CIT vs. Baer Shoes (Madras High Court)

DATE: (Date of pronouncement)
DATE: September 2, 2010 (Date of publication)

Click here to download the judgement (baer_shoes.pdf)

Reopening beyond 4 years on basis of Supreme Court’s judgement not justified if assessee has not failed to disclose material facts

The AO passed an order u/s 143(3) r.w.s 147 in which he allowed deduction u/s 80HHC though the assessee had suffered a loss in the export business by setting off the said loss against the export incentive. After the expiry of four years from the end of the assessment year, the assessment was reopened u/s 147 on the ground that pursuant to the judgement of the Supreme Court (probably Ipca Laboratories vs. CIT 266 ITR 521) s. 80HHC deduction could be allowed only if there were positive profits from export operations and the assessee had been wrongly allowed deduction u/s 80HHC. The Tribunal struck down the reopening. On appeal by the department, HELD dismissing the appeal:

The assessee had claimed deduction u/s 80HHC after a full disclosure of the material facts. As four years had elapsed from the end of the assessment year, the assessment could not be reopened in the absence of failure to disclose the material facts. The judgment of the Supreme Court is an expression of opinion on the interpretation of statute. Merely because a judgment has been rendered, the same cannot be a ground for reopening the assessment u/s 147 as it amounts to a change of opinion. Austin Engineering 312 ITR 70 (Guj) followed)

See Also: Sadbhav Engineering vs. DCIT (Guj): Reopening on the basis of retrospective law not permissible beyond 4 years; Rallis India (Bom):Retrospective amendment after the issue of s. 148 notice cannot be relied upon