2015 (7) TMI 1129 - HC - Income Tax

Reopening of assessment - whether Assessing Officer ought to have examined the applicability of 2008 Scheme to the Petitioner as required in terms of Rule 18C of Rules while passing assessment order? - Held that - Rule 18C of the Rules itself provides that the same would apply only to undertaking established after April 2006 and before March 2011. In this case admittedly the Petitioner was established prior to April 2006. Prima facie it appears that 2008 Scheme would not have any application to the Petitioner. Further the other issue namely income on renting of property should be charged as business income is already dealt with in the Assessment Year. Thus it prima facie amounts to a change of opinion. The other objections are factual and the order disposing of the objections not having dealt with the objections at this stage it appears to be valid.

Summary

Issues:
Challenge to reopening notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2009-10.

Analysis:
The Petitioner challenged the reopening notice based on various grounds. Firstly, the Petitioner contended that their Industrial Park was notified under the Industrial Park Scheme 2002, making the 2008 Scheme inapplicable. Secondly, the issue of rental income being considered as business income was already addressed during the previous assessment, leading to the argument of a change in opinion. Thirdly, the Petitioner did not claim a reduction in stock, rendering that basis factually incorrect. Fourthly, the exemption claimed under Section 80IA4(iii) of the Act excluded the application of Section 80IA(3) of the Act. Lastly, the Petitioner highlighted that all conditions for approvals were satisfied, and the notifications were not withdrawn.

The Assessing Officer disposed of the Petitioner's objections without specifically addressing them, relying on court decisions to justify the reopening. During the hearing, the Revenue emphasized the applicability of the 2008 Scheme under Rule 18C of the Income Tax Rules. However, it was noted that Rule 18C applied to undertakings established after April 2006 and before March 2011, while the Petitioner was established prior to April 2006. This raised doubts about the applicability of the 2008 Scheme to the Petitioner. Additionally, the issue of rental income had already been examined in the previous assessment, potentially constituting a change of opinion. Other objections raised by the Petitioner were deemed factual, and the lack of specific addressing of objections in the order supported the validity of the reopening at that stage.

Based on the arguments presented and the examination of relevant rules and past assessments, the Court granted an interim stay in favor of the Petitioner.