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2018 (1) TMI 1571 - AT - Income TaxReopening of the assessment u/s. 147 - making the claim u/s. 80IA - HELD THAT - It is not the case where the assessee had misled the AO in any manner while making the claim u/s. 80IA of the Act. All the statutory requirements as per law for claiming deduction like tax audit report, etc. were filed before the AO and the AO had applied his mind and then had granted the deduction u/s. 80IA of the Act. The action of the AO to reopen an assessment completed earlier u/s. 143(3) of the Act without any tangible material ought not to have been done. We note that the AO has done the reopening and consequent reassessment on the basis of the very same material which was before the earlier AO. So, the AO on the same material on which the predecessor of AO has taken a plausible view during the original assessment, has ventured in the reassessment to take a different view, which action is akin to review of his own order which power AO does not enjoy. We note that the AO had the knowledge of the assessee taking over the proprietary concern on 01.04.2002 i.e. running business of M/s. Anupam Bricks and Concrete Industries a proprietorship firm of Shri Budhmal Baid, Managing Director of the company in lieu of which the company had issued shares at a premium and the fact that by this process, the assessee acquired the assets including a Hot Mix plant. This fact was in the knowledge of the AO as well as he has considered this fact elaborately as reproduced above in his original assessment order, therefore, right or wrong, the decision taken by him cannot be revisited or reviewed by the AO invoking Sec. 147 of the Act because the AO does not have the power to review his own order. Relying upon the decision in the case of Kelvinator of India Ltd. 2010 (1) TMI 11 - SUPREME COURT we do not find any legal infirmity in the order passed by the Ld. CIT(A) and hence, the same is hereby upheld. Appeal of revenue is dismissed.
Issues Involved:
1. Reopening of assessment under Section 147 of the Income-tax Act, 1961. 2. Eligibility for deductions under Sections 80IA and 80IC of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Reopening of Assessment under Section 147 of the Income-tax Act, 1961: The main grievance of the revenue was against the action of the Ld. CIT(A) in quashing the reopening of the assessment under Section 147 of the Income-tax Act, 1961. The AO issued a notice under Section 148 on 10.09.2010, reopening the assessment on the grounds that the assessee's company was not eligible for deductions under Sections 80IA and 80IC. The AO believed that the company was formed by reconstruction of an existing business and had merely executed contract work, thus not qualifying for the deductions. The Tribunal noted that the AO can reopen an assessment only if there is "reason to believe" that income chargeable to tax has escaped assessment. "Reason to believe" requires a foundation based on information and belief based on reason. It was emphasized that the AO cannot review his own order, and reopening must be based on tangible material. The Tribunal found that the AO reopened the assessment on the same material that was available during the original assessment, which is akin to a review, and thus, the reopening was bad in law. The Tribunal referenced the Supreme Court decision in CIT Vs. Kelvinator India Ltd. (2010) 310 ITR 561 (SC), which reiterated that the AO has no power to review but only to reassess based on tangible material indicating escapement of income. The Tribunal concluded that the AO's action to reopen the assessment without any new tangible material was not justified, and hence, the reopening of the assessment was quashed. 2. Eligibility for Deductions under Sections 80IA and 80IC of the Income-tax Act, 1961: The AO had originally allowed partial deduction under Section 80IA but denied the deduction under Section 80IC. Upon reopening, the AO questioned the eligibility of the assessee for deductions under both sections. The Tribunal analyzed the original assessment order and found that the AO had already considered and allowed the deduction under Section 80IA, except for the interest component, and denied the deduction under Section 80IC. The Tribunal noted that the assessee had complied with all statutory requirements, including filing the tax audit report and auditor’s certificate. The AO’s reopening was based on the same facts and materials that were considered during the original assessment, and the AO’s action to take a different view on the same material was not permissible. On the merits, the Tribunal referred to similar cases, including the decision in DCIT Vs. Simplex Somdatt Builders JV, ITA No.1684/Kol/2011, where it was held that the assessee’s claim under Section 80IA was allowable. The Tribunal concluded that the assessee’s activities qualified as development of infrastructure facilities and not merely as works contracts, thus making them eligible for the deduction under Section 80IA. Regarding the deduction under Section 80IC, the Tribunal noted that the original assessment had already denied the claim, and the AO, during the reopening, had no power to review this decision. The Tribunal upheld the Ld. CIT(A)’s order quashing the reopening of the assessment and dismissed the revenue’s appeal. Conclusion: The Tribunal dismissed the revenue’s appeal, upholding the Ld. CIT(A)’s order that quashed the reopening of the assessment under Section 147. The Tribunal found that the reopening was not based on any new tangible material and was akin to a review of the original assessment, which is not permissible. The Tribunal also upheld the eligibility of the assessee for deductions under Section 80IA, referencing similar cases and legal precedents. The appeal of the revenue was dismissed, and the order was pronounced in the open court on 10th January 2018.
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