015] 60 TAXMANN.COM 73 (MADRAS) WHEREIN IT IS HELD THAT:- ITA NO.1320/MDS./2016 :- 11 - : 17. THE POWER OF REASSESSMENT CONFERRED UNDER SECT ION 147 OF THE ACT CAN BE EXERCISED WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WITHOUT RES TRICTIONS IMPOSED BY THE PROVISO TO THAT SECTION. HOWEVER, AF TER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR, POWER OF THE ASSESSING OFFICER IS RESTRICTED BY THE LIMITATIONS IMPOSED UNDER THE PROVISO, AS STATED EA RLIER. 18. SECTION 147 OF THE ACT IS THE SOURCE OF POWER O F THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT. SECTION 148 CONTAINS PROCEDURAL RESTRICTIONS FOR ISSUANCE OF A NOTICE FOR EXERCISE OF THE POWER OF REOPENING OF AN ASSESSMENT CONFERRED UNDER SECTION 147. SECTION 149 PRESCRIBES THE TIME LIMIT FOR ISSUANCE OF A NOTICE UNDER SECTION 148. THEREFORE, THE CONDITIONS LAID DOWN UNDER SECTION 147 OF THE ACT F OR THE PURPOSES OF REOPENING THE ASSESSMENT MUST BE SATISF IED BEFORE THE NOTICE CAN BE ISSUED. THE CONDITIONS LAID DOWN IN SECTION 147 ARE THE JURISDICTIONAL FACTS NECESSARY FOR THE PURPOSE OF EXERCISE OF THE POWER UNDER SECTION 147. THE JURISD ICTIONAL FACTS PRESCRIBED UNDER SECTION 147 MUST EXIST BEFOR E A NOTICE UNDER SECTION 148 CAN BE ISSUED. THE TIME LIMIT PRE SCRIBED UNDER SECTION 149 OF THE ACT FOR ISSUANCE OF A NOTI CE UNDER SECTION 148 IS IN ADDITION TO AND NOT IN DEROGATION WITH THE NECESSARY CONDITIONS REQUIRED TO BE SATISFIED UNDER SECTION 147 OF THE ACT. IN OTHER WORDS, IF THE BASIC JURISDICTI ONAL FACTS REQUIRED FOR REOPENING OF AN ASSESSMENT UNDER SECTI ON 147 OF THE ACT DO NOT EXIST IT WOULD NOT BE COMPETENT FOR THE ASSESSING OFFICER TO ISSUE A NOTICE UNDER SECTION 1 48. EVEN WHERE THE JURISDICTIONAL FACTS PRESCRIBED UNDER SEC TION 147 EXIST AND ALL CONDITIONS LAID DOWN UNDER SECTION 14 7 AND THE PROVISO THERETO ARE SATISFIED, THE NOTICE UNDER SEC TION 148 CAN BE ISSUED ONLY AFTER THE ASSESSING OFFICER HAS RECO RDED HIS ITA NO.1320/MDS./2016 :- 12 - : REASONS FOR DOING SO UNDER SUB-SECTION (2) OF SECTI ON 148 AND HAS FURTHER OBTAINED THE NECESSARY SANCTION FOR ISS UANCE OF THE NOTICE AS REQUIRED UNDER SECTION 151 OF THE ACT. SU CH NOTICE IS ALSO REQUIRED TO BE ISSUED WITHIN THE TIME LIMIT PR ESCRIBED UNDER SECTION 149 OF THE ACT. IN FACT, SECTION 149 OF THE ACT, DOES NOT RELAX THE RESTRICTION OF FOUR YEARS PRESCR IBED IN THE PROVISO TO SECTION 147 OF THE ACT FOR ISSUANCE OF A NOTICE UNDER THE PROVISO TO SECTION 147. THE RESTRICTION OF FOUR YEARS WOULD BE APPLICABLE UNLESS THE INCOME CHARGEABLE TO TAX H AS ESCAPED ASSESSMENT BY REASON OF FAILURE OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE UNDER SECTION 142 OR 148 OF THE ACT OR THE FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IF THE REASSESSMENT IS REQUIRED TO BE MADE ON ACCOUNT OF THE FAILURE OF TH E ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS ASSESSMENT, OBVIOUSLY, THE RESTRICTION OF FOUR YEAR S PUT UNDER THE PROVISO TO SECTION 147 WOULD NOT BE APPLICABLE AND NOTICE CAN BE ISSUED AFTER THE EXPIRY OF A PERIOD OF FOUR YEARS, BUT WITHIN THE TIME LIMIT OF 7 OR 10 YEARS, AS THE CASE MAY BE, PRESCRIBED UNDER SECTION 149 OF THE ACT. THE OBJECT OF SECTION 149 IN IMPOSING THE RESTRICTION