2021 (4) TMI 70 - HC - Income Tax

Reopening of assessment u/s 147 - deduction under explanation 7 of section 80IB(10)(a) (iii) - HELD THAT - As examined all the material facts as well as the reasons recorded for reopening of the assessment for the years under consideration. The impugned action on the part of the respondent to issue the impugned notices under Section 148 of the Act is without authority of law and therefore, the same are required to be quashed and set aside on the following reasons reasons recorded by the assessing officer led to belief about the escapement of assessment is nothing, but mere a change of opinion, which cannot sustainable in law. The issue of claim of deduction under Section 80IB(10) of the Act was thoroughly examined at the stage of original assessment by the assessing officer and had considered various details and consciously arrived at the conclusion not to disallow the deduction claimed by the assessee for the respective years under consideration. Even on the issue of commission paid to Mr. Baldevbhai Patel and cash deposit of ₹ 6,50,000/-, sufficient explanation was made by the assessee and accordingly, for the A.Y. 2011-12, the assessing officer did not add this amount for the purpose of tax. Therefore, it is presumed to have accepted the contention of the assessee even there was no express reference in the assessment order. Considering the facts of the present case, no any tangible material came in the hands of the assessing officer after concluded assessment and therefore, in absence of any tangible materials, the reassessment on the basis of change of opinion cannot be permissible. We have examined the materials on record, which show that, at the time of filing the return of income as well as during the course of original assessment proceedings, the assessee had disclosed all the material facts fully and truly and there was no false and untrue declaration on the part of the assessee with regard to approval of the project by the concerned authorities to avail the benefit of claim of deduction under Section 80IB (10) of the Act. We have no hesitation to hold that, there was no basis or jurisdiction for the assessing officer to form a belief that, any income of the assessee for the respective assessment years, had escaped assessment within the meaning of Section 147 of the Act and the reasons recorded could not have led to formation of any belief that, the income has escaped assessment within the meaning of the aforesaid provisions. Notice issued under section 148 of the Act are required to be quashed and set aside and accordingly the same are hereby quashed. - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of the reopening of assessments under Section 148 of the Income Tax Act, 1961.
2. Validity of claims for deductions under Section 80IB(10) of the Income Tax Act, 1961.
3. Adequacy of the original disclosure of material facts by the assessee.
4. Alleged change of opinion by the assessing officer.

Detailed Analysis:

1. Legality of the Reopening of Assessments under Section 148 of the Income Tax Act, 1961:
The court examined whether the revenue was justified in reopening the assessments for the assessment years 2011-12, 2012-13, 2013-14, and 2014-15. The notices for reopening were based on the alleged incorrect claims for deductions and unexplained cash deposits. The court noted that the original assessments were framed under Section 143(3) of the Act, and during those proceedings, the assessee had provided detailed responses to the notices issued under Section 142(1) of the Act. The court emphasized that a mere change of opinion does not confer jurisdiction upon the assessing officer to issue notice under Section 148.

2. Validity of Claims for Deductions under Section 80IB(10) of the Income Tax Act, 1961:
The court observed that during the original assessment proceedings, the issue of deduction under Section 80IB(10) was thoroughly examined. The assessee had furnished all necessary approvals and documents, including the approval from the Town Planning & Valuation Department, Ahmedabad, and the Notification of village Bopal under AUDA jurisdiction. The assessing officer had considered these details and concluded not to disallow the deductions claimed by the assessee.

3. Adequacy of the Original Disclosure of Material Facts by the Assessee:
The court found that the assessee had disclosed all material facts fully and truly during the original assessment proceedings. This included the approval for the housing project, details of commission expenses, and cash deposits. The court noted that there was no false or untrue declaration on the part of the assessee regarding the approval of the project by the concerned authorities.

4. Alleged Change of Opinion by the Assessing Officer:
The court held that the reasons recorded by the assessing officer for reopening the assessments were merely a change of opinion, which is not permissible under the law. The court cited precedents, including the Supreme Court's rulings in Binani Industries Ltd. Vs. CCT and A.L.A Firm Vs. CIT, emphasizing that a mere fresh application of mind to the same set of facts does not justify reopening assessments.

Conclusion:
The court concluded that the impugned notices under Section 148 of the Act were issued without authority of law and were based on a mere change of opinion. The court quashed the notices dated 31.03.2018, 27.03.2019, and 28.03.2019, thereby allowing the writ applications filed by the assessee. The court found no basis or jurisdiction for the assessing officer to form a belief that any income had escaped assessment within the meaning of Section 147 of the Act. Consequently, all writ applications were allowed with no order as to costs.