2016 (5) TMI 1159 - AT - Income Tax

Reopening of assessment - delayed payment of PF and claim of deduction u/s.80IB without furnishing the full certificate of Form 10CCB along with return of income - Held that - Since admittedly in the instant case the notice u/s.148 has been issued beyond a period of 4 years from the end of the relevant assessment year and there is no allegation by the AO in the reasons recorded for such reopening that there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment therefore following the decision of the Tribunal in assessee s own case for A.Y. 2005-06 we hold that the notice issued by the AO u/s.148 in the instant case is void ab-initio. The grounds raised by the assessee on the issue of validity of reopening is thus decided in favour of the assessee.

Summary

Issues Involved:
1. Validity of the reopening of assessment under Section 147 of the Income Tax Act, 1961.
2. Disallowance of employees' contribution to PF due to delayed payment.
3. Denial of deduction under Section 80IB.

Detailed Analysis:

1. Validity of the Reopening of Assessment under Section 147:
The assessee challenged the reopening of the assessment under Section 147, arguing that it was initiated after four years from the end of the relevant assessment year without any failure on the part of the assessee to disclose all material facts. The original assessment was completed under Section 143(3) on 30-03-2006, and the notice for reopening was issued on 26-03-2010, which is beyond the four-year limit. The AO's reasons for reopening included delayed payment of PF and the claim of deduction under Section 80IB without furnishing the full certificate in Form 10CCB. However, the AO did not mention any failure by the assessee to disclose fully and truly all material facts necessary for the assessment.

The Tribunal, referring to the second proviso to Section 147, emphasized that no action can be taken after four years from the end of the relevant assessment year unless there is a failure on the part of the assessee to disclose fully and truly all material facts. The Tribunal cited several decisions, including those from the Hon'ble Bombay High Court, which held that the absence of such an allegation in the reasons recorded makes the notice void ab-initio. Therefore, the Tribunal concluded that the notice issued under Section 148 was invalid, and the reopening of the assessment was void ab-initio.

2. Disallowance of Employees' Contribution to PF:
The AO disallowed an amount of ?1,13,952/- for delayed payment of PF contributions. The CIT(A) upheld this disallowance, stating that the payments were made after the due dates specified under the PF Act and hence were disallowable under Section 36(1)(va) of the Income Tax Act. The assessee argued that the payments were made before the due date of filing the return under Section 139(1), and thus, the disallowance was not justified. However, since the Tribunal decided the primary issue of the validity of reopening in favor of the assessee, this ground became academic and was not specifically addressed.

3. Denial of Deduction under Section 80IB:
The AO disallowed the deduction claimed under Section 80IB amounting to ?3,04,867/-, arguing that the full certificate in Form 10CCB was not furnished with the return of income. The CIT(A) upheld this disallowance, stating that the value of plant and machinery exceeded the limit for claiming the deduction under Section 80IB(3). The assessee contended that the complete copy of the audit report in Form 10CCB was submitted at the time of filing the return, and even if it was not, the relevant information was available in the balance sheet. However, this ground also became academic due to the Tribunal's decision on the validity of reopening.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, holding that the notice issued under Section 148 was void ab-initio due to the absence of any allegation of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Consequently, the alternate grounds regarding disallowance of PF contributions and denial of deduction under Section 80IB were not decided as they became academic in nature. The appeal was thus allowed in favor of the assessee.