M/s. Amoli Organics Pvt.Ltd., Vapi V. The ACIT., Vapi Circle, Vapi

ITA 2802/AHD/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0473 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-11-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 13-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income; Bad and doubtful debts; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 192; 139(1); 147; 148; 154; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH, J.M. AND D. C. AGRAWAL, A.M. ITA NO.2802/AHD/2006 ASST. YEAR: 1998-99 M/S AMOLI ORGANICS (P) LTD., PLOT NO.322, GIDC, VAPI. V/S . ASSTT. CIT, VAPI CIRCLE, VAPI. PAN NO.AACCA 3990 Q (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S. N. SOPARKAR RESPONDENT BY:- SHRI C. K. MISHRA, SR. D.R. O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 21.9.2006 WHEREIN LD. CIT(A) HAS CONFIRMED THE REOP ENING OF ASSESSMENT UNDER SECTION 147/148 AND ALSO PARTLY CONFIRMED THE DISALLOWANCE UNDER SECTION 80 HHC MADE BY A.O. IN RESPECT OF EXPORT EN TITLEMENT SUCH DEPB UTILIZED FOR OWN CONSUMPTION AMOUNTING TO RS.1 1,92,018/-, EXPORT PASS BOOK BENEFIT RECEIVED RS.51,54,459/- AND SALE OF IMPORT LICENCE RS.63,83,924/-. THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS :- 1. THE LD. CIT(A) ERRED IN DISMISSING THE CLAIM OF ASS ESSEE THAT ASSESSMENT CANNOT BE REOPENED UNDER SECTION 147 R.W .S. 148. ITA NO.2802/AHD/2006 AY 1998-99 2 2. AS PER SECOND GROUND OF APPEAL THE LD. CIT(A) ERRED IN DISALLOWING DEDUCTION FOR RS.67,94,154/- CLAIMED UN DER SECTION 80 HHC OF THE ACT WITHOUT CONSIDERING THE FACTS OF THE CASE. 3. AS PER THIRD GROUND OF APPEAL THE LD. CIT(A) ERRED IN NOT CONSIDERING FOLLOWING EXPORT INCENTIVES AS BUSINESS INCOME TO CALCULATE THE DEDUCTION UNDER SECTION 80 HHC OF THE ACT. A. DEPB UTILIZED FOR OWN CONSUMPTION RS.11,92,018/- B. EXPORT PASS BOOK BENEFIT RECEIVED RS.51,54,459/- C. SALE OF IMPORT LICENCE RS.63,83,924/- 2. AT THE OUTSET THE LD. AR FOR THE ASSESSEE CHALLE NGED THE REOPENING OF THE ASSESSMENT AND SUBMITTED THAT MERIT OF THE C ASE MAY BE CONSIDERED ONLY WHEN THE GROUNDS RELATE TO REOPENING IS DECIDE D AGAINST HIM. ACCORDINGLY, WE CONSIDER GROUND NO.1 FOR ADJUDICATI ON. 3. THE FACTS OF THE CASE ARE THAT RETURN OF INCOME WAS FILED BY THE ASSESSEE COMPANY ON 30.11.1998 SHOWING TOTAL INCOME OF RS.44,54,095/- UNDER NORMAL PROVISIONS AND RS.52,77,796/- U/S 115J A OF THE ACT. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 29 .12.00 DETERMINING TOTAL INCOME AT RS.1,46,16,870/- AS AGAINST DECLARE D INCOME OF RS.44,54,095/-. THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80 HHC AT RS.2,20,80,820/- BUT THE AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND AFTER SUBSEQUENT RECTIFICATION ORDE R RESTRICTED THE DEDUCTION UNDER SECTION 80 HHC TO RS.67,94,154 ON A CCOUNT OF EXPORT INCENTIVE. A.O. SUBSEQUENTLY VERIFIED THE RECORDS A ND FOUND THAT EXPORT PASS BOOK BENEFIT CONSISTS OF