2019 (7) TMI 748 - HC - Income Tax

Reopening of assessment u/s 147 - deduction u/s 80IB(10) denied - the petitioner had submitted the details of buyers which revealed that he had sold residential units to in all seven parties who were spouses or had more than one residential unit in the same project - whether there was any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment ? - HELD THAT - The court in CLIANTHA RESEARCH LTD. VERSUS DY. CIT 2013 (7) TMI 452 - GUJARAT HIGH COURT held that when a claim was processed at length after calling for detailed explanation from the assessee and the same was accepted merely because a certain element or angle was not in the mind of the Assessing Officer while accepting such a claim cannot be a ground for issuing notice for reassessment. In the present case the assessment is sought to be reopened beyond a period of four years from the end of relevant assessment year in the absence of any failure on the part of the petitioner to disclose truly and fully all material facts necessary for its assessment the basic requirement for taking action u/s 147 of the Act as postulated in the first proviso thereto is not satisfied. Moreover as discussed hereinabove during the course of scrutiny assessment the Assessing Officer had examined the claim for deduction under section 80IB(10) in detail therefore merely because he did not examine such claim from the angle of clauses (e) and (f) thereof would not be a valid ground for reopening the assessment as it would amount to a mere change of opinion . Under the circumstances the assumption of jurisdiction by the Assessing Officer u/s 147 by issuing notice u/s 148 is invalid which renders the impugned notice unsustainable. - Decided in favour of assessee.

Issues Involved:
1. Validity of reopening assessment under Section 148 of the Income Tax Act, 1961.
2. Alleged failure to disclose material facts necessary for assessment.
3. Alleged change of opinion by the Assessing Officer.
4. Compliance with Section 80IB(10) of the Income Tax Act, 1961.

Detailed Analysis:

1. Validity of Reopening Assessment under Section 148:
The petitioner challenged the notice dated 28.03.2018 issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for the assessment year 2012-13. The petitioner contended that the notice was issued beyond four years from the end of the relevant assessment year and argued that there was no failure on their part to disclose fully and truly all material facts necessary for the assessment. The court noted that since the assessment year was 2012-13 and the notice was issued on 28.03.2018, it was clearly beyond the four-year period. Therefore, the first proviso to Section 147 of the Act would apply, which requires a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.

2. Alleged Failure to Disclose Material Facts:
The petitioner had submitted its return of income for the assessment year 2012-13, including an audit report under Section 44AB and Form No.10CCB for claiming deduction under Section 80IB. During the original assessment proceedings, the Assessing Officer had called for various details, including the justification for the deduction under Section 80IB(10), which the petitioner provided. The petitioner argued that the details of all purchasers, including their addresses and PAN, were furnished, and the Assessing Officer did not disallow the deduction. The court found that the petitioner had disclosed all material facts necessary for the assessment, and the Assessing Officer had failed to examine the issue from the angle of clauses (e) and (f) of Section 80IB(10) despite having all relevant material before him.

3. Alleged Change of Opinion by the Assessing Officer:
The petitioner contended that the reopening of the assessment was based on a mere change of opinion, as the Assessing Officer sought to reopen the assessment based on material already available on record. The court agreed, noting that the Assessing Officer had scrutinized the claim for deduction under Section 80IB(10) in detail during the original assessment and had raised several queries, which the petitioner had answered. The court held that merely because the Assessing Officer did not examine the claim from the angle of clauses (e) and (f) would not justify reopening the assessment, as it would amount to a mere change of opinion.

4. Compliance with Section 80IB(10):
The respondent argued that the petitioner was not entitled to claim deduction under Section 80IB(10) because seven flats were sold to family members or the same individual, which contravened clauses (e) and (f) of Section 80IB(10). The court noted that Form No.10CCB, required for claiming deduction, did not have a column for disclosing whether more than one residential unit was allotted to related parties. The court found that the petitioner had provided all required details during the original assessment, and the Assessing Officer had failed to examine the issue from the perspective of clauses (e) and (f). Therefore, the court concluded that there was no failure on the part of the petitioner to disclose material facts necessary for the assessment.

Conclusion:
The court held that the assumption of jurisdiction by the Assessing Officer under Section 147, by issuing the notice under Section 148, was invalid. The petition was allowed, and the impugned notice dated 28.03.2018 was quashed and set aside. The court ruled that the reopening of the assessment was based on a mere change of opinion and that the petitioner had disclosed all material facts necessary for the assessment.

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