Advik Hi tech Pvt. Ltd., Chakan V. Addl. CIT, Range 8, Pune

ITA 705/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6782 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 18-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Wrong claim; Difference of opinion; Assessment record; Change of opinion
• Section: 143(3); 142(1); 80IB; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.705/PN/2013 (ASSESSMENT YEAR : 2005-06) ADVIK HI-TECH PVT. LTD., GAT NO.357, PLOT NO.99, PART- A, CHAKAN TALEGAON ROAD, KHARABWADI, CHAKAN 410 501. PAN : AACCA3106E . APPELLANT VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE- 8, PUNE. . RESPONDENT ASSESSEE BY : MR. SHARAD SHAH DEPARTMENT BY : MR. S. P. WALIMBE DATE OF HEARING : 30-06-2014 DATE OF PRONOUNCEMENT : 25-07-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DA TED 28.12.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 08.12.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 147 OF THE INCOME-TAX ACT , 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. IN THIS APPEAL, THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSEE :- 1) THE REOPENING OF THE ASSESSMENT U/S 147 IS BAD IN LAW INASMUCH AS THE PROCEEDINGS ARE BASED ON CHANGE OF OPINION. 2) THE REOPENING OF THE ASSESSMENT U/S 147 IS BAD I N LAW AS THE DENIAL OF EXEMPTION U/S 80IB (WHICH WAS THE REASON TREATED BY THE LEARNED A.O. FOR PROCEEDINGS U/S 147) ARE BASED ON MISINTER PRETATION OF PROVISIONS OF LAW. 3) THE LEARNED A.O. ERRED IN (AND LEARNED CIT-A ERR ED IN CONFIRMING) DISALLOWING THE CLAIM OF DEDUCTION U/S 80IB(3)(II). THE AMOUNT CLAIMED IS RS. 92,60,687/-. ITA NO.705/PN/2013 A.Y. : 2005-06 4) THE LEARNED A.O. ERRED IN (AND LEARNED CIT-A ERR ED IN CONFIRMING) IN COMPUTING THE VALUE OF PLANT & MACHINERY FOR DETERM INING WHETHER THE ASSESSEE CAN BE CONSIDERED TO BE A SMALL SCALE INDUSTRY (SSI) UNIT. SEC 80IB(L4)(G) SPECIFIES THAT THE MEANING OF SSI UNIT WILL BE AS PER THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951. UNDER THE SAID ACT, CERTAIN MACHINERY ARE TO BE EXC LUDED WHILE COMPUTING THE VALUE OF MACHINERY FOR ELIGIBILITY AS SSI UNIT. THE SAME HAS NOT BEEN DONE BY THE LEARNED A.O. AND LEAR NED CIT-A. 5) THE LEARNED A.O. ERRED IN DISALLOWING THE CLAIM OF DEDUCTION U/S 80IB(3)(II) ON THE BASIS OF, INTER ALIA, ASSESSEE COMPANY'S INABILITY TO PROVIDE BILLS FOR THE PERIOD FALLING EARLIER TO 6 YEARS ARE NOT PROVIDED. 6) THE LEARNED CIT ERRED IN DISALLOWING THE CLAIM O F DEDUCTION U/S 80IB(3)(II) ON THE BASIS OF, INTER ALIA, A) INSUFFICIENT INFORMATION IN 10CCB CERTIFICATE, ALT HOUGH THE DEFICIENCY WAS SET RIGHT BY PROVIDING INFORMATION T O THE ORIGINAL A.O. B) COMPANY'S INABILITY TO PROVIDE BILLS FOR THE PERIO D FALLING EARLIER TO 6 YEARS ARE NOT PROVIDED. 7) THE LEARNED A.O. ERRED IN NOT PROVIDING THE COPY OF THE ORDER SHEETS FOR THE ASSESSMENT PROCEEDINGS AT THE TIME O F ORIGINAL ASSESSMENT IN SPITE OF ASSESSEE'S PRAYER FOR THE SA ME WHICH WAS ACCOMPANIED BY THE CHALLAN FOR PAYMENT OF COPYING C HARGES. 