2018 (10) TMI 936 - HC - Income Tax

Reopening of assessment - notice has been issued beyond a period of four years from the end of relevant assessment year - claim of deduction u/s 10B - Held that - There is not even a suggestion on record that there was any failure on part of the assessee to disclose truly and fully all material facts. Only on this ground, impugned notice should have been set aside. Nevertheless, there are additional grounds on which we would like to make few comments. We have recorded the reasons. AO principally alleges is disproportionate bifurcation of expenditures between eligible and non eligible units. He is obviously hinting at inflated profit of eligible unit and deflated profit of non eligible units. Entire issue pertained to assessee s claim of deduction under section 10B of the Act. High Court had noted that this claim was examined by the Assessing Officer in the original assessment proceedings. Not be open for him to reexamine the claim, may be on another aspect or element of the claim being raised through reassessment proceedings. In the present case, yet another element of the claim being cited as a ground for reopening the assessment.We have noticed that during the original assessment, the Assessing Officer had raised multiple queries with respect to this claim.8. Thus the claim having been examined by the Assessing Officer during the assessment proceedings, it would not be open for reopening on such grounds. - Decided in favour of assessee.

Summary

Issues:
1. Validity of notice under section 148 of the Income Tax Act, 1961 for reopening assessment for the assessment year 2011-2012.
2. Allegations of disproportionate bifurcation of expenditures between eligible and non-eligible units.
3. Claim of deduction under section 10B of the Act and its examination during original assessment.

Analysis:
1. The petitioner challenged a notice for reopening the assessment for the assessment year 2011-2012 under section 148 of the Income Tax Act, 1961. The Assessing Officer had previously raised queries regarding the petitioner's claim for deduction under section 10B during the original assessment. The High Court had earlier allowed the petition, noting that the claim was examined, and a minor disallowance was made. The petitioner contended that the notice was issued beyond the prescribed period and that reexamination of the claim would amount to a change of opinion, which is impermissible.

2. The Assessing Officer in the impugned notice alleged disproportionate bifurcation of expenditures between eligible and non-eligible units, hinting at inflated profit of eligible units and deflated profit of non-eligible units. The petitioner argued that such grounds were already examined during the original assessment, and providing a detailed breakdown of expenditures was done in the audit report. The High Court reiterated that reexamination of the claim under section 10B was impermissible, even if new grounds were cited for reopening the assessment.

3. The petitioner's claim for deduction under section 10B was thoroughly examined during the original assessment, with the Assessing Officer raising specific queries and the petitioner providing detailed replies supported by documents. The High Court emphasized that since the claim was scrutinized during the original assessment, it could not be reopened merely on the grounds of disproportionate bifurcation of expenditures between units. The Court held that the impugned notice was invalid and quashed it, allowing the petition and disposing of the matter in favor of the petitioner.