RS.51,54,459/-, SALE S OF IMPORT LICENCES OF RS.63,83,924/- AND DEPB OF RS.1,19,018/- TOTALIN G TO RS.1,27,30,401/- ARE PROFIT UNDER SECTION 80HHC(3) R.W.S. 28(IIIA) B UT THEY ARE NOT EXPORT PROFIT AND THEREFORE, CANNOT BE CONSIDERED FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80 HHC. ACCORDING TO HIM DEPB LICENCE IS GRANTED UNDER ITA NO.2802/AHD/2006 AY 1998-99 3 THE IMPORT (CONTROL) ACT, 1947 AND THEREFORE, IT IS NOT DERIVED FROM EXPORT AND THEREFORE NOT EXPORT PROFIT. HE REFERRED TO THE AMENDMENT TO SECTION 80 HHC VIDE TAXATION LAWS (AMENDMENT) ACT, 2005 DAT ED 29 TH DECEMBER, 2005 ACCORDING TO WHICH FOR GETTING BENEF IT ON PROFIT ON SALE OF DEPB CERTAIN CONDITIONS ARE TO BE SATISFIED. SIN CE THE CONDITIONS ARE NOT SATISFIED THE ENTIRE AMOUNT RECEIVED BY THE ASS ESSEE COMPANY ON PROFIT OF SALE OF EXPORT INCENTIVE WILL BE EXCLUDED WHILE COMPUTING THE PROFITS AND ELIGIBLE DEDUCTION UNDER SECTION 80 HHC . THE LD. CIT(A) CONFIRMED THE REOPENING OF THE ASSESSMENT BY RELYIN G ON THE DECISION IN RAYMOND WOOLEN MILLS VS. ITO 236 ITR 34 (SC) FOR TH E PROPOSITION THAT IT IS ONLY TO BE SEEN FOR HOLDING THE REOPENING AS INVALID WHERE THERE WAS PRIMA-FACIE SOME MATERIAL ON THE BASIS OF WHICH DEP ARTMENT CAN REOPEN THE CASE. THE LD. CIT(A) DID NOT GO FURTHER AS TO W HETHER OTHER CONDITIONS LAID DOWN UNDER SECTION 147 ARE SATISFIED. 4. THE LD. AR SUBMITTED THAT THE ASSESSMENT WAS COM PLETED UNDER SECTION 143(3). IT IS SOUGHT TO BE REOPENED ON 29.3 .2005 I.E. AFTER EXPIRY OF 4 YEARS FROM THE END OF ASSESSMENT YEAR I.E. 199 8-99. HE REFERRED TO FOLLOWING REASONS RECORDED BY THE AO FOR REOPENING OF THE ASSESSMENT :- DURING THE YEAR ASSESSEE HAS CLAIMED DEDUCTION U/ S 80 HHC OF RS.2,20,80,820/- IN THE RETURN OF INCOME AND SAME W AS ALLOWED WHILE PROCESSING THE RETURN. ON VERIFICATION OF COM PUTATION OF DEDUCTION U/S 80 HHC IT IS SEEN THAT ASSESSEE HAS C LAIMED 90% OF EXPORT INCENTIVES AMOUNTING TO RS.6794154/- AS DEDU CTION U/S 80 HHC. THIS DEDUCTION HAS BEEN REDUCED TO RS.63,13,46 1/- VIDE ORDER DTD.29/12/2000 U/S 143(3). HOWEVER, VIDE RECT IFICATION ORDER U/S 154 DTD.18/2/2003, RECTIFYING THE ORDER OF THE ORDER GIVING EFFECT TO THE ORDER OF THE CIT(A) DTD.27.5.2002, AG AINST THE DEDUCTION ON ACCOUNT OF EXPORT INCENTIVES HAS BEEN WORKED OUT TO RS.6794154/-. ITA NO.2802/AHD/2006 AY 1998-99 4 ON FURTHER VERIFICATION IT IS SEEN THAT THESE EXPO RT BENEFITS CONSISTS OF (1) EXPORT PASS BOOK BENEFIT OF RS.5154459/-, (2 ) SALES OF IMPORT LICENCES OF RS.6383924/- AND DEPB OF RS.1192 018/-, TOTALING TO RS.12730401/-. AS PER SECTION 80 HHC(3) R.W.S. 28(IIIA), PROFIT ON SALE OF A LICENCE GRANTED UNDER THE IMPORT (CONTROL) ACT, 1947 CAN ONLY BE COUNTED FOR DEDUCTI ON U/S 80 HHC AND NO PROFIT ON SALE OF LICENCE ACQUIRED FROM ANY OTHER PERSON CAN NOT BE CONSIDERED FOR DEDUCTION U/S 80 HHC. FURTHER THE ISSUE DEPB HAS BEEN CLARIFIED THROUGH THE PRESS RELEASE D ATED 8/9/2004 PUBLISHED IN THE BOMBAY