2018 (12) TMI 43 - HC - Income Tax

Reopening of assessment - admissibility of deduction u/s 80IB(10) in respect of Tans Residency Project - AO had rejected the claim inter alia on the ground that the development and construction of housing project had commenced prior to 01.10.1998 (which was the crucial date for claiming the benefits under Section 80IB(10)) - Held that - All necessary facts were before the AO while deciding the original assessment. During such assessment, the assessee s claim of deduction was also minutely examined by the AO. Reopening of assessment beyond the period of four years was, therefore, correctly disallowed by the CIT(A) and the Tribunal. As noted, the only source available with the Assessing Officer to contend that relevant material was not brought on record by the assessee was assessment in case of M/s. Abode Builders. Here also, there is one vital defect in the logic adopted by the Assessing Officer. We do not find any where any material to suggest that the development and construction of the housing project commenced before 01.10.1998. Even in the reasons recorded, AO has not linked any material in order to make this observation. He has mainly relied on the findings of the AO of M/s. Abode Builders. This conclusion was reversed by the CIT(A) noting that in fact all along there was evidence suggesting that the commencement of construction of the housing project was some time in the year 2002. Assessee points out that the assessment order in case of M/s. Abode Builders was set aside by the CIT(A) and the same was confirmed by the Tribunal. No failure on the part of the assessee to disclose truly and fully all relevant facts as correctly held by the CIT(A) and the Tribunal - Decided in favour of assessee.

Summary

Issues:
1. Validity of reassessment proceedings under Section 147 of the Income Tax Act.
2. Justification of reassessment based on mere change of opinion.
3. Dismissal of the appeal regarding admissibility of deduction under Section 80IB(10) for a specific project.

Analysis:
1. The primary issue in this case revolves around the validity of reassessment proceedings initiated by the Assessing Officer for the Assessment Year 2004-05 concerning the deduction claim under Section 80IB(10) of the Income Tax Act. The Assessing Officer reopened the assessment due to alleged discrepancies related to the commencement date of the housing project, which he believed disqualified the assessee from claiming the deduction. The Tribunal and CIT(A) both found that there was no failure on the part of the assessee to disclose material facts during the original assessment, leading to the dismissal of the reassessment by the Tribunal.

2. The second issue questions whether the reassessment was justified based on a mere change of opinion. The CIT(A) and Tribunal both concluded that the assessee had provided all necessary material during the original assessment, and there was no evidence to support the Assessing Officer's claim that the construction of the housing project began before the qualifying date of 01.10.1998. The Tribunal upheld the CIT(A)'s decision, emphasizing that the reassessment was not valid due to the absence of any failure to disclose relevant facts by the assessee.

3. The final issue concerns the dismissal of the Revenue's appeal regarding the admissibility of the deduction under Section 80IB(10) for the specific project in question. The CIT(A) extensively reviewed the facts and documents related to the project, concluding that the assessee had indeed disclosed all necessary information during the original assessment. The Tribunal affirmed this decision, highlighting the consistent allowance of the deduction in previous years and the lack of evidence supporting the reassessment. Consequently, the appeal was ultimately dismissed by the High Court.

In summary, the High Court upheld the decisions of the CIT(A) and Tribunal, ruling in favor of the assessee by dismissing the Revenue's appeal challenging the validity of the reassessment proceedings and the admissibility of the deduction under Section 80IB(10) for the housing project.