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Income-tax Officer, Vs. M/s Green World Corporation, Ward 19(3), New Delhi. Shop no. 2157, Basement, Desh Bandhu Gupta Road, Pahar Ganj, Delhi.
April, 15th 2014
            IN THE INCOME TAX APPELLATE TRIBUNAL
                  DELHI BENCH "C" NEW DELHI
         BEFORE SHRI R.P. TOLANI AND SHRI T.S. KAPOOR

                       ITA No. 246/Del/2013
                       Asstt. Yr: 2004-05
Income-tax Officer,           Vs. M/s Green World Corporation,
Ward 19(3), New Delhi.              Shop no. 2157, Basement,
                                    Desh Bandhu Gupta Road,
                                    Pahar Ganj, Delhi.
                                    PAN: AAAFG 6719 Q
                       AND
                       C.O. No. 231/Del/2013
                       ( In ITA No. 246/Del/2013)
                       Asstt. Yr: 2004-05
M/s Green World Corporation, Vs. Income-tax Officer,
                                    Ward 19(3), New Delhi.

Appellant )                           ( Respondent )

              Revenue by        :     Shri Satpal Singh Sr. DR
              Assessee by       :     Shri Sachin Garg FCA &
                                      Shri Achin Garg
                   Date of hearing:   9-4-2014.
                   Date of order :    09-04-2014.

                                ORDER

PER R.P. TOLANI, J.M::

      This is Revenue's appeal and assessee's cross objections against the
order of CIT(A)-XI, New Delhi dated 31-10-2012 in appeal no. 49/11-12
relating to A.Y. 2004-05. Both these are heard together and disposed of by a
common order for the sake of convenience.
2.    Brief facts are: The assessee's assessment was reopened and framed
u/s 147/143(3), rejecting the assessee's contention that reopening was bad in
law. Besides, the assessing officer made quantum additions.
                                       2


3.    Aggrieved, assessee preferred first appeal where CIT(A) upheld the
reopening of assessment proceedings, however, deleted the additions on
merits by following observations:
"I find that the AO has based his conclusions on assumptions and surmises. The most important fact is that no opportunity was given to the appellant to give its submissions on the adverse conclusions drawn against the appellant. I do not find any sound reasoning in the order to sustain the additions. The addition of Rs. 9,26,113/- is therefore deleted. The deductions u/s 80IB may be allowed to the appellant after verification and as per law. The ground of appeal is ruled in favour of the appellant." 4. Aggrieved, against CIT(A)'s order the revenue is now in appeal on merits and the assessee has agitated the upholding of 148 assessment on various issues, like, invalid service of notice; non-recording of proper reasons to believe; the basis of recording of reasons being non-existent the CIT(A) erred in holding that the reasons recorded to believe that income had escaped assessment, the reassessment is bad in law.
5. Since the assessee's cross-objection goes to the root of the matter, the same was proposed to be heard first.
6. Ld. Counsel for the assessee contends that the reasons for reopening the assessment as recorded by AO in assessment order are as under: "I have reason to believe that income chargeable to tax to the extent of Rs. 8,95,086/- has escaped assessment on account of false and fraudulent claim of deduction u/s 80IB made by the assessee in its return. The reason for the formation of this belief are the detailed orders under section 263 dated 13-3-2009 passed by the CIT Delhi VII in the case of the subject assessee for the assessment years 2001-02, 2002-03 & 2003-04. In these orders, which may be read as an annexure to these reasons, the 3 CIT has on the basis of detailed facts and evidences held that the assessee was claiming wrong deduction u/s 80IB in respect of bogus industrial undertaking at parwanoo known as Unit-III. The subject assessment year is the fourth year for which the assessee claimed the fraudulent deduction u/s 80IB in respect of the above mentioned Unit-III." 7. Ld. Counsel for the assessee contends that in earlier three years, the deduction u/s 80IB was allowed to the assessee in 148 proceedings after reopening the original assessments. Against the allowability of claim u/s 80IB in reopened assessment the CIT exercising revisional powers u/s 263 vide order dated 13-3-2009 held that assessee is not allowable for deduction u/s 80IB which was allowed during the course of reassessment proceedings in these three years. 8. The assessee challenged the action u/s 263 for these three years before the ITAT, which quashed the order of ld. CIT passed u/s 263 in all the three years as under: A.Y. 2001-02 vide order dated 14-5-2010 in ITA no. 1746/Del/2009. A.Y. 2002-03 vide order dated 13-11-2009 in ITA no. 1854/Del/2009 A.Y. 2003-04 vide order dated 22-10-2010 in ITA no. 1958/Del/2009 9. The Revenue did not filed any appeal against Tribunal's order for A.Y. 2003-04. However, Tribunal's orders for A.Y. 2001-02 & 2002-03 were challenged before the Hon'ble High Court which also dismissed the Revenue's appeals for A.Y. 2001-02 on 1-2-2011 and for A.Y. 2002-03 on 30-11-2010. 10. It is pleaded that the very basis of reopening the assessment i.e. 263 order of the CIT having been quashed by the Tribunal and the High Court, which goes to the root of the matter for reopening and the reasons for reopening for the current year i.e. A.Y. 2004-05 being only based on 263 4 action which has been held to be bad in law, the reasons recorded itself becomes bad in law. Reliance is placed on Hon'ble Delhi High Court judgment in the case of Silver Oak Laboratories Pvt. Ltd. Vs. DCIT WP No. 17719/2006 dated 18-12-2008, holding that when the very basis for recording the reasons for escapement of income do not survive, the reopening of assessment is bad in law. 11. Ld. DR is heard. 12. We have heard rival contentions and perused the material available on record. The contentions of the assessee have not been disputed. The reasons recorded for reopening the assessment in this year is solely on the basis that earlier years assessments have been revised u/s 263 by the CIT. 13. It emerges from record that in earlier three years the ITAT has quashed the 263 proceedings for A.Y. 2003-04. Department did not prefer any appeal to the High Court and for remaining two years revenue's appeal against quashing of 263 order has been dismissed by the Hon'ble High Court. Thus, the 263 order being bad in law stands confirmed. In view of these facts and circumstances, since the very basis for reopening of reasons and reopening the assessment for the impugned year i.e. 2004-05 does not exist, the reasons recorded are held to be bad in law and are accordingly quashed. Our view is further supported by the Hon'ble Delhi High Court in the case of Silver Oak Laboratories Pvt. Ltd. (supra). In view thereof we allow the cross objection filed by the assessee and quash the reassessment proceedings. 5 14. Since we have quashed the reassessment proceedings as bad in law, the Revenue's appeal is dismissed consequently. 15. In the result revenue's appeal is dismissed and assessee's cross- objection is allowed. Order pronounced in open court on 09-04-2014. Sd/- Sd/- ( T.S. KAPOOR) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 09-04-2014. MP Copy to : 1. Assessee 2. AO 3. CIT 4. CIT(A) 5. DR
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