2015 (10) TMI 1015 - HC - Income Tax

Reopening of assessment - disallowance u/s. 80IB(10) - Held that - We find that the reopening notice dated 30th March, 2010 has been issued beyond a period of four years from the end of the relevant Assessment Year i.e. A. Y. 2002-03. A primary condition to be satisfied for reopening of assessment beyond a period of four years is a failure on the part of the assessee to fully and truly disclose all material facts necessary for the Assessment. So far as the benefit under Section 80IB(10) of the Act is concerned the same was not only fully and truly disclosed but also considered in depth by the Assessing Officer while passing its original order dated 31st May, 2005 under Section 143(3) of the Act. Thus, no fault can be found with the order of the CIT(A) as well as of the Tribunal holding that (i) the entire exercise of issuing a reopening notice and passing of reassessment Order was not justified; and (ii) on merits, the authorities have held that same stands concluded in favour of the Respondent-Assessee by the decision of this Court in Brahma Associates (2011 (2) TMI 373 - BOMBAY HIGH COURT ). - Decided in favour of assessee.

Summary

Issues:
1. Validity of reopening assessment proceedings under Section 260-A of the Income Tax Act, 1961.
2. Validity of the addition made by the Assessing Officer on account of disallowance under Section 80IB(10) of the Income Tax Act.

Issue 1: Validity of Reopening Assessment Proceedings
The case involved a challenge to the order passed by the Income Tax Appellate Tribunal (the Tribunal) related to Assessment Year 2003-04. The Assessing Officer issued a notice under Section 148 of the Act to reopen the assessment for the said year. The Respondent-Assessee contested the validity of the reopening and the denial of deduction under Section 80IB(10) before the Assessing Officer. The Assessing Officer upheld the reopening and denied the deduction. Subsequently, the Commissioner of Income Tax (Appeals) held that the reassessment notice was without jurisdiction and that the denial of deduction was unjustified. On further appeal, the Tribunal affirmed the CIT(A)'s decision, ruling that the reopening was without jurisdiction and the Respondent-Assessee was entitled to the deduction under Section 80IB(10) based on a previous court decision.

Issue 2: Addition Made by the Assessing Officer
The Assessing Officer had initially allowed a deduction of Rs. 2.12 lakhs under Section 80IB(1) of the Act in the regular assessment order for the year 2003-04. However, upon reopening the assessment, the Assessing Officer sought to disallow this deduction under Section 80IB(10). The CIT(A) and the Tribunal both held that the denial of the deduction was not justified. They relied on a previous court decision to support their conclusion that the Respondent-Assessee was indeed eligible for the deduction under Section 80IB(10). The Tribunal specifically mentioned that the reopening notice was issued beyond the permissible period and that the benefit under Section 80IB(10) had been fully and truly disclosed during the original assessment.

In conclusion, the High Court dismissed the appeal, emphasizing that the reopening of the assessment was not justified as all material facts were fully disclosed, and the Respondent-Assessee was entitled to the deduction under Section 80IB(10) as per the court's decision in Brahma Associates. The court highlighted that the questions raised did not give rise to substantial legal issues and upheld the decisions of the lower authorities.