8) THE LEARNED A.O. ERRED IN NOT ACCEPTING THE INCO ME AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE. 9) THE APPELLANT CRAVES ITS RIGHT TO ADD TO OR ALTE R THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE COURSE OF H EARING OF THE CASE. 3. IN THIS APPEAL, THE FIRST AND FOREMOST ISSUE RAI SED BY THE ASSESSEE IS THAT THE PROCEEDINGS INITIATED BY THE ASSESSING OFF ICER BY ISSUANCE OF NOTICE U/S 148 OF THE ACT ARE BAD IN LAW AND THEREFORE THE IMPUGNED ASSESSMENT MADE NEEDS TO BE ANNULLED. 4. ON THIS ASPECT, THE POINT MADE BY THE ASSESSEE I S THAT THE ISSUANCE OF NOTICE U/S 148 OF THE ACT HAS TAKEN PLACE AFTER A P ERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THE ASSESSM ENT WAS ORIGINALLY MADE U/S 143(3) OF THE ACT. ACCORDINGLY, IT IS CANVASSE D THAT THE VALIDITY OF THE NOTICE ISSUED U/S 148 OF THE ACT REOPENING THE ASSESSMENT WOULD DEPEND UPON FULFILLMENT OF THE CONDITIONS PRESCRIBED IN THE FIR ST PROVISO TO SECTION 147 OF THE ACT. THE PROVISO TO SECTION 147 OF THE ACT PRESCRI BES THAT WHERE AN ITA NO.705/PN/2013 A.Y. : 2005-06 ASSESSMENT U/S 143(3) OF THE ACT HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN TO REOPEN THE ASSESS MENT U/S 147 OF THE ACT 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 FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 139 OF THE ACT OR IN RESPONSE A NOTICE I SSUED U/S 142(1) OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR AN ASSESSMENT. IN THE PRESENT CASE, THE CLAIM MADE BY THE ASSESSEE IS THAT IT MADE A RETURN U/S 139 OF THE ACT AND THERE WAS NO F AILURE ON ITS PART TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELATIN G TO THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION. IN SUPPORT OF HIS SUBMISSION, THE LEARNED COUNSEL HAS REFERRED TO THE RELEVANT PAPERS PLACED IN THE PAPER BOOK TO DEMONSTRATE THAT ASSESSEE HAD DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS RELATING TO THE ASSESSMENT OF THE YEAR IN QUESTION. OSTENSIBLY, TH E ISSUE IN DISPUTE IS WITH REGARD TO THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB(3) OF THE ACT AMOUNTING TO RS.92,60,687/-. 5. BEFORE PROCEEDING FURTHER, THE SALIENT FACTS OF THE CASE CAN BE SUMMARIZED AS FOLLOWS. THE ASSESSEE COMPANY FILED A RETURN OF INCOME ORIGINALLY ON 16.11.2005 DECLARING TOTAL INCOME OF RS.2,33,80,380/- WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT BY WAY OF AN ORDER U/S 143(3) OF THE ACT DATED 19.11.2007 WHEREBY THE TOTAL INCOME WAS DETER MINED AT RS.2,37,12,348/-. IN THE RETURN OF INCOME, ASSESSE E HAD INTER-ALIA CLAIMED DEDUCTION U/S 80IB(3) OF THE ACT AT RS.92,60,687/- AND IN THE ASSESSMENT THE ASSESSING OFFICER ALLOWED THE SAME AT RS.92,60,687/ -. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED A NOTICE U/S 148 OF THE AC T ON 19.01.2011 ON THE GROUND THAT CERTAIN INCOME CHARGEABLE TO TAX HAD ES CAPED ASSESSMENT INASMUCH AS THERE WAS AN EXCESS RELIEF ALLOWED INAS MUCH AS ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(3) OF THE ACT, AS THE TOTAL VALUE OF PLANT & MACHINERY OF ITS SMALL SCALE UNIT EXCEEDED THE ELIG IBILITY TO BE RECKONED AS SSI ITA NO.705/PN/2013 A.Y. : 2005-06 UNIT. IN THE ENSUING ASSESSMENT