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2018 (4) TMI 576 - HC - Income TaxReopening of assessment - failure of the AO to apply the mind during the regular assessment - allowing deduction u/s 80IC in respect of component of other income which was not derived from industrial undertaking - Held that - In this case the Assessing Officer consciously considered the claim for deduction under Section 80IC of the Act as is admittedly evident from the issues raised during the regular assessment proceedings. This by itself would be evidence of the fact that the Assessing Officer had occasion to apply his mind to the claim for deduction under Section 80IC of the Act during the regular assessment proceedings and had taken a view on the claim of deduction under Section 80IC of the Act. The reasons in support of the impugned notice is not premised on the fact that he had not applied his mind to the claim for deduction under Section 80IC during the regular assessment proceedings in respect of the income/receipts which were not derived from its paper and pulp unit to claim benefit under Section 80IC of the Act. It proceeds to exclude the above income from the claim for deduction on account of omission by the Assessing Officer during the regular assessment proceedings. This is different from non-application of mind to claim for deduction under Section 80IC of the Act. As held by this Court in Hindustan Lever v. Wadkar (2004 (2) TMI 42 - BOMBAY High Court) the reasons in support of the reopening notice has to be read as it is. No additions and/or inferences are permissible. Moreover, the power under Section 147/148 of the Act is not to be exercised to correct mistakes made during the regular assessment proceedings. - Decided against revenue.
Issues:
Reopening of assessment under Section 260A of the Income Tax Act, 1961 challenging the order dated 22.8.2014 passed by the Income Tax Appellate Tribunal for Assessment Year 2007-08. Analysis: Issue 1: Reopening of Assessment The Revenue contended that the Tribunal erred in considering the reopening of the case as bad in law, arguing that no opinion was formed on the issue of allowing deduction under Section 80IC for "other income" not derived from an industrial undertaking. The Assessing Officer disallowed a portion of the claimed deduction under Section 80IC during the regular assessment proceedings. Subsequently, a notice under Section 148 was issued to reopen the assessment, leading to further disallowance of the deduction. The Respondent objected, claiming it was a change of opinion. The Tribunal held that the Assessing Officer had already formed an opinion during the regular assessment proceedings, making the reopening a case of change of opinion, citing the Supreme Court's decision in CIT v. Kelvinator of India Ltd. The Tribunal concluded that the reasons for reopening did not indicate a lack of application of mind during the regular assessment, and the power to reopen assessments should not be used to correct past mistakes. Issue 2: Regular Assessment Proceedings The Respondent argued that the Assessing Officer had already considered the claim for deduction under Section 80IC during the regular assessment, as evidenced by queries raised and responses provided. The Tribunal agreed, emphasizing that the Assessing Officer had consciously enquired into the claim, resulting in a reduction of the deduction claimed. The Respondent highlighted the importance of the Assessing Officer's prior consideration of the deduction claim, which prevented a valid reopening based on a lack of application of mind. The Tribunal distinguished this case from Export Credit Guarantee Corporation of India Ltd. v. Additional Commissioner of Income Tax, where no query was raised during regular assessment proceedings. Conclusion The Tribunal's decision aligns with the Kelvinator India case, emphasizing the need for a valid reason to believe for reopening assessments and prohibiting corrections of past mistakes through such actions. The Tribunal found no substantial question of law in the case and dismissed the appeal, upholding the Respondent's position.
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