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2018 (2) TMI 1856 - AT - Income TaxReopening of assessment u/s 147 - HELD THAT - We find that there is no dispute about the factual position, as very well documented in the orders of the authorities below, that the reassessment proceedings were initiated on 14.03.2013 which was well within four years from the end of the assessment year and it was thus not really required of the AO to demonstrate assessee s failure in true and full disclosure of all material facts necessary for assessment. CIT(A) was thus clearly swayed by irrelevant considerations. We, therefore, vacate the conclusions arrived at by the CIT(A) on this point. Ground No.1 is allowed. Entitlement for claim of deduction u/s 10B - HELD THAT - Issue is covered, in favour of the assessee, by a series of binding judicial precedents including by Hon ble jurisdictional High Court s judgement in the case of PCIT vs. Zealous Web Technologies 2016 (4) TMI 255 - GUJARAT HIGH COURT . Once it is not in dispute, as the position is before us, that conclusions arrived at by the CIT(A) are in harmony with the binding judicial precedents, we see no reasons to interfere in the matter. The order of the CIT(A), granting relief on merits, is confirmed and approved. In effect thus our reversing the order of the CIT(A) on the reopening issue is of no practical use to the appellant, and the success on that point ends up being a hollow success. The relief granted to the assessee on merits was justified. - Decided in favour of assessee.
Issues:
1. Validity of notice u/s 148 for reopening assessment. 2. Entitlement for claim of deduction u/s 10B of the Act. Issue 1: Validity of notice u/s 148 for reopening assessment: The Assessing Officer challenged the correctness of the CIT(A)'s order quashing the reassessment proceedings under section 147 of the Income-tax Act, 1961. The CIT(A) held that the notice u/s 148 was invalid as it did not mention the failure of the assessee to disclose material facts necessary for assessment. The CIT(A) emphasized that for a valid reopening, the AO must specify the failure of the assessee to disclose fully and truly all material facts. The High Court's decision in CIT V/s. Pradeshiya Industrial and Investment Corporation of Uttar Pradesh Ltd. was cited to support the requirement of reflecting specific ingredients in the reasons recorded for reopening. The CIT(A) concluded that the assessment was not validly reopened as the appellant had already disclosed material facts during the original assessment proceedings. Additionally, it was noted that the AO's decision to disallow exemption u/s 10B was based on the appellant's claim, which was available during the original assessment. The AO's attempt to change the opinion from the original assessment was deemed impermissible. The Tribunal found that the reassessment proceedings were initiated within the prescribed timeframe and overturned the CIT(A)'s decision, emphasizing that the AO was not required to demonstrate the assessee's failure in disclosure. Issue 2: Entitlement for claim of deduction u/s 10B of the Act: The Assessing Officer contested the CIT(A)'s decision granting the assessee's claim of deduction u/s 10B. It was acknowledged that the issue was covered by binding judicial precedents favoring the assessee, including judgments by the jurisdictional High Court and Ahmedabad 'C' bench. The Tribunal upheld the CIT(A)'s order, confirming the relief granted to the assessee based on the established legal position and binding precedents. Despite the success on the reopening issue being deemed hollow, the relief on merits was deemed justified, and the appeal was partly allowed in favor of the assessee. In conclusion, the Tribunal upheld the validity of the notice u/s 148 for reopening the assessment and confirmed the grant of deduction u/s 10B to the assessee based on binding judicial precedents, ultimately partly allowing the appeal in favor of the assessee.
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