FINALIZED U/S 147 R.W.S. 143(3) OF THE ACT DATED 08.12.2010, THE DEDUCTION EARLIER ALLOWED U/S 80IB(3) OF THE ACT AMOUNTING TO RS.92,60,687/- HAS BEEN DENIED. THE S AID ACTION OF THE ASSESSING OFFICER HAS BEEN AFFIRMED BY THE CIT(A), WHICH IS THE SUBJECT-MATTER OF APPEAL BEFORE US. 6. IN PARA 2 OF THE ASSESSMENT ORDER, THE REASONS R ECORDED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT HAVE BEEN REPRODUCED WHICH READ AS UNDER :- AS PER SUB-SECTION (3) OF 80IB, THE AMOUNT OF DEDU CTION IN THE CASE OF AN INDUSTRIAL UNDERTAKING IN AN INDUSTRIALLY BACKWA RD STATE SPECIFIED IN THE EIGHTH SCHEDULE SHALL BE HUNDRED PER CENT. OF THE P ROFIT AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE ASSESSMEN T YEARS BEGINNING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER TWENTY-FIVE PER CENT. (OR THIRTY PER CENT. WHERE THE ASSESSEE IS A COMPANY) OF THE PROFIT AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING: AN INDUSTRIAL UNDERTAKING IN WHICH THE INVESTMENT I N FIXED ASSETS IN PLANT AND MACHINERY WHETHER HELD ON OWNERSHIP TERMS OR ON LEASE, OR BY HIRE PURCHASE DOES NOT EXCEED RS.3 CRORE ON THE LAST DAY OF THE PREVIOUS YEAR IS A SMALL SCALE INDUSTRIAL UNDERTAKING. THE ASSESSMENT OF THE RETURN OF INCOME FOR A.Y. 200 5-06 WAS COMPLETED U/S 143(3) ON 19.11.2007 DETERMINING INCO ME AT RS.2,37,12,348/- AFTER ALLOWING DEDUCTION U/S 80IB RS.92,60,687/-. IT IS NOTICED FROM ASSESSMENT RECORD THAT THE ASSES SEE COMMENCED OPERATION OF THE UNIT FROM 12 TH JUNE, 2000 AND WAS ALLOWED DEDUCTION OF RS.92,60,687/- U/S 80IB BEING A SMALL SCALE UNIT FO R MANUFACTURE AUTO COMPONENTS. AS PER BALANCE SHEET AS ON 31.03.2005 THE TOTAL VALUE OF PLANT & MACHINERY USED FOR BUSINESS WAS RS.4.75 CRORES AN D WHICH EXCEEDED THE ELIGIBILITY TO BE RECKONED AS A SMALL SCALE UNIT. THUS THE ASSESSEE IS NOT ENTITLE FOR THE BENEFIT OF 80IB DEDUCTION THE INCOM E TAX ACT, 1961. 7. NOW, THE FIRST POINT MADE BY THE ASSESSEE IS THA T THE ASSESSMENT HAS BEEN REOPENED AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THE ORIGINAL ASSESSMENT WAS MAD E U/S 143(3) OF THE ACT AND THEREFORE, THE PRESCRIPTION OF THE FIRST PROVIS O TO SECTION 147 OF THE ACT APPLIES. IT IS SOUGHT TO BE MADE OUT THAT IN TERMS OF THE FIRST PROVISO TO SECTION 147 OF THE ACT, THE ASSESSING OFFICER IS REQUIRED T O MAKE OUT A CASE IN THE REASONS RECORDED AS TO WHETHER THERE IS A FAILURE O N THE PART OF THE ASSESSEE ITA NO.705/PN/2013 A.Y. : 2005-06 TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR ASSESSMENT. IT IS POINTED OUT THAT THE ASSESSING OFFICER COULD HAVE P ROCEEDED TO REOPEN THE ASSESSMENT ONLY AFTER RECORDING THE AFORESAID AND F OR HIS FAILURE TO DO SO, THE INITIATION OF PROCEEDINGS U/S 147 OF THE ACT ARE RE NDERED NUGATORY. IN SUPPORT OF THE AFORESAID PROPOSITION, RELIANCE HAS BEEN PLA CED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TITANOR CO MPONENTS LTD. VS. ACIT, (2012) 343 ITR 183 (BOM). 