CHARTERED ACCOUNTANT JOURNA L, DECEMBER, 2004 AND SUCH PROFIT IS NOT QUALIFIED FOR DEDUCTION U/S 80 HHC. IN VIEW OF THIS FACT, I HAVE REASON TO BELI EVE THAT INCOME TO THE EXTENT OF RS.67,94154/- HAS ESCAPED ASSESSME NT WITHIN THE MEANING OF SECTION 147 OF THE IT ACT. AFTER GOING THROUGH THE REASONS LD. AR POINTED OUT THAT AO HAS NOT CHARGED ANY OMISSION OR FAILURE TO DISCLOSE ANY MAT ERIAL FACTS NECESSARY FOR ASSESSMENT WHICH IS PRE-CONDITION FOR ACQUIRING JURISDICTION TO REOPENING THE ASSESSMENT AFTER 4 YEARS. IN FACT ACC ORDING TO HIM ALL THE FACTS ARE DISCLOSED IN THE ORIGINAL RETURN AND COMP UTATION OF DEDUCTION UNDER SECTION 80 HHC WAS MADE. THE DETAILS OF EXPOR T INCENTIVE WERE ALSO DECLARED AS PER PAGES 2 AND 3 OF THE PAPER BOO K FILED. HE ALSO DREW OUR ATTENTION TO ORIGINAL ASSESSMENT ORDER DATED 29 .12.00 WHEREIN THE DISCUSSION ON DEDUCTION UNDER SECTION 80 HHC IS STA RTED FROM PAGE 49 AND CONTINUED TO PAGE 54. THE CALCULATION OF DEDUCT ION UNDER SECTION 80 HHC WAS CARRIED OUT BY THE AO AS PER SEPARATE WORKI NG SHEET ENCLOSED WITH THE ASSESSMENT ORDER SEPARATELY INCLUDED EXPOR T INCENTIVE AMOUNTING TO RS.12736475/-. ACCORDINGLY THERE WAS NO OMISSION OR FAILURE ON THE PART OF ASSESSEE TO DISCLOSE ANY MATERIAL FACT AND AO WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENT. 5. LTD. AR REFERRED TO THE DECISION OF HONBLE PUNJ AB & HARYANA HIGH COURT IN DULICHAND SINGHANIA VS. ACIT (2004) 269 ITR 192 FOR THE ITA NO.2802/AHD/2006 AY 1998-99 5 PROPOSITION THAT NOTICE UNDER SECTION 148 ISSUED ON THE GROUND THAT EXCESS DEDUCTIONS HAVE BEEN GRANTED UNDER SEC.80O IN A C ASE WHERE NOTICE WAS ISSUED AFTER 4 YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR WOULD BE INVALID. 6. ON THE OTHER HAND THE LD. DR SUPPORTED THE ORDER S OF AUTHORITIES BELOW . 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND CONS IDERING THE MATERIAL ON RECORD, WE ARE OF THE CONSIDERED VIEW T HAT REOPENING OF THE ASSESSMENT IS NOT JUSTIFIED. THE REASONS ARE THAT A SSESSMENT IS SOUGHT TO BE REOPENED AFTER FOUR YEARS FROM THE END OF RELEVA NT ASSESSMENT YEAR WHERE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTI ON 143(3). ACCORDINGLY PROVISO TO SECTION 147 WOULD BE APPLICA BLE ACCORDING TO WHICH WHERE AN ASSESSMENT IS COMPLETED UNDER SECTIO N 143(3) OR UNDER SECTION 147 THEN NO REASON FOR REOPENING OF THE ASS ESSMENT CAN BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE RELEVANT AY UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A Y BY REASON OF FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY A ND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT AY. THEREFORE , IT IS NECESSARY FOR THE AO TO SPECIFICALLY MENTION AS TO WHAT MATERIAL FACTS, THE ASSESSEE WAS REQUIRED TO DISCLOSE AND WHICH HAS NOT BEEN DISCLOS ED AND FURTHER WHICH ARE NECESSARY FOR DISCLOSURE IN THE REGULAR ASSESSM ENT. IN FACT THE AO HAS CARRIED OUT DETAILED INVESTIGATION AND THE DISCUSSI ON HAS