SMT. PRABHADEVI SINGHVI Vs. UNION OF INDIA

JUDGEMENT

(1.) Heard learned counsel for the parties.

(2.) The instant batch of writ petitions involves common questions of facts and law and is thus being decided by this single order.

(3.) Facts in brief :- The petitioners herein are regular income tax assessees involved in the business of manufacturing of finished cloth after the process of bleaching, dyeing, printing and padding. The petitioners industrial undertakings are located in Balotra town of District Barmer which is a backward area and thus, the petitioners claim themselves to be entitled for tax deduction under Section 80IB of the Income Tax Act, 1961 (for short, 'the IT Act'). The petitioners further claim that as they satisfy all the requisite conditions stipulated under Section 80IB of the IT Act and thus, the concerned assessing authorities conducted assessment of the petitioners for the corresponding years and allowed their claim for deduction under Section 80IB of the IT Act while issuing assessment orders under Section 143(3) of the IT Act. The assessment year from which the controversy involved in these writ petitions originates is 2006-2007. The original assessment order was passed by the assessing authority recording a categoric finding as to the fulfilment of the requisite conditions prescribed under Section 80IB of the IT Act observing that the petitioners were involved in manufacturing and number of workers in each unit was more than 10 and units were undertaking manufacturing process with the aid of power. Accordingly, the benefit of deduction under Section 80IB was allowed to each of the petitioners for AY 2006-2007. However, thereafter the assessing officer seems to have taken a different view and issued notices to the petitioners under Section 148 of the IT Act proposing to disallow the deduction already granted to the petitioners for the AY 2006-2007. The petitioners herein filed their replies to the notices and demanded reasons for purported reopening of the proceedings in reference to the law as laid down by the Hon'ble Supreme Court in the case of GKN Drive Shaft v. ITO & Ors. reported at 259 ITR 19 (SC). The assessing officer intimated the petitioners that the reasons for reopening, conveying inter alia that the activity of the petitioners could not be termed to be manufacturing and that number of employees engaged in the process should be more than 20. The petitioners filed detailed objections against the reasons recorded by the assessing authority and sought annulment of the notices issued to them under Section 148 of the IT Act claiming that the activity of bleaching, dyeing, printing etc. was covered in the definition of manufacture as held in numerous judgments of the Hon'ble Supreme Court and that number of minimum workers required for claiming the benefit of deduction under Section 80-IB was only ten. The petitioners further claimed that mere change of opinion would not entitle the assessing authority to reopen the proceedings and sought dropping thereof on the ground of lack of jurisdiction and colourable exercise of power. However, the objections raised by the petitioners were rejected by the assessing authority vide orders dated 25.11.2010. Hence, these writ petitions.