Law:

Section:

Section 10A, read with section 147, of the Income-tax Act, 1961 - Free trade zone - Assessment year 2005-06 - Assessee was manufacturing jewellery in a Special Economic Zone - Assessee's claim for exemption under section 10A was allowed - After expiry of four years of relevant assessment year, Assessing Officer reopened assessment on ground that assessee acted as a mere facilitator and not manufacturer and, thus, it was not entitled to deduction under section 10A - It was apparent from records that while allowing assessee's claim, Assessing Officer had recorded a finding of fact that assessee was manufacturing jewellery in a Special Economic Zone - Moreover, there was no failure on part of assessee to disclose fully and truly all material facts necessary for assessment - Whether, in view of aforesaid, impugned reassessment proceedings were to be set aside - Held, yes [In favour of assessee] FACTS The assessee was manufacturing jewellery in a Special Economic Zone. For the assessment year 2005-06, the assessee filed return claiming deduction under section 10A. The Assessing Officer allowed assessee's claim. The assessment for assessment year 2005-06 was subsequently sought to be reopened on the basis of an assessment order that was passed for assessment year 2007-08. The reasons furnished to the assessee stated that during the course of the scrutiny proceedings for Assessment Year 2007-08, it was found that the assessee merely acted as a facilitator for its parent company and was not a manufacturer or exporter and, thus, its claim for exemption under section 10A was wrongly allowed. On writ: HELD By the impugned notice dated 20-6-2011, the assessment for Assessment Year 2005-06 is sought to be reopened beyond a period of four years of the end of the relevant assessment year. The condition precedent to the exercise of the jurisdiction to reopen an assessment beyond a period of four years as spelt out in the proviso to section 147 is that there ought to be a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for that assessment year. In the present case, the sole basis on which the assessment proceedings…

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