2019 (1) TMI 865 - HC - Income Tax

Reopening of assessment - petitioner s claim for benefit of deduction u/s 80IB(10) - reopening beyond the period of four years - basis of the impugned notice is the Government approved Valuer s Certificate - assessment is completed by scrutiny under Section 143(3) - Held that - It is a settled position in law that when an assessment is completed by scrutiny under Section 143(3) then a reopening notice beyond a period of four years is barred, unless there is a failure to disclose fully and truly all material facts necessary for assessment. This is in fact the mandate of the first provisio to Section 147. It is settled position of law that reopening of assessment is not to review the assessment order passed under Section 143(3). Therefore, no reopening is permissible on mere change of opinion. In the present facts, we note the reopening notice is issued beyond a period of four years from the end of the assessment year 2011-12 in respect of assessment completed under Section 143(3) of the Act. The basis of the impugned notice is the Government approved Valuer s Certificate dated 24th March, 2014. We note that this very certificate was a subject of consideration while passing the assessment order dated 25th March, 2014 under Section 143(3). The reason do not state that the above certificate dated 24th March, 2014 came to the notice of the AO after passing the Assessment Order dated 25th March, 2014. Thus, there is no failure to disclose all material facts truly and fully on the part of the petitioner during regular assessment proceedings. Thus, on the above ground itself, the impugned notice is bad. In the assessment order dated 25th March, 2014 under Section 143(3), the above certificate dated 24th March, 2014 was considered before passing the order. The impugned notice is an attempt to reopen an assessment completed under Section 143(3) of the Act based on the change of opinion. - Decided in favour of assessee.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reopening assessment for Assessment Year 2011-12.

Analysis:
The petitioner, a partnership firm engaged in construction, filed a return claiming deduction under Section 80IB(10) of the Act for its project "Sicilia" in Pune. The Assessing Officer allowed the deduction after scrutiny. However, a notice dated 29th March, 2018, sought to reopen the assessment based on a report by a Government approved Valuer indicating some flats exceeded the 1,500 sq.ft. limit under Section 80IB(10)(c) of the Act.

The petitioner objected to the reopening, arguing it was beyond the four-year limit and there was no failure to disclose material facts. The Court noted that reopening beyond four years is barred without such failure and emphasized that reassessment cannot be for a mere change of opinion. The impugned notice was found to be based on the same Valuer's report considered in the original assessment order, indicating no failure to disclose facts during the initial assessment.

The Court held that the notice was without jurisdiction as it attempted to reopen an assessment completed under Section 143(3) of the Act based on a change of opinion. The Assessing Officer sought to take a different view from the one already considered, which was deemed impermissible. Consequently, the Court quashed and set aside the notice dated 29th March, 2018.

The judgment highlights the importance of adhering to the statutory limitations for reopening assessments and the prohibition against reassessment based solely on a change of opinion. It underscores the need for Assessing Officers to have valid grounds supported by new material to justify reopening assessments beyond the prescribed time limits.