Smart Cube India Pvt. Ltd v. Assistant Commissioner Ofincome Tax & Ors

$~25 & 26 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 2037/2016 & CM No. 8769/2016 SMART CUBE INDIA PVT. LTD...... PetitionerThrough: Mr. Rupesh Jain, Mr. Neeraj Jain andMr. Aniket D. Agrawal, Advs. versus ASSISTANT COMMISSIONER OFINCOME TAX & ORS...... Respondents Through: Mr. P. Roychaudhuri, Adv. + W.P.(C) 2136/2016 & CM No. 9156/2016 SMART CUBE INDIA PVT. LTD...... PetitionerThrough: Mr. Rupesh Jain, Mr. Neeraj Jain andMr. Aniket D. Agrawal, Advs. versus ASSISTANT COMMISSIONER OF INCOMETAX & ORS...... RespondentsThrough: Mr. P. Roychaudhuri, Adv. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHATHON'BLE MR. JUSTICE NAJMI WAZIRIO R D E R%06.12.2016 1.The petitioner in both these proceedings is aggrieved by re-assessment notices issued by the respondent-Revenue on 05.06.2015for Assessment Year (AY) 2008-09 and 2009-10. 2.The brief facts are that the assessee was and continued to claimdeduction under Section 10B of the Income Tax Act, 1961 (in short the Act) in respect of a unit, based upon approval from the STPI(MinistryofCommunicationandInformationTechnology,Department of Information Technology, Noida) since inception. Theassessee’s returns were processed and framed for both the assessmentyears upon the materials furnished.3.While so, the impugned notices, in identical terms, were issuedby the Assessing Officer (AO) on the ground that the appropriateapproval from the Inter-Ministerial Standing Committee, notified on22.02.1993, had not been obtained.The reasons to believe for AY2008-09, which is fairly repeated for both cases reads as follows: “...... During the course of assessment proceedingsfor the A.Y. 2010-11 in the case of M/s. Smart CubeIndia Pvt. Ltd. it is noticed that the assessee hasbeen claiming constantly deduction / exemption u/s10B of the Income Tax, 1961, During the assessmentyear 2008-09 the assessee company has claimed Rs.76,89,396/- deduction/exemption u/s 10B of theIncome Tax Act. The assessee company has beentaking constantly its approval from STPI (TheMinistryofCommunicationandInformationTechnology, Department of Information Technology,Noida, since its incorporation. In view of detailsfiled by the assessee during the course of assessmentproceedingsfortheAY2010-11theassesseecompany is not entitled to claim deduction u/s 10Bof the Income Tax Act. The assessee company has tobe approved by the inter ministerial standingcommittee constituted under the power conferred bysection 14 of the IDR Act, 1951 read with Sub-rule(2) of rule 10 of the Registration and Licensing ofIndustrial undertakings Rules, 1952, as specified bythe notification No. 117(E) dated 22.02.1993, which has not been taken by the assessee company and thetaken its approval for deduction/ exemption u/s 10B,from STPI Noida which is not a competent authorityto approve the assessee for deduction /exemption u/s10B of income Tax Act, 1961. It is also held by thecourts in various cases that merely received fromSTPI is not full fill the condition laid down for claimof deduction u/s 10B. 2. In view of the above discussed facts I havereasons to believe that the assessee has escapedassessment to the tune of Rs. 76,89,396/- chargeableto tax with the meaning of section 147 of the IncomeTax Act, for A.Y. 2008-09 since the assessment hasescaped due to failure on the part of the assesseecompany to disclose material facts truly and fullynecessary....” 4.We have considered the submissions of the parties.TheRevenue contends that clearance of the Inter-Ministerial StandingCommitteespecifiedundertheIndustries(DevelopmentandRegulation) Act, 1951 was essential in terms of the notification dated22.02.1993 and since the AO noticed this omission in a subsequentyear i.e. 2010-11, the re-assessment notice was justified. 2. In view of the above discussed facts I havereasons to believe that the assessee has escapedassessment to the tune of Rs. 76,89,396/- chargeableto tax with the meaning of section 147 of the IncomeTax Act, for A.Y. 2008-09 since the assessment hasescaped due to failure on the part of the assesseecompany to disclose material facts truly and fullynecessary....” 4.We have considered the submissions of the parties.TheRevenue contends that clearance of the Inter-Ministerial StandingCommitteespecifiedundertheIndustries(DevelopmentandRegulation) Act, 1951 was essential in terms of the notification dated22.02.1993 and since the AO noticed this omission in a subsequentyear i.e. 2010-11, the re-assessment notice was justified. 5.This Court is of the opinion that to trigger a valid re-assessmentnotice, there should be tangible material or evidence pointing towithholding of material information, in the return of any particularyear. Whilst, as to what is the tangible material is a fact dependent oninquiry which a Court would conduct where a re-assessment notice ischallenged.What is definite is the obligation of the assessee todisclose all facts relevant to the assessment in any given year. In thefacts of this case there is no dispute that the assessee had claimed and was granted exemption under Section 10B on the basis of the STPIapproval given at the relevant time.The AO framed assessmentunder Section 143(3) of the Act. There was no additional requirementcast upon the assessee in the sense, as understood by law, as pointedout earlier by the Supreme Court in Calcutta Discount Co. Ltd. vsITO (1961) 41 ITR 191 (SC).The obligation always was andcontinues to be disclosure of full and true facts. That the assessee diddisclose is not in doubt at all.That it did not disclose somethingwhich it did not have, i.e. the approval from the Inter-MinisterialStanding Committee, therefore, cannot be a valid ground for re-opening the assessment. 6.Consequently this Court is of the opinion that the re-assessmentnotices impugned in both these cases cannot be enforced. They are,hereby, quashed along with all proceedings arising therefrom.Inaddition, the assessee has urged that a further re-assessment noticesfor AY 2008-09 and 2009-10 are issued which are also the subjectmatter of these proceedings. These notices tread on common groundand do not refer to any new fact and tangible material.Besides,during the pendency of re-assessment under Section 148 a fresh re-assessment notice on the same facts, as it were, is impermissible inview of the decision of the Supreme Court in Trustees of H.E.H. TheNizam’s Supplemental Family Trust vs CIT (2000) 242 ITR 381(SC). On this ground as well, the subsequent re-assessment noticesdated 13.05.2015 cannot survive.The impugned notices dated26.03.2015 and 13.05.2015 are hereby quashed.The writ petitions are allowed in the above terms. DECEMBER 06, 2016/kk S. RAVINDRA BHAT, J NAJMI WAZIRI, J