OF SEVEN YEARS OR T EN YEARS WHERE THE INCOME LIKELY TO HAVE ESCAPED ASSESSMENT IS LESS THAN RS.50,000 OR RS.1,00,000, AS THE CASE MAY BE, IS NOT TO PERMIT REOPENING OF THE ASSESSMENT WHERE THE TAX LI ABILITY WOULD NOT BE SIGNIFICANT AS COMPARED WITH THE EFFOR TS THAT WOULD BE REQUIRED FOR REOPENING OF AN ASSESSMENT AF TER A PASSAGE OF SEVEN OR TEN YEARS, AS THE CASE MAY BE. TO REPEAT, THE TIME-LIMIT IMPOSED UNDER SECTION 149 OF THE ACT FOR ISSUANCE OF THE NOTICE IS NOT IN DEROGATION OF AND IS NOT FOR ENLARGING THE TIME RESTRICTION IMPOSED UNDER THE PR OVISO TO SECTION 147 OF THE ACT BUT TO PUT AN ADDITIONAL TIM E RESTRICTION EVEN WHERE THERE IS NO RESTRICTION OF TIME FOR REOP ENING OF THE ITA NO.1320/MDS./2016 :- 13 - : ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. 19. REVERTING TO THE CASE ON HAND, IT IS NOT IN DIS PUTE THAT THE SCRUTINY ASSESSMENT UNDER SECTION 143(3) WAS COMPLE TED ON 16.12.2010 AND THE TIME LIMIT OF FOUR YEARS TO INVO KE SECTION 147 OF THE ACT IS TILL 31.03.2014. IT IS NOT IN DIS PUTE THAT THE IMPUGNED NOTICE UNDER SECTION 148 HAS BEEN ISSUED O N 26.3.2014 BY THE SECOND RESPONDENT PROPOSING TO REA SSESS THE INCOME FOR THE ASSESSMENT YEAR 2007-08 SINCE HE HAD REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX FOR TH E SAID ASSESSMENT YEAR HAS ESCAPED ASSESSMENT WITHIN THE M EANING OF SECTION 147 OF THE ACT. THEREFORE, WHEN IT IS CL EAR THAT THE REASSESSMENT RESORTED TO BY THE SECOND RESPONDENT I S WITHIN THE PERIOD OF FOUR YEARS, NOW THIS COURT IS REQUIRE D TO EXAMINE WHETHER THERE ANY TANGIBLE MATERIAL IS EXIST ON REC ORD FOR THE ASSESSING OFFICER TO FORM THE REQUISITE BELIEF THAT THAT THE INCOME CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT. 6.4 IN THE PRESENT CASE THE ASSESSEE HAS NOT OBTAINED THE NOTIFICATION FROM THE CENTRAL GOVERNMENT AS REQUIRE D U/S 80IA(4) WHICH IS A PRECONDITION FOR DEDUCTION. THE ASSESSEE HAS N OT FILED ANY COPY NOTIFICATION FROM THE CENTRAL GOVERNMENT TILL DATE AND THE APPELLANT HAS NOT SATISFIED THE CONDITIONS LAID DOWN IN SECTION 8 0IA(4) FOR THE PURPOSE OF DEDUCTION. THE CLAIM MADE BY THE APPELLA NT IN THE RETURN OF INCOME WAS INCORRECT AND IT HAS COME TO THE NOTICE OF THE AO SUBSEQUENTLY DURING THE ASSESSMENT PROCEEDINGS FOR THE A.Y.2009-10. NOW RECEIPT OF NOTIFICATION FOR THE PURPOSE OF DEDU CTION U/S 80IA(4) FROM THE CENTRAL GOVERNMENT CONSTITUTES A TANGIBLE MATERIAL FOR THE ITA NO.1320/MDS./2016 :- 14 - : PURPOSE OF REOPENING OF THE ASSESSMENT U/S 147. TH E AO HAS ISSUED NOTICE U/S148 AFTER RECORDING THE REASONS AND HAVIN G REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T. THEREFORE, WE HOLD THAT CIT(A) IS NOT CORRECT IN ANNULLING THE AS SESSMENT ORDER. WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND RESTORE TH E ORDER OF AO. HENCE, THE GROUNDS RAISED BY REVENUE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED ON 29 TH JULY, 2016, AT CHENNAI. SD/ - SD/ - ( . . . ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( . . ) (D.S.SUNDER SINGH) / ACCOUNTANT MEMBER 3 - / CHENNAI 4 / DATED: 29 TH JULY, 2016 K S SUNDARAM ) +.5# '65&. / COPY TO: 1 . '#'( / APPELLANT 3. 7. ('#) / CIT(A) 5. 5: +.;$ / DR 2. +, '( / RESPONDENT 4. 7. / CIT 6. % <- / GF