Dy. CIT v. Dharampal Satyapal Ltd.

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2016 TaxPub(DT) 0692 (Del-Trib) : (2016) 175 TTJ 0663 : (2016) 130 DTR 0241 Dy. CIT v. Dharampal Satyapal Ltd. INCOME TAX ACT, 1961 --Reassessment--ValidityAssessee inflating profit for deduction undr section 80-IC--No related tangible material available--Where assessment of assessee was completed under section 143(3) and AO had taken the case for reassessment, alleging that assessee was inflating its profit so as to claim excess deduction under section 80IC, then such reopening was held as invalid based on the facts that AO had no tangible material on record to substantiate its ground. Further reassessment could also not be invoked because matter had expired four years and assessee made full and true disclosure of material facts during original assessment proceedings. --Assessee was engaged in manufacturing and trading business. Admittedly it was having units both eligible and ineligible for deduction under section 80IC. During assessment proceedings, assessee claimed that on inter-unit transfer of goods, no notional profit was generated/ accrued at transferor branch. Assessment was completed under section 143(3). Thereafter, search was conducted at premises of third party, wherefrom department formed the view that deduction under section 80IC was over claimed by assessee by inflating profits of eligible units. AO took the case for reassessment after expiry of four years and assessment order was passed. Assessee challenged the validity of reopening on the ground that no new tangible material was not brought on record to reopen the assessment. *Held:* The process of manufacture of Pan Masala was already on record during the original assessment and contention of AO, that certain stages of manufacturing were not taken place at the eligible units, was not backed up by any tangible evidence. Further, as the matter had passed four years, reassessment could not be made even if there was concealment of income, if assessee had made full disclosure of relevant facts during original assessment. As in present case, assessee provided details of its units and fact that goods were transferred at cost price, it was held that assessee had disclosed full particulars and AO was not justified in invoking reassessment proceedings. Income Tax Act, 1961 Section 147 *REFERRED :* FAVOUR : In assessee's favour. A.Y. : 2004-05 IN THE ITAT DELHI B BENCH A.T. VARKEY, J.M. & PRASHANT MAHARISHI, A.M. Dy. CIT v. Dharampal Satyapal Ltd. ITA No. 5611, 5581/Del/2013 8 January, 2016 A.Y. 2004-05 *Counsel: Shri R.S. Singhvi, CA and Shri Satyajeet Goel, CA, for the Assessee* Ms. Nandita Kanchan, CIT DR, for the Revenue ORDER SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2016 TaxPub(DT) 0692 (Del-Trib) : (2016) 175 TTJ 0663 : (2016) 130 DTR 0241

Dy. CIT v. Dharampal Satyapal Ltd.

INCOME TAX ACT, 1961

--Reassessment--ValidityAssessee inflating profit for deduction undr section 80-IC--No related tangible material available--Where assessment of assessee was completed under section 143(3) and AO had taken the case for reassessment, alleging that assessee was inflating its profit so as to claim excess deduction under section 80IC, then such reopening was held as invalid based on the facts that AO had no tangible material on record to substantiate its ground. Further reassessment could also not be invoked because matter had expired four years and assessee made full and true disclosure of material facts during original assessment proceedings. --Assessee was engaged in manufacturing and trading business. Admittedly it was having units both eligible and ineligible for deduction under section 80IC. During assessment proceedings, assessee claimed that on inter-unit transfer of goods, no notional profit was generated/ accrued at transferor branch. Assessment was completed under section 143(3). Thereafter, search was conducted at premises of third party, wherefrom department formed the view that deduction under section 80IC was over claimed by assessee by inflating profits of eligible units. AO took the case for reassessment after expiry of four years and assessment order was passed. Assessee challenged the validity of reopening on the ground that no new tangible material was not brought on record to reopen the assessment. Held: The process of manufacture of Pan Masala was already on record during the original assessment and contention of AO, that certain stages of manufacturing were not taken place at the eligible units, was not backed up by any tangible evidence. Further, as the matter had passed four years, reassessment could not be made even if there was concealment of income, if assessee had made full disclosure of relevant facts during original assessment. As in present case, assessee provided details of its units and fact that goods were transferred at cost price, it was held that assessee had disclosed full particulars and AO was not justified in invoking reassessment proceedings.

Income Tax Act, 1961 Section 147

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2004-05

IN THE ITAT DELHI B BENCH

A.T. VARKEY, J.M. & PRASHANT MAHARISHI, A.M.

Dy. CIT v. Dharampal Satyapal Ltd.

ITA No. 5611, 5581/Del/2013

8 January, 2016 A.Y. 2004-05

Counsel: Shri R.S. Singhvi, CA and Shri Satyajeet Goel, CA, for the Assessee Ms. Nandita Kanchan, CIT DR, for the Revenue

ORDER