INCOME TAX ACT, 1961

--Reassessment--Full and true disclosure Assessment reopened on the basis of subsequent information--The petitioner filed its return of income for assessment year 2004-05 declaring a nil income after claiming a deduction under section 10A. An order of assessment was passed under section 143(3) on 29-12-2006. The AO allowed a deduction under section 10A. The AO did not specifically deal with the eligibility of the petitioner to claim a deduction under section 10A in the course of assessment year. On 9-8-2010, a notice was issued to the petitioner under section 148. The reasons that had been disclosed for reopening the assessment for assessment year 2004-05 were as follows : During the course of the assessment proceedings for assessment year 2006-07, it has been established on the basis of the details filed by the assessee that the assessee is not entitled to deduction under section 10A for the following reasons : (1) Units are not independent units and constitute one integrated unit. (2) No independent accounts of units are maintained. (3) There is complete overlapping of work and use of resources amongst units through leased lines. (4) The Tax Audit Report and Audit Report under section 10A is not correct or assessee is claiming expenses/depreciation of 10A units in non-10A units. (5) Several non-10A activities are being carried on from 10A units which is evident from service tax returns. (6) The assessee has declined to file a reconciliation of Service Tax/VAT returns with income-tax returns. Since both these taxes are location-wise, the reconciliation would have shown the overlapping of receipts/expenses. As the assessee has claimed deduction of Rs. 23,93,12,934 under section 10A in its return filed for assessment year 2004-05 and the material facts brought out during the course of assessment proceedings for assessment year 2006-07, remain the same in assessment year 2004-05. Further, the facts brought out during the course of assessment proceedings of assessment year 2006-07 have not been truly and fully disclosed by the assessee in assessment year 2004-05. Therefore, it cannot be said that the assessee had disclosed fully and truly all the material facts in respect of the units on which 10A deduction is claimed.” Held: In the present case, during the course of the assessment proceedings for assessment year 2004-05, the assessee made a claim for deduction under section 10A. The assessee, by its letter dt. 10-10-2006 disclosed unit-wise statements as regards the computation of profit and loss. The AO had addressed a notice to the assessee on 29-11-2006 in response to which the assessee, by its reply dt. 6-12-2006 submitted as under : (i) Details of the unrealized export turnover upto 30-9-2004; (ii) Consolidated figures for the year ending 31-3-2003 in respect of the non-STP/EOU units. By a further letter dt. 14-12-2006 the assessee furnished an allocation of expenses as between the eligible and non-eligible units. The AO has, however, come to the conclusion that it was during the course of the assessment proceedings for assessment year 2006-07 that facts were brought out which were not truly and fully disclosed by the assessee in assessment year 2004-05. The order for assessment year 2006-07 is based on disclosures made by the assessee during the course of assessment proceedings for that year and it is not the submission of the assessee before this Court that the same disclosures were also made during the course of assessment year 2004-05. In the circumstances, though the reopening of the assessment in the present case has taken place beyond a period of four years, the jurisdictional condition for reopening the assessment under section 147 has been fulfilled.