RUN INTO SEVERAL PAGES IN THE ASSESSMENT ORDER. A SEPARATE CALCULATI ON SHEET HAS BEEN ANNEXED WITH THE ASSESSMENT ORDER SHOWING HOW DEDUC TION UNDER SECTION 80 HHC IS WORKED OUT THEN THERE IS NO REASON TO REO PEN THE ASSESSMENT WHEN THERE IS NO OMISSION OR FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING ANY RELEVANT MATERIAL FACT. IN FACT THE AO HAD CONSIDERED THE ITA NO.2802/AHD/2006 AY 1998-99 6 EXPORT INCENTIVE BEING EXPORT PASS BOOK BENEFIT, DE PB AND SALE OF IMPORT LICENCE WHILE CARRYING OUT COMPUTATION OF DE DUCTION UNDER SECTION 80 HHC. THE DECISION OF HONBLE PUNJAB & HA RYANA HIGH COURT IN DULICHAND SINGHANIA VS. ACIT (SUPRA) IS FULLY AP PLICABLE ON THE FACTS OF THE CASE AND ASSESSMENT CANNOT BE REOPENED MEREL Y ON THE GROUND THAT EXCESS DEDUCTIONS HAVE BEEN GRANTED UNDER SECTION 8 0 O IN THAT CASE. HONBLE CALCUTTA HIGH COURT IN PEERLESS GENERAL FIN ANCE & INVESTMENT CO. LTD. VS. DCIT & ORS.(2005) 273 ITR 16 (CAL) IT IS HELD THAT AN ASSESSMENT CANNOT BE REOPENED AFTER EXPIRY OF 4 YEA RS ON THE BASIS OF OBSERVATIONS OF HONBLE SUPREME COURT AS THERE IS N O OMISSION OR FAILURE ON THE PART OF THE ASSESSEE. 8. HONBLE GUJARAT HIGH COURT IN ARVIND MILLS LTD. VS. DCIT (2000) 242 ITR 173 (GUJ) HELD THAT IMPORT OF PROVIS O TO SECTION 147 OF IT ACT, 1961 WHERE THERE IS NO DEFAULT ON THE PART OF THE ASSESSEE IN FILING THE RETURN AS REQUIRED UNDER THE ACT EITHER UNDER SECTI ON 139(1) OR IN RESPONSE TO NOTICE UNDER SECTION 142(1) OR 148(1) OR THERE I S NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR ASSESSMENT, THEN ACTION COULD NOT BE TAKEN FOR REOP ENING THE ASSESSMENT AFTER EXPIRY OF FOUR YEARS NOTWITHSTANDING THE FACT THAT REASONS FOR ESCAPEMENT OF INCOME FROM ASSESSMENT EXISTED. IN TH IS CASE AO SOUGHT TO REOPEN THE ASSESSMENT AFTER EXPIRY OF FOUR YEARS ON THE BASIS OF DECISION OF HONBLE ALLAHABAD HIGH COURT IN SWARUP VEGETABL E PRODUCTS INDUS. LTD. VS. CIT (1991) 187 ITR 412 BY HOLDING THAT HI S DECISION EARLIER WAS ERRONEOUS AND BECAUSE OF WHICH INCOME HAS ESCAPED A SSESSMENT. SIMILAR VIEW WAS HELD BY HONBLE GUJARAT HIGH COURT IN SHRE E THARAD JAIN YUVAK MANDAL AND ANOTHER VS. ITO (2000) 242 ITR 612 (GUJ) WHEREIN ASSESSMENT WAS SOUGHT TO BE REOPENED AFTER EXPIRY O F FOUR YEARS ON THE BASIS OF OBJECTION OF AUDIT PARTY WHICH POINTED OUT THAT THE TRUST HAD NOT ITA NO.2802/AHD/2006 AY 1998-99 7 OBTAINED PERMISSION OF THE AO UNDER SECTION 11(3A) OF THE ACT AND, THEREFORE, ASSESSEE TRUST WAS NOT ELIGIBLE FOR EXEM PTION. ON THIS BASIS NOTICE UNDER SECTION 148 WAS ISSUED AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASST. YEAR. ON WRIT PETITION PARTNE R OF THE ASSESSEE TRUST IT WAS HELD THAT WHERE ASSESSEE HAS DISCLOSED ALL THE PROBABLE FACTS AND AO FAILED TO DRAW LEGAL INFERENCE FOR THE PURPOSES OF APPLYING THE LAW THEN THERE IS NO FAILURE ON THE PART OF ASSESSEE TO DISC LOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND ACCORDI NGLY COULD NOT