8. IN THE ABOVE CONTEXT, WE HAVE PERUSED THE JUDGM ENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TITANOR COMPONENTS LTD. (SUPRA). IN THE CASE BEFORE THE HONBLE HIGH COURT, NOTICE WAS ISSU ED U/S 148 OF THE ACT FOR REOPENING AN ASSESSMENT BEYOND THE PERIOD OF FOUR Y EARS AND THE INCOME OF THE ASSESSEE WAS ORIGINALLY ASSESSED BY WAY OF AN O RDER U/S 143(3) OF THE ACT. CONSIDERING A SIMILAR ARGUMENT AS IS BEING MADE BEF ORE US, THE HONBLE HIGH COURT HELD AS UNDER :- HAVING REGARD TO THE PURPOSE OF THE SECTION, WE AR E OF THE VIEW THAT THE POWER CONFERRED BY S. 147 DOES NOT PROVIDE A FR ESH OPPORTUNITY TO THE AO TO CORRECT AN INCORRECT ASSESSMENT MADE EARLIER UNL ESS THE MISTAKE IN THE ASSESSMENT SO MADE IS THE RESULT OF A FAILURE OF TH E ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMEN T. INDEED, WHERE THE ASSESSEE HAS FULLY DISCLOSED ALL THE MATERIAL FACTS , IT IS NOT OPEN FOR THE AO TO REOPEN THE ASSESSMENT ON THE GROUND THAT THERE IS A MISTAKE IN ASSESSMENT. MOREOVER, IT IS NECESSARY FOR THE AO TO FIRST OBSER VE WHETHER THERE IS A FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR ASSESSMENT AND HAVING OBSERVED THAT THERE IS SUCH A FAILURE TO PRO CEED UNDER S. 147. IT MUST FOLLOW THAT WHERE THE AO DOES NOT RECORD SUCH A FAI LURE HE WOULD NOT BE ENTITLED TO PROCEED UNDER S. 147. AS OBSERVED EARL IER, THE AO HAS NOT RECORDED THE FAILURE ON THE PART OF THE PETITIONER TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASST. YR. 1997-98. WHAT IS RECORDED IS THAT THE PETITIONER HAS WRONGLY CLAIMED CERTAIN DEDUCTIONS W HICH HE WAS NOT ENTITLED TO. THERE IS A WELL KNOWN DIFFERENCE BETWEEN A WRONG CL AIM MADE BY AN ASSESSEE AFTER DISCLOSING ALL THE TRUE AND MATERIAL FACTS AND A WRONG CLAIM MADE BY THE ASSESSEE BY WITHHOLDING THE MATERIAL FA CTS FULLY AND TRULY. IT IS ONLY IN THE LATTER CASE THAT THE AO WOULD BE ENTITL ED TO PROCEED UNDER S. 147. WE ARE SUPPORTED IN THIS VIEW BY A DECISION OF A DI VISION BENCH OF THIS COURT IN HINDUSTAN LEVER LTD. VS. R.B. WADKAR, ASSTT. CIT (2004) 190 CTR (BOM) 166 : (2004) 268 ITR 332 (BOM) WHERE IN A SIMILAR C ASE THE DIVISION BENCH HELD THAT REASON THAT THERE WAS A FAILURE TO DISCLO SE FULLY AND TRULY THAT ALL MATERIAL FACTS MUST BE READ AS RECORDED BY THE AO A ND IT WOULD NOT BE PERMISSIBLE TO DELETE OR ADD TO THOSE REASONS AND T HAT THE AO MUST BE ABLE TO ITA NO.705/PN/2013 A.Y. : 2005-06 JUSTIFY THE SAME BASED ON MATERIAL RECORD. THE DIV ISION BENCH OBSERVED AS FOLLOWS : HE MUST DISCLOSE IN THE REASONS AS TO WHICH FACT O R MATERIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSESSMENT OF THAT ASSESSMENT YEAR, SO AS TO ESTABLISH THE VITAL LINK BETWEEN THE REASONS AND EVIDENCE. 5. WE FIND IN THE CIRCUMSTANCES THAT THE IMPUGNED N OTICE IS NOT SUSTAINABLE AND IS LIABLE TO BE QUASHED AND SET ASI DE. ACCORDINGLY, THE WRIT PETITION IS ALLOWED IN TERMS OF PRAYER CLS. (A) AND (C). 