2017 (1) TMI 930 - HC - Income Tax

Reopening of assessment - change of opinion - Revenue s grievance is that there was no application of mind by AO to the assessee s claim for deduction u/s 80IB(8A) during the regular assessment proceedings for subject assessment years under Section 143(3) - Held that - In all orders passed under Section 143(3) during the regular assessment proceedings for the subject assessment years, AO records the fact that the assessee s claim for deduction under Section 80IB(8A) were examined in detail and found to be in order. There can be no clear case of application of mind to the respondent assessee s claim for deduction under Section 80IB(8A) of the Act then this. Therefore, in the facts of this case, it is not to be presumed that the Assessing Officer had applied his mind to the respondent assessee s claim for deduction under Section 80IB(8A) of the Act when assessment orders were passed under Section 143(3) of the Act for the subject assessment years as it has in fact been considered therein. Thus, this is a clear case of change of opinion. Consequently, the reopening notices issued for the subject assessment years are without jurisdiction as they are founded upon a change of opinion. - Decided n favour of assessee

Summary

Issues:
1. Jurisdiction of reopening assessment under Section 147 of the Income Tax Act.
2. Allowance of deduction under Section 80IB(8A) of the Income Tax Act.

Analysis:

Jurisdiction of Reopening Assessment (Section 147):
The respondent, a company engaged in clinical research, had its assessment reopened for certain years under Section 147 of the Income Tax Act. The Revenue contended that the reassessment was valid as it was not merely a change of opinion but based on facts and provisions of the Act. However, the Tribunal held the reopening notices as without jurisdiction, citing a change of opinion. The Tribunal reasoned that during the regular assessment proceedings, the Assessing Officer had already applied his mind to the deduction claim under Section 80IB(8A) of the Act. The Tribunal concluded that the reassessment was a clear case of a change of opinion, making the reopening notices invalid. The High Court upheld this decision, stating that the Assessing Officer had indeed considered the deduction claim during the initial assessment, rendering the reassessment unnecessary and without jurisdiction.

Allowance of Deduction under Section 80IB(8A):
The second issue regarding the allowance of deduction under Section 80IB(8A) became academic due to the decision on the first issue. Since the jurisdiction to reassess the respondent was denied, there was no need to re-examine the deduction claim. Therefore, the High Court did not delve into this issue. Consequently, all appeals were dismissed with no order as to costs.

In conclusion, the High Court affirmed that the reassessment proceedings were invalid due to being founded on a change of opinion and not new facts. This decision resulted in the dismissal of the appeals, settling the dispute over the jurisdiction of reopening assessments and the allowance of deductions under the Income Tax Act.