Commissioner Of Income Tax-20 v. M/S. General Exports

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1206 OF 2011 Commissioner of Income Tax-20..Appellantversus M/s. General Exports..Respondent -------- Mr. Suresh Kumar for the Appellant. Mr. Sameer G. Dalal for the Respondent. ............. CORAM : J.P. DEVADHAR & M.S.SANKLECHA, JJ. DATE : 17[th] January, 2013 P.C. : In this appeal by the revenue for the assessment year 2001-02, the following questions of law have been proposed for our consideration. a)Whether on the facts and in the circumstances of the case and in law, ITAT is justified in holding that the reopening of the assessment proceedings after 4 years of the completion of assessment u/s. 143(3) of the Income Tax Act, 1961 as invalid, in spite of the fact on record that reopening of assessment proceedings was in accordance with the amended provisions of Section 80HHC inserted in 2005 with retrospective effect from 01.04.1998 with regards to taxability of profits on account of DEPB credits on exports? b) Whether on the facts and in the circumstances of the case and in law, ITAT is justified in holding reopening of assessment invalid when assessee had failed to furnish details of DEPB credits and profits there from in the return of income or during the course of assessment proceedings? Whether on the facts and 2On 05.01.2004, the Assessing Officer assessed the respondent-assessee to income of Rs. 49.83 lacs under Section 143(3) of the Income Tax Act, 1961 (the Act). In its return of income the respondent-assessee had claimed deduction under Section 80HHC of the Act of Rs.2.08 crores and the same was accepted in the assessment order dated 05.01.2004. 3Thereafter on 21.03.2007, a notice under Section 148 of the Act was issued to the respondent alleging that there was failure on the part of the respondent to fully and truly disclose all material facts necessary for assessment. In particular, the export incentive in the form of DEPB which was claimed could not have been claimed as profits on sale of DEPB was not covered and in support SNC reliance was placed upon a CBDT circular dated 08.09.2004. The Assessing Officer by order dated 27.12.2007 under Section 143 read with Section 147 disallowed the deduction under Section 80HHC of the Act to the extent of Rs.99 lacs and recomputed the deduction under Section 80HHC of the Act to Rs.1.37 crores. In Appeal, the CIT(A) by order dated 09.10.2009 partly allowed the respondent's appeal. The CIT(A) held that in view of the decision of the Special Bench of the Tribunal in the matter of Topman Exports in ITA No. 5789/Mum/06 dated 11.08.2009 the Assessing Officer was directed to rework the deduction on profit of sale of DEPB under Section 28(iiid) of the Act. 4In second appeal, the Tribunal held that as the reopening of assessment for the Assessment year 2001-02 was beyond 4 years from the end of the relevant assessment year is bad unless there has been a failure on the part of the assessee to fully and truly disclose all facts necessary for the assessment. The Tribunal has reached a finding of fact that there has been no failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment. The reason for reopening the assessment was the circular issued by the CBDT on 08.09.2004 which was also issued subsequent to the passing of assessment order on 05.01.2004. 4In second appeal, the Tribunal held that as the reopening of assessment for the Assessment year 2001-02 was beyond 4 years from the end of the relevant assessment year is bad unless there has been a failure on the part of the assessee to fully and truly disclose all facts necessary for the assessment. The Tribunal has reached a finding of fact that there has been no failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment. The reason for reopening the assessment was the circular issued by the CBDT on 08.09.2004 which was also issued subsequent to the passing of assessment order on 05.01.2004. 5We note that there is a finding of fact that there has been no failure on part of the respondent-assessee to disclose fully and truly of material facts necessary for assessment. In the circumstances, the condition precedent for reopening an assessment beyond the period of four years from the end of relevant assessment year is not satisfied and consequently, the Tribunal was justified in holding that the reopening of assessment was without jurisdiction. Further, where the assessment sought to be reopened is on the basis of CBDT circular issued subsequent to an assessment order it cannot lead to a conclusion that there was failure on the part of the assessee to fully and truly disclosed all material facts necessary for assessment. In any event, the entire issue with regard to the allowability of DEPB entitlement being covered as export incentive stand concluded by the decision of the Apex Court in the matter of Topman Export (Supra) reported in 342 ITR page 49. 6In view of the above, both the questions of law as proposed by the revenue cannot be entertained. 7Accordingly, the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P.DEVADHAR, J.)