2016 (9) TMI 334 - HC - Income Tax

Reopening of assessment - benefit of Section 80IB - Held that - As the reasons in support do not satisfy the requirement of the proviso to Section 147 of the Act, the impugned notice is unsustainable. Therefore at this stage, we are not considering the second submission on the part of the Petitioner that this is a case of change of opinion and therefore without jurisdiction. As Respondent, states that on merits, the Petitioner was not entitled to the benefit of Section 80IB of the Act. This by itself would entitle the Respondent to issue a reopening notice. In support, he placed reliance on the decision of this court in support of Export Credit Guarantee Corporation of India Ltd. vs. Additional Commissioner of Income tax 2013 (1) TMI 517 - BOMBAY HIGH COURT to contend that where a provision of law has been clearly overlooked or ignored in the assessment order, it would be open to the Assessing Officer to issue a reopening notice. This decision relied upon by the Respondent has been rendered in the context of assessment being reopened within a period of four years from the end of the relevant assessment years. In such cases of reopening of assessment in less than four years, the jurisdiction is not dependent upon failure to disclose fully and truly all material facts necessary for assessment as in this case, where the reopening is for a period beyond a period of four years from the end of the relevant assessment year. Thus we find absence of any failure to disclose all the material facts truly and fully which were necessary for assessment. Therefore, the impugned notice is prima facie without jurisdiction - Decided in favour of assessee

Summary

Issues:
1. Challenge to notice issued by Assessing Officer under Section 148 of the Income Tax Act, 1961 for reopening an assessment for Assessment Year 2008-09.
2. Denial of benefit under Section 80IB(10) of the Act.
3. Under assessment of income due to transfer of goods and services to related parties for deduction under Section 80IA of the Act.
4. Confirmation of unsecured loans signed by persons other than directors/partners/proprietors.

Analysis:

1. The Assessing Officer sought to reopen the assessment for Assessment Year 2008-09 beyond the four-year period, alleging failure to disclose all material facts necessary for assessment. However, the petitioner argued that there was no failure to disclose the notification or any other material fact while claiming the benefit of Section 80IB of the Act. The court found that the Assessing Officer did not establish any failure on the part of the assessee to fully and truly disclose material facts, rendering the impugned notice unsustainable in this regard.

2. Regarding the denial of benefit under Section 80IB(10) of the Act, the court noted that the Assessing Officer did not show any failure on the part of the assessee to disclose material facts necessary for assessment. The court highlighted that the Assessing Officer had granted the benefit of Section 80IB(10) after considering the relevant notifications, and hence, the jurisdictional requirement was not satisfied in this case.

3. The issue of under assessment of income due to transfer of goods and services to related parties for deduction under Section 80IA of the Act was also raised. The court observed that a similar issue had been raised in a previous case of the petitioner for the Assessment Year 2009-10, where the reopening notice was challenged and interim relief was granted. As no change in material facts was presented for the current assessment year, the court found the reopening notice on this ground prima facie unsustainable.

4. Lastly, the confirmation of unsecured loans signed by persons other than directors/partners/proprietors was discussed. The court noted that there was no indication that these confirmations were not produced during the assessment proceedings. Consequently, the court found that the Respondent had not been able to establish any failure on the part of the petitioner to fully and truly disclose all material facts necessary for assessment.

In conclusion, the court held that the impugned notice was prima facie without jurisdiction as there was an absence of failure to disclose all material facts necessary for assessment. The court granted interim relief to the petitioner based on these findings, highlighting the importance of satisfying the jurisdictional requirements for reopening assessments beyond the statutory period.