HAVE ASSUMED JURISDICTION FOR REASSESSMENT AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASST. YEAR. HONBLE GUJARAT HIGH CO URT FURTHER HELD THE SIMILAR VIEW IN VARELI WEAVES (P) LTD. VS. DCIT (19 99) 240 ITR 77 (GUJ) WHERE ASSESSMENT WAS SOUGHT TO BE REOPENED ON THE GROUND OF NON- EXERCISE OF DUE DILIGENCE BY A.O. THE REASONS DID N OT ATTRIBUTE ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FA CTS TRULY AND FULLY WHICH COULD HAVE RESULTED IN ESCAPEMENT OF INCOME. HONBL E GUJARAT HIGH COURT IN GOVIND CHHAPABHAI PATEL VS. DCIT (1999) 24 0 ITR 628 (GUJ) DECLARED THE REASSESSMENT PROCEEDINGS INVALID WHEN THEY WERE SOUGHT TO BE INITIATED AFTER EXPIRY OF FOUR YEARS FROM THE EN D OF RELEVANT ASST. YEAR IN RESPECT OF ASSESSMENT COMPLETED UNDER SECTION 14 3(3) BUT ON THE GROUND THAT INTEREST PAID TOWARDS A LOAN TAKEN FOR PURCHASE OF SILVER COULD NOT BE INCLUDED IN THE PRICE OF SILVER/COST OF SILV ER. IT WAS HELD THAT IT IS MERELY A CHANGE OF OPINION BECAUSE EARLIER THE AO C ONSIDERED THE CAPITALIZATION OF THE AMOUNT OF INTEREST IN COMPUTI NG THE LOSS BUT NOW ON THE BASIS OF SAME MATERIAL SUCCEEDING OFFICER HAS T AKEN A DIFFERENT VIEW WHICH IS NOTHING BUT A CHANGE OF OPINION. IN HYNOOP FOOD AND OIL INDUSTRIES VS. ACIT (2008) 307 ITR 115 (GUJ) HONBL E GUJARAT HIGH COURT HELD THAT NOTICE ISSUED AFTER EXPIRY OF FOUR YEARS TO WITHDRAW ESPECIAL DEDUCTION ALLOWED EARLIER UNDER SECTION 80 HH AND 80I WAS NOT VALID WHEN THERE WAS NO FAILURE OR OMISSION ON THE PART OF ASSESSEE TO ITA NO.2802/AHD/2006 AY 1998-99 8 DISCLOSE TRULY AND FULLY ANY MATERIAL FACTS NECESSA RY FOR ASSESSMENT. IN THAT CASE WHILE EXAMINING A SUBSEQUENT ASSESSMENT Y EAR THE AO HAD FOUND THAT THE ACTIVITIES CARRIED ON BY THE ASSESSE E IN REFINING OF VEGETABLE OIL DID NOT AMOUNT TO MANUFACTURE OR PRODUCTION OF ARTICLE AS WAS REQUIRED FOR ALLOWING DEDUCTION UNDER SECTION 80 HH AND UNDE R SECTION 80I. ON THE BASIS OF THIS OBSERVATION IN SUBSEQUENT YEAR TH E AO HAD SOUGHT TO REOPEN ASSESSMENT OF AN EARLIER YEAR WHICH WAS NOT PERMITTED BY HONBLE GUJARAT HIGH COURT. ITAT DELHI BENCH IN M.M.T.C. LT D. VS. DCIT (2009) 309/(AT) 361 FOUND THAT ASSESSMENT WAS EARLI ER MADE ALLOWING DEDUCTION UNDER SECTION 80 HHC WITH NO DISCOVERY OF ANY BOGUS TRANSACTION. SUBSEQUENTLY AFTER EXPIRY OF FOUR YEAR S FROM THE END OF RELEVANT ASST. YEAR ASSESSMENT WAS SOUGHT TO BE REO PENED TO TAX INTEREST AND DIVIDEND INCOME AS INCOME FROM OTHER SOURCES AN D WITHDRAW DEDUCTION ON THE GROUND THAT BUSINESS PROFIT WAS AC CORDINGLY A NEGATIVE FIGURE. IT WAS HELD THAT IT WAS NO A CASE WHERE BOG US TRANSACTION WAS ENTERED BY THE ASSESSEE WHICH WERE SUBSEQUENTLY DIS COVERED , NO NEW MATERIAL HAS COME TO THE NOTICE OF THE A.O. AFTER F RAMING ORIGINAL ASSESSMENT. AS THE AO HAD FORMED AN OPINION IN ORIG INAL ASSESSMENT ORDER THAN SUBSEQUENT REOPENING WOULD BE BASED ON A MERE CHANGE OF OPINION. IN DCIT VS. TATA MOTORS LTD.