2019 (8) TMI 1133 - HC - Income Tax

Reopening of assessment u/s 147 - reason to believe - the audit report was not filed electronically in Form 10CCB for claiming deduction u/s 80IA - the same was already disallowed in intimation passed u/s 143 (1) - HELD THAT - The Court finds that in the objection raised by the Petitioner vide letter dated 7th May, 2019 addressed to the AO, the Petitioner clearly stated that the case was processed u/s 143(1) disallowing the deduction claim u/s 80IA(4)(iv)(a) of ₹ 1,24,04,182/- and demand of ₹ 42,83,943/- has been raised. There is an obvious non-application of mind by the AO to the above fact. If indeed the above deduction claimed by the Petitioner was not allowed in the first instance, and the intimation sent to the Petitioner u/s 143(1) indicated this, then the question of any income escaping assessment on that score did not arise. - the impugned notice sets aside - Decided in favour of assessee.

Summary

Issues:
1. Challenge to the notice issued under Section 148 of the Income Tax Act, 1961 for reopening assessment.
2. Rejection of objections to the reopening of assessment for the Assessment Year 2017-18.
3. Disallowance of deduction claimed under Section 80IA of the Act.

Analysis:
1. The petitioner filed a writ petition challenging the notice dated 26th March 2019 issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the Assessment Year 2017-18. The petitioner also contested the consequential order dated 7th August 2019 rejecting objections to the reopening of assessment. The reasons for reopening the assessment were related to the non-filing of the audit report for claiming deduction under Section 80IA of the Act amounting to ?1,24,04,182.

2. The assessment for the said year was reopened based on the grounds that the deduction claimed by the petitioner under Section 80IA was not allowable due to the non-filing of the required audit report. However, upon examination of the intimation sent under Section 143(1) of the Act, it was revealed that the entire deduction claimed by the petitioner had already been disallowed by the respondents during the initial assessment process. The petitioner had raised objections to this disallowance in a letter dated 7th May 2019, highlighting the non-allowance of the deduction and the raised demand of ?42,83,943.

3. The court observed a clear non-application of mind by the Assessing Officer (AO) regarding the disallowance of the deduction claimed by the petitioner under Section 80IA. As the intimation under Section 143(1) already communicated the disallowance of the deduction, there was no basis for the income escaping assessment. Consequently, the court set aside the impugned notice issued on 26th March 2019 and the order dated 7th August 2019 rejecting the petitioner's objections. The petition was allowed, and the pending application was disposed of accordingly.