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2015 (2) TMI 803 - HC - Income TaxReopening of assessment - admissibility of the claim of the assessee under section 80-IA in view of the fact that there is loss from the windmill project - Held that - Revenue does not dispute the fact that the issue with regard to which the reopening is sought to be done was the subject matter of discussion and deliberation before the AO during the original proceedings leading to the order dated April 29, 2003. In these circumstances, it is an undisputed position that the Assessing Officer did have occasion to apply his mind to the deduction claimed by the respondent-assessee before allowing the same. The objection of the Revenue that there was no opinion formed during the original assessment proceeding as the order dated April 29, 2003, did not deal with the same is unsustainable. The mere fact that the assessment order does not discuss the issue of deduction under section 80-IA(4) of the Act would not lead to the conclusion that the Assessing Officer had made no opinion with regard to the issue. The Tribunal has reached a finding of fact that the question with regard to the claim for deduction under section 80-IA of the Act was raised by the Assessing Officer and responded to by the respondent-assessee. This position is also not disputed by the Revenue. Merely because the issue is not discussed in the assessment order would not lead to a conclusion that no opinion was formed as to the subject of the query as held by this court in the matter of Idea Cellular Ltd. v. CIT reported in 2008 (2) TMI 146 - BOMBAY HIGH COURT . Reopening dismissed. - Decided in favour of assessee.
Issues:
1. Validity of reopening assessment based on Revenue audit objection 2. Consideration of change of opinion in reopening assessment 3. Application of Supreme Court decision on reopening assessment based on factual error --- Issue 1: Validity of reopening assessment based on Revenue audit objection The respondent-assessee was initially assessed for the assessment year 2001-02, allowing a deduction under section 80-IA for its windmill project. The Assessing Officer later sought to reopen the assessment based on the Revenue audit objection, stating that no deduction was admissible as there was a loss from the windmill project. The Tribunal held the reopening invalid, citing it as a mere change of opinion. The Revenue contended that the reopening was justified within the four-year limit and not solely based on the audit objection. However, the Tribunal did not grant relief based on the audit objection, emphasizing that the power to reopen an assessment is not for review but requires substantive reasons beyond a change of opinion. --- Issue 2: Consideration of change of opinion in reopening assessment The Revenue argued that as the original assessment order did not discuss the deduction under section 80-IA, there was no change of opinion in seeking the reopening. Contrarily, the Tribunal found that the Assessing Officer had indeed deliberated on the deduction during the original assessment proceedings, indicating a formed opinion. The Tribunal emphasized that the absence of explicit discussion in the assessment order did not negate the existence of an opinion. Referring to precedents, the Tribunal highlighted that the Assessing Officer's consideration of the deduction during the initial assessment sufficed to establish an opinion, making the reopening on grounds of change of opinion unjustified. --- Issue 3: Application of Supreme Court decision on reopening assessment based on factual error The Tribunal's decision was challenged by the Revenue, contending that the Tribunal erred in not considering the Supreme Court precedent allowing reopening based on factual errors pointed out by internal audit. However, the Tribunal's order did not address this argument, focusing instead on the lack of a valid reason beyond a change of opinion for the reopening. The Tribunal's findings were based on established principles that reopening assessments require substantive reasons and cannot be solely based on a change of opinion, even if within the statutory time limit. As questions (a) and (c) did not directly arise from the Tribunal's order, they were not admitted for consideration, while question (b) was dismissed as the Tribunal's factual findings were accepted by the Revenue. --- In conclusion, the High Court dismissed the appeal, upholding the Tribunal's decision that the reopening of the assessment for the assessment year 2001-02 was invalid and not supported by substantive reasons beyond a mere change of opinion. The judgment reaffirmed the principle that the power to reopen assessments must be exercised on valid grounds, emphasizing that prior consideration of an issue during the original assessment signifies the existence of an opinion, precluding a reopening based solely on a change of opinion.
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