2017 (6) TMI 834 - HC - Income Tax

Reopening of assessment - assessee was not fulfilling the conditions laid down under Section 80IA - Held that - What can be seen from reasons is that though the Assessing Officer refers to the assessment of year 2009-10 for the purpose of his information, insofar as the year under consideration is concerned, he confined his reasons to one single aspect viz. of the assessee not fulfilling the necessary conditions for deduction. Literal reading of the reasons would imply that the Assessing Officer was not pressing in service the ground of deficiencies in the treatment of waste that the assessee was imparting, which he had noticed in the assessment year 2009-10, for the present year i.e. assessment year 2006-07. Further his reference to the assessee not fulfilling the conditions for claim of deduction is, by itself, rather vague and general reference. In our understanding, the reasons lack clarity. there was no failure on the part of the assessee to disclose necessary facts. The documents in the nature of contracts between the government and other agencies were very much part of the record. In a case where reopening of assessment is being resorted beyond the period of four years this would be relevant. Further, during the assessment pursuant to the first notice for reopening, the Assessing Officer had examined the claim of deduction under Section 80IA (4) of the Act. It may be that the Assessing Officer had only one of the units of the assessee in mind when such assessment was being framed. Nevertheless nothing prevented him from disallowing such deduction qua other units also if similar situation obtained. - Decided in favour of assessee.

Summary

Issues:
1. Reopening of assessment for the assessment year 2006-07 based on claimed deduction under Section 80IA (4) of the Income Tax Act.

Analysis:

Background and Initial Assessment:
The petitioner, a hazardous solid waste management company, filed an income tax return for the assessment year 2006-07 declaring total income after deduction under Section 80IA (4) of the Act. The initial assessment in 2008 did not disallow the deduction claimed.

Reasons for Reopening:
The Assessing Officer sought to reopen the assessment based on the petitioner's treatment of hazardous waste not meeting norms, leading to disallowance of deduction claimed under Section 80IA (4) for the assessment year 2009-10. Subsequently, for the assessment year 2006-07, the officer issued a notice disallowing the claimed deduction due to the petitioner not fulfilling the conditions under Section 80IA of the Act.

Petitioner's Objections:
The petitioner objected to the notice of reopening, citing reasons such as the notice being issued beyond the prescribed period, no failure in disclosing material facts, and the Assessing Officer's reliance on the reversed assessment of 2009-10.

Court's Analysis:
The High Court noted that the reasons provided by the Assessing Officer lacked clarity and were vague. The court highlighted that the grounds for disallowance in the assessment year 2009-10 were not directly applicable to the assessment year 2006-07. It emphasized that the defects noted by the Pollution Control Board inspection team in later years did not automatically imply similar issues existed during the relevant assessment year.

Conclusion:
The court allowed the petition, setting aside the notice to reopen the assessment for the assessment year 2006-07. The judgment emphasized the lack of clarity in the reasons provided by the Assessing Officer and the absence of concrete evidence linking the alleged defects to the relevant assessment year.