2013 (4) TMI 12 - HC - Income Tax

Reassessment - Notice u/s 148 - deduction under section 10B - According to Department it is a case of escape assessment and assessee was not entitled for deduction under section 10B of the Act and therefore serve a notice u/s 148 for reopening of the case. Held that - During the course of assessment proceedings the Income-tax Officer has raised certain queries with regard to deductions, which were replied by the assessee and in the assessment order in paragraph 4.1 the Assessing Officer has dealt with the question of grant of deduction and has allowed deductions. - The reasons given for reopening the assessment and the notice issued under section 148 of the Act is nothing but a change of opinion. It is not the case of escape assessment. For the aforesaid reasons, notice issued under section 148 of the Act deserves to be quashed. This writ petition succeeds and is allowed.

Summary

Issues:
Challenge to notice for reopening assessment under section 147 of the Income-tax Act, 1961.

Analysis:
The High Court of Gujarat heard a writ petition challenging a notice dated August 6, 2010, issued by the Assistant Commissioner, Income-tax Circle II, Jamnagar, regarding the assessment year 2007-08. The Assessing Officer had reopened the assessment order dated October 14, 2008, citing irregular deductions under section 10B of the Act. The court noted that assessment orders can be reopened within four years if new material is discovered or if the assessee concealed relevant information. In this case, the court found that the reasons for reopening the assessment were merely a change of opinion, as the assessee had provided all necessary details during the assessment proceedings. The court held that since there was no concealment or failure to disclose relevant material, the notice issued under section 148 of the Act was unwarranted and should be quashed.

The court further elaborated that the assessee had filed the return on October 25, 2007, which was processed under section 143(1) of the Act on October 14, 2008. The total income was accepted at Rs. 38,88,083, with a deduction claimed under section 10B of the Act at Rs. 1,60,55,803. However, the deduction was restricted to Rs. 1,57,57,803 for the assessment year 2007-08. The Assessing Officer contended that the irregular deductions allowed were against the provisions of section 10B(2) of the Act, making the assessee ineligible for the deduction. Despite queries raised during the assessment proceedings, the court found that the reasons for reopening the assessment did not align with the facts, leading to the decision to quash the notice issued under section 148 of the Act.

In conclusion, the High Court allowed the writ petition, quashing the notice dated August 6, 2010, issued under section 148 of the Income-tax Act, 1961, for the assessment year 2007-08. The court directed that each party would bear their own costs in this matter.