2019 (6) TMI 441 - HC - Income Tax

Reopening of assessment u/s 147 - allowability of deduction u/s 80IB(10) - reasons relates to income on sale of car parking, area of flat allotment of more than one flats - HELD THAT - The petitioner had produced full accounts. In the profit and loss account, the petitioner had showed income of ₹ 112.58 Crores from sale of flats. A separate sum of ₹ 4,48,50,0000/- was shown by way of receipt from sale of car parking. Along with the return, the petitioner had also produced accounts dully attached in From 3CD which also contained such details. In plain terms, there was no failure on the part of the assessee to disclose truly and fully all material facts. AO in his reasons recorded for issuing the impugned notice has proceeded on the basis of the material already on record clearly indicating there was no material alient to the record on which he had placed reliance in order to form a belief that income chargeable to tax had escaped assessment. The objections with respect to not providing built up area details and breach of clause (f) to Section 80-IB(10) of the Act are unsustainable factually and legally respectively. The assessee had provided full details including built up area of the flats sold contrary to what the AO had asserted in the reasons recorded. Further, the clause (f) of Section 80-IB(10) would apply in case of allotment to an individual as the Section itself clearly provides which is not a case in the present case. Contention of the Revenue that certain objections not having been taken by the assessee in response to the notice issued would preclude him from raising a contention that the petition is not borne out from any authority or statutory provision. If there is legal contention which goes to the root of the matter and which would render the action of the AO of issuing notice of reassessment without jurisdiction, such a ground cannot be showed out merely because in the written objections, the petitioner had not thought of raising it. Accepting any such contention would enable the revenue to proceed further with the reassessment which at a later relatably stage when shown to be without jurisdiction, would be liable to be quashed. - Decided in favour of assessee.

Summary

Issues:
1. Challenge to notice of reopening of assessment.
2. Claim of deduction under Section 80-IB(10) of the Income Tax Act.
3. Failure to disclose all material facts for determination of income.

Analysis:
1. The petitioner challenged a notice of reopening of assessment issued by the Assessing Officer. The notice was based on reasons to believe that income chargeable to tax had escaped assessment. The petitioner had raised objections to the notice, which were rejected by the Assessing Officer, leading to the filing of the petition.

2. The Assessing Officer objected to the petitioner's claim of deduction under Section 80-IB(10) on various grounds. Firstly, the deduction claimed on the sale of car parking spaces was deemed ineligible. Secondly, discrepancies in the details provided by the assessee regarding flat areas raised concerns about the sustainability of the deduction. Lastly, the sale of residential units to specific individuals was seen as a breach of the conditions for claiming the deduction.

3. The petitioner contended that the notice of reopening was issued beyond the prescribed time limit and that there was no failure to disclose all material facts. The petitioner argued that the claim for deduction under Section 80-IB(10) had been thoroughly examined during the original assessment, and any attempt to disallow it now would amount to a change of opinion. The petitioner also asserted that the reasons recorded for reopening lacked validity and were based on erroneous averments.

4. The High Court analyzed the case and found that the notice of reopening could not withstand legal scrutiny. The court noted that the petitioner had fully disclosed all material facts during the assessment proceedings. It was emphasized that the Assessing Officer had scrutinized the deduction claim previously and made no disallowance, rendering any attempt to disturb the claim now impermissible. Additionally, the court highlighted that the notice was issued beyond the statutory time limit and that there was no failure on the part of the assessee to disclose material facts.

5. The court further addressed the objections raised by the department and concluded that the notice of reopening lacked legal validity. It was emphasized that the Assessing Officer's grounds for disallowing the deduction were unsustainable, and the petitioner had provided necessary details to support their claim. The court held that the objections not raised by the assessee in response to the notice did not preclude them from challenging the jurisdiction of the reassessment.

6. In the final ruling, the High Court set aside the impugned notice dated 30.3.2018 and allowed the petition to be disposed of accordingly, finding in favor of the petitioner.