(2009) 312 IT R (AT) 180 (MUM) IT WAS FOUND THAT ASSESSMENT WAS SOUGHT TO BE REOPE NED AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASST. YEAR ON T HE GROUND OF NON- INCLUSION OF CUSTOMS DUTY IN THE VALUATION OF CLOSI NG STOCK, OMISSION OF SALES TAX AND COMPENSATION RECEIVED FROM TERMINATIO N OF AGREEMENT FROM THE PROFIT OF BUSINESS FOR ALLOWING DEDUCTION UNDER SECTION 80HHC, FURTHER PROVISION FOR INTEREST AND DOUBTFUL DEBTS A ND OTHER ITEMS OF EXPENDITURE WAS DEBITED IN THE PROFIT AND LOSS ACCO UNT. THE AO RECOMPUTED THE INCOME AND DEDUCTION UNDER SECTION 8 0 HHC. IT WAS HELD THAT AO DID NOT ESTABLISH THAT SUCH ESCAPEMENT OF I NCOME WAS ONLY DUE TO ITA NO.2802/AHD/2006 AY 1998-99 9 FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY A ND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. HONBLE CALCUTTA HIGH COU RT IN THE CASE OF SIMPLEX CONCRETE PILES (INDIA) LTD. & ORS. VS. DCIT (2003) 262 ITR 605 (CAL) FOUND THAT ASSESSMENT WAS SOUGHT TO BE RE OPENED AFTER EXPIRY OF FOUR YEARS ON THE BASIS OF A SUPREME COURT DECISION . IT WAS HELD THAT THERE WAS NO FAILURE TO DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT. HONBLE GUJARAT HIGH COURT IN AUSTIN ENGINEERING CO . LTD. VS. JCIT (2009) 312 ITR 70 (GUJ) FOUND THAT AO HAD ALLOWED D EDUCTION UNDER SECTION 80 HHC ON EXPORT INCENTIVE BENEFIT IN AN OR DER PASSED UNDER SECTION 143(3) THEN AO SOUGHT TO DISALLOW PART OF T HE DEDUCTION ON THE BASIS OF A SUBSEQUENT DECISION OF HON/BLE SUPREME C OURT. IT WAS HELD THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT AND, THEREFORE, ISSUANCE O F NOTICE UNDER SECTION 148 WAS INVALID. 9. IN THE PRESENT CASE THE AO HAD SOUGHT TO REOPEN THE ASSESSMENT AND WITHDRAW DEDUCTION UNDER SECTION 80 HCC ON THE BASI S OF SUBSEQUENT AMENDMENT VIDE TAXATION LAW (AMENDMENT) ACT, 2005, DATED 29 TH DECEMBER, 2005. CLEARLY WHEN ASSESSEE HAD CLAIMED T HIS DEDUCTION IN THE RETURN FILED AND AO ALLOWED THE SAME THE CHANGED LA W DID NOT EXIST AND ACCORDINGLY NO OMISSION OR FAILURE COULD BE IMPUTED TO THE ASSESSEE IN DISCLOSING ANY MATERIAL FACT FOR ASSESSMENT EVEN TH OUGH THE AMENDED LAW HAS RESULTED IN ESCAPEMENT OF INCOME IN THE ASSTT. YEAR IN QUESTION BUT THIS ESCAPEMENT IS NOT BECAUSE OF FAILURE ON THE PA RT OF THE ASSESSEE IN DISCLOSING MATERIAL FACTS NECESSARY FOR ASSESSMENT. 10. AS A RESULT, WE HOLD THAT REOPENING OF ASSESSME NT IS NOT JUSTIFIED AS THERE IS NO ALLEGATION OF ANY OMISSION OR FAILURE O N THE PART OF ASSESSEE IN DISCLOSING ANY MATERIAL FACT NECESSARY FOR ASSESSME NT. ACCORDINGLY THIS ITA NO.2802/AHD/2006 AY 1998-99 10 GROUND OF ASSESSEE IS ALLOWED. THE ISSUES ON MERITS ARE ACCORDINGLY NOT REQUIRED FOR DISCUSSION AND, THEREFORE, GROUND RELA TING TO THEM BECOMES OF ACADEMIC INTEREST ONLY. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13 /11 /2009 SD/- SD/- (MAHAVIR SINGH) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 13/11/2009 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD