Textron India Private Ltd. Vs DCIT (ITAT Bangalore)
Conclusion: Reassessment was bad in law beyond four years when the tax payer had disclosed the facts at the time of original assessment proceedings and the AO did not draw any adverse inference regarding the same.
Held: In the present case, there was regular original assessment that was completed u/s. 143(3) r.w.s. 144C on 24.1.2012. During the course of original assessment proceedings, deduction u/s. 10A was considered by AO and granted accordingly. In the reasons recorded, there was no allegation by the AO that there was any failure on the part of assessee to disclose truly and correctly all material facts necessary for assessment. Without any such allegation, AO in the present case recorded the reason for reopening the assessment. Thus, it was held that assessment was reopened merely on a change of opinion without any fresh material or any allegation by the AO that assessee failed to disclose truly and correctly all material facts for the purpose of assessment. The Hon’ble Apex Court in the case of New Delhi Television v. DCIT [(2020) 116 taxmann.com 151 (SC)] had held that reopening of the assessment beyond four years was bad in law when the tax payer had disclosed the facts at the time of original assessment proceedings and the AO did not draw any adverse inference regarding the same.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal by the assessee is directed against the order of CIT(Appeals)-7, Bengaluru dated 7.3.2017 for the assessment year 2008-09.
2. The assessee has raised the following grounds:-
“Revised grounds of appeal
The grounds hereinafter taken by the Appellant are without prejudice to one another Grounds of appeal arising from order passed by Commissioner of Income-tax (Appeals) (CIT(A)]
1. That the learned CIT(A) erred in upholding the action of the learned Assessing Officer (hereafter referred to as the learned AO) in adding back excess provision written back amounting to Rs. 16,300,116 while computing the taxable income of the Company and also, holding that provision written back during the year under appeal cannot be reduced from the income in the year of write back despite the fact that it was disallowed under section 40(a)(ia) of the Income-tax Act, 1961 (“the Act”) in earlier years.
2. Without prejudice to the above, the learned CIT(A) erred in not appreciating the fact that the amount, if any, added back in computation of total income, will increase the business profit and consequently, would enhance the deduction under section 10A of the Act and also, erred in alleging that, on the basis of records available and furnished by the appellant, it is not possible to ascertain allowability of deduction under section 10A of the Act on disallowance made, even though, the learned AO mentioned that said excess provision written back is pertaining to business under section IDA of the Act in the assessment order passed under section 143(3) read with section 148 of the Act.
3. That the learned CIT(A) erred in upholding the action of the learned AO of initiating the penalty proceedings under section 271(1)(c) of the Act.”
3. The assessee has filed additional grounds as follows:-
“4. That the learned CIT(A) ought to have held the reassessment order as invalid for the reasons that
a) neither the reasons recorded nor the reassessment order satisfy the pre-requisite of mentioning about failure of the assessee to disclose any material fact;
b) The reassessment order essentially is a review order in the garb of reassessment as the same is based on material already on record without bringing on record any additional material and thus constitutes change of opinion
c) the aspect of the quantum of deduction under section 10A was already examined under original assessment order and therefore could not be reexamined for any new reason.
5. That the learned CIT(A) ought to have appreciated the fact that the Appellant had not claimed deduction under section 10A on the amount of provisions written back. That the learned CIT(A) ought to have held the reassessment order as invalid for the reason that the facts alleged in the reasons recorded are incorrect.”
4. The ld. AR submitted that the assessee inadvertently did not specifically take the above mentioned grounds arising from the reassessment order, as such the CIT(Appeals) did not adjudicate the issues in his order. However, the contentions relating to these grounds mentioned in the assessee’s letter dated 23.7.2017 was available on record before the CIT(Appeals) and pleaded that the additional grounds be admitted relying on the following judgments:-
