2021 (12) TMI 1481 - HC - Income Tax

Reopening of assessment - claim made u/s 80IA was rejected for the reason that the conditions laid down by the said provision are not fulfilled - HELD THAT - Revenue carried the matter in Appeal before this Court and this Court in 2011 (9) TMI 1251 - BOMBAY HIGH COURT dismissed Revenue s Appeal relying upon in 2011 (2) TMI 1625 - BOMBAY HIGH COURT . Therefore the entire foundation for the proposed re-opening which could even if considered to be a tangible material has crumbled. Decided in favour of assessee.

Summary

Issues:
1. Validity of notice under Section 148 of the Income Tax Act, 1961 for re-opening assessment for AY 1997-98.
2. Rejection of objections filed by the Petitioner against the notice.
3. Requirement of tangible material for validly re-opening assessment.
4. Impact of rejection of deduction claim under Section 80IA for AY 2001-02 on re-opening assessment for AY 1997-98.

Analysis:

1. The Respondent issued a notice under Section 148 seeking to re-open the Petitioner's assessment for AY 1997-98 based on excessive claim and allowance of deduction under Section 80IA. The Petitioner objected to the notice, which was rejected. The key issue was whether the notice and subsequent order were valid.

2. The High Court examined the requirement of tangible material for re-opening an assessment under Section 148. The Court emphasized the need for tangible material to justify re-opening, even if the reasons disclosed such material. The Court noted that the rejection of the deduction claim under Section 80IA for AY 2001-02 formed the basis for the proposed re-opening for AY 1997-98.

3. The Court highlighted that the rejection of the deduction claim under Section 80IA for AY 2001-02 had been challenged by the Petitioner before the CIT(A), who allowed the appeal. Subsequently, the Revenue challenged this decision before the ITAT, which dismissed the appeal. The Revenue then appealed to the High Court, which upheld the decisions of the lower authorities, thereby undermining the foundation for re-opening the assessment for AY 1997-98.

4. Consequently, the High Court found that the basis for the proposed re-opening had crumbled due to the decisions in previous appeals related to the deduction claim under Section 80IA for AY 2001-02. As a result, the Court made the Rule absolute, quashing the impugned notice, approval, order, and reassessment proceedings for AY 1997-98. The petition was disposed of with no order as to costs.