9. OSTENSIBLY, THE HONBLE HIGH COURT OBSERVED THAT THE ASSESSING OFFICER DID NOT RECORD THAT THERE WAS FAILURE ON THE PART O F THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. WHAT WAS RECORDED IN THE CASE BEFORE THE HONBLE HIGH COURT WAS THAT THE PETITIONER HAD WRONGLY CLAIMED CERTAIN DEDUCTION WHICH HE WAS NOT ENTITLED TO. UNDER THESE CIRCUMSTANCES, THE HONBLE HIGH COURT HELD THAT THE NOTICE U/S 148 OF THE ACT WAS NOT SUSTAINABLE BECAUSE IN THE REASONS RECORDED THERE WAS NO RECORDING BY THE ASSESSING OFFICER TO THE EFFECT THAT THERE W AS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR THE ASSESSMENT. APPLYING THE AFORESAID PARITY OF REASO NING TO THE PRESENT CASE, WE FIND THAT THE REASONS RECORDED, WHICH WE HAVE RE PRODUCED IN THE EARLIER PARAGRAPHS, DO NOT CONTAIN ANY AVERMENT BY THE ASSE SSING OFFICER THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIALS FACTS NECESSARY FOR THE ASSESSMENT, MORE PARTICULAR LY, WITH REGARD TO THE EXCESS DEDUCTION U/S 80IB(3) OF THE ACT AMOUNTING T O RS.92,60,687/-. WHAT IS RECORDED BY THE ASSESSING OFFICER IS THAT THE ASSES SEE COMMENCED OPERATION OF ITS UNIT FROM 12.06.2000 AND WAS ALLOWED DEDUCTI ON OF RS.92,60,687/- U/S 80IB(3) OF THE ACT FOR ASSESSMENT YEAR 2005-06, BEI NG A SMALL SCALE UNIT MANUFACTURING AUTO COMPONENTS. AS PER THE ASSESSIN G OFFICER, BALANCE SHEET AS ON 31.03.2005 SHOWS, THAT THE TOTAL VALUE OF PLANT & MACHINERY USED FOR BUSINESS WAS RS.4.75 CRORES, WHICH EXCEEDED THE LIMIT ELIGIBLE TO BE RECKONED AS A SMALL SCALE UNIT AND THUS ASSESSEE WA S NOT ENTITLED FOR THE BENEFIT OF SECTION 80IB(3) OF THE ACT. IN TERMS OF THE SAID REASONS, THE ASSESSING OFFICER FORMED A BELIEF THAT THE DEDUCTIO N OF RS.92,60,687/- U/S ITA NO.705/PN/2013 A.Y. : 2005-06 80IB(3) OF THE ACT WAS THUS WRONGLY ALLOWED IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT ON 19.11.2007. QUITE CLEARLY, TH E AVERMENT IN THE REASONS RECORDED, AS REQUIRED BY THE FIRST PROVISO TO SECTI ON 147 OF THE ACT TO THE EFFECT THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE T O FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, IS CON SPICUOUS BY ITS ABSENCE. THE ABSENCE OF SUCH AN AVERMENT RENDERS THE INITIAT ION OF PROCEEDINGS SUSCEPTIBLE TO A LEGAL INFIRMITY, AS PROPOUNDED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TITANOR COMPONENTS LTD. (SUPRA ). THUS, ON THIS ASPECT ITSELF, WE ARE INCLINED TO HOLD THAT INITIATION OF PROCEEDINGS U/S 147 OF THE ACT IN THE PRESENT CASE ARE BAD IN LAW AND CONSEQUENTIAL A SSESSMENT IS LIABLE TO BE ANNULLED. 10. BEFORE CONCLUDING, WE MAY ALSO REFER TO AN ARGU MENT SETUP BY THE REVENUE THAT THE CLAIM OF DEDUCTION U/S 80IB(3) OF THE ACT AMOUNTING TO RS.92,60,687/- WAS WRONGLY ALLOWED IN THE ASSESSMEN T ORDER AND THAT SUCH ERRONEOUS ALLOWANCE ITSELF CONSTITUTES AN ESCAPEMEN T OF INCOME WITHIN THE MEANING OF SECTION 147 OF THE ACT. ON THIS BASIS, INVOKING OF SECTION 147 IS SOUGHT TO BE JUSTIFIED. PRESENTLY, WE ARE ONLY EXA MINING THE VALIDITY OF THE JURISDICTION EXERCISED BY THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR. THE ONLY POINT TO BE EXAMINED IS WHETHER THE CONDITION PRECE DENT TO EXERCISE JURISDICTION TO REOPEN THE ASSESSMENT BEYOND FOUR Y EARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR HAS BEEN FULFILLED OR NOT. FOR THE PRESENT, WE ARE NOT EXAMINING THE MERITS OF THE CLAIM OF DEDUCTION U/S 80IB(3) OF THE ACT. IN THIS CONTEXT, WE MAY ALSO REFER TO THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TITANOR COMPONENTS LTD. (SUPRA ) WHEREIN SIMILAR ARGUMENT WAS RAISED BY THE REVENUE TO JUSTIFY THE I NVOKING OF SECTION 147 OF THE ACT. THE HONBLE HIGH COURT ANSWERED THE OBJEC TION OF THE REVENUE BY STATING THAT THERE IS A DIFFERENCE BETWEEN A WRONG CLAIM MADE BY THE ASSESSEE AFTER DISCLOSING FULL AND TRUE MATERIAL FACTS AND A WRONG CLAIM MADE BY THE ITA NO.705/PN/2013 A.Y. : 2005-06 ASSESSEE BY WITHHOLDING THE MATERIAL FACTS FULLY AN D TRULY. ACCORDING TO THE HONBLE HIGH COURT, IT IS ONLY IN THE LATTER CASES THAT AN ASSESSING OFFICER IS ENTITLED TO PROCEED U/S 147 OF THE ACT, HAVING REGA RD TO THE FIRST PROVISO TO SECTION 147 OF THE ACT. THE HONBLE HIGH COURT FUR THER NOTED THAT IN THE CASE BEFORE IT THE ASSESSING OFFICER HAD NOT RECORDED TH E FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL F ACTS NECESSARY FOR THE ASSESSMENT. IN THE PRESENT CASE TOO, THE ASSESSING OFFICER HAS NOT RECORDED THE FAILURE ON THE PART OF THE ASSESSEE TO FULLY AN D TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT AND THEREFORE IT IS NOT A CASE WHERE IT CAN BE SAID THAT THE WRONG CLAIM HAS BEEN MADE BY THE A SSESSEE BY WITHHOLDING ANY MATERIAL FACTS FULLY AND TRULY SO AS TO JUSTIFY INVOKING OF SECTION 147 OF THE ACT. THE ONLY POINT MADE OUT BY THE ASSESSING OFFI CER IS THAT THE TOTAL VALUE OF PLANT & MACHINERY USED FOR BUSINESS WAS RS.4.75 CRO RES WHICH EXCEEDED THE ELIGIBLE LIMIT TO BE RECKONED AS A SMALL SCALE UNIT . QUITE CLEARLY, THE SAID AVERMENT IN THE REASONS RECORDED IS BASED ON THE BA LANCE-SHEET OF THE ASSESSEE AS ON 31.03.2005. SUCH MATERIAL WAS, IN A NY CASE, AVAILABLE TO THE ASSESSING OFFICER ALL ALONG IN THE ORIGINAL ASSESSM ENT PROCEEDINGS ALSO. THEREFORE, ABSENCE OF ANY AVERMENT IN THE REASONS R ECORDED TO THE EFFECT THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO FUL LY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT COUPLED WITH THE FACT THAT THE ASSESSING OFFICER HAS NOT REFERRED TO ANY NEW TANGI BLE MATERIAL TO FORMULATE A BELIEF TOWARDS ESCAPEMENT OF INCOME, RENDERS THE IN ITIATION OF PROCEEDINGS LEGALLY SUSCEPTIBLE IN TERMS OF THE RATIO OF THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF TITANOR COMPONENTS LTD. (SUPRA) AS WELL AS IN THE CASE OF PRASHANT PROJECTS LTD. VS. ACIT, (2011) 333 ITR 368 (BOM). 11. IN VIEW OF THE AFORESAID DISCUSSION, WE HOLD TH AT THE INITIATION OF PROCEEDINGS BY THE ISSUANCE OF A NOTICE U/S 147/148 OF THE ACT IN THE PRESENT CASE IS BAD IN LAW AND THEREFORE THE CONSEQUENT ASS ESSMENT MADE THEREOF IS HEREBY CANCELLED. ITA NO.705/PN/2013 A.Y. : 2005-06 12. BEFORE PARTING, WE MAY EMPHASIS THAT THE APPEAL HAS BEEN DISPOSED- OFF ONLY ON THE PRELIMINARILY POINT OF THE VALIDITY OF THE PROCEEDINGS INITIATED BY THE ASSESSING OFFICER BY ISSUANCE OF NOTICE U/S 148 OF THE ACT AND NOT WITH RESPECT TO THE MERITS OF THE CLAIM OF DEDUCTION U/S 80IB(3) OF THE ACT. 13. IN THE RESULT, THE APPEAL THE ASSESSEE IS ALLOW ED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 25 TH JULY, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE