Law:

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Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment year 2002-03 - Assessee's assessment was sought to be reopened under section 147 beyond period of four years from end of relevant assessment year on ground that assessee had wrongly been allowed deductions under sections 80-IA and 80-IB - Facts revealed that assessee had made disclosure of all material facts relating to its claim for deductions under sections 80-IA and 80-IB and Assessing Officer, after due application of mind to all facts, allowed said deductions in assessment - Whether, on facts, condition precedent to a valid exercise of power to reopen assessment beyond period of four years from end of relevant assessment year was satisfied - Held, no FACTS On 23-3-2009, a notice under section 148 was issued to the assessee proposing to reopen assessment of the relevant assessment year on the grounds : (i) that the assessee had claimed a deduction under section 80-IA on the generation of electricity by a Captive Power Plant ('CPP') of the amount of Rs. 86.37 lakhs which was computed on the basis of saving claimed on Low Sulphur Heavy Stock ('LSHS') due to the use of steam generated as a by-product in the generation of electricity which was quantified at Rs. 29.95 crores. According to the Assessing Officer, but for the aforesaid item, the operations of the CPP would have actually reported a loss and, thus, there had been an escapement of income; (ii) that the assessee had claimed a deduction under section 80-IB in respect of the Vizag Refinery Expansion Project (VREP-II) which, according to the Assessing Officer, did not constitute an independent undertaking but was a reconstruction of a business already in existence and, hence, the conditions prescribed by section 80-IB(2) were not fulfilled; and (iii) that the assessee had claimed a deduction under section 80-IB(4) in respect of its Lube Blending Plant at Silvassa which, according to the Assessing Officer, did not manufacture or produce any article or thing within the meaning of the statutory provision. On writ : HELD The parameters of the enquiry of the Court in the instant case would be…

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