2022 (5) TMI 1147 - AT - Income Tax

Reopening u/s 147 - Deduction u/s 80IC - whether the assessee s allowance of claim of deduction u/s 80IC can be revisited by issuing notice u/s 148 of the Act especially when there has been no change in facts and circumstances of the case? - HELD THAT - If the assessee s claim for deduction is held to be allowable in assessment year 201314, there is no reason why the assessee s claim is not allowable in assessment year 2012-13 (i.e. the year under appeal) when the Statute specifically provides allowance of claim of deduction @ 100% for the initial five assessment years. As far as the issue of having multiple initial assessment years for the purpose of claim of deduction is concerned, the same stands having attained finality by the order of the Hon'ble Apex Court in the case of Pr.CIT, Shimla Vs. M/s Aarham Softronics 2019 (2) TMI 1285 - SUPREME COURT and there is no dispute about that. It is also to be mentioned again, even at the cost of repetition, that the AO himself had accepted the assessee s claim for deduction @ 100% on substantial expansion in the original assessment proceedings and, therefore, without recording any cogent reason, which would justify the reopening, without pointing out any difference in the facts and circumstances of the case and without establishing that there has been some fraud or misrepresentation on part of the assessee, the claim once allowed cannot be revisited. Section 147 of the Act authorizes the re-opening of any assessment of a previous year. Section 148, which contains the conditions for re-opening assessments, including the limitation period within which notices can be issued, by its proviso. As to what can be the valid grounds for re-opening an assessment has been the subject matter of several decisions. In Income Tax Officer, Calcutta Ors. vs. Lakhmani Mewal Das 1976 (3) TMI 1 - SUPREME COURT the Hon'ble Apex Court held that the reasons to believe must be based on objective materials, and on a reasonable view. Thus basis for a valid reopening of assessment should be availability of tangible material, which can lead the AO to scrutinize the returns for the previous assessment year in question, to determine, whether a notice under Section 147 is called for. Accordingly, in view of the settled judicial precedents as noted above, we cannot endorse the reopening of the assessment in the present case. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reopening the assessment under Section 148.
2. Correctness of the addition of Rs. 48,43,000 based on the share percentage in industrial property.
3. Legitimacy of the disallowance of Rs. 4,09,46,317 under Section 80IC.

Detailed Analysis:

1. Validity of Reopening the Assessment under Section 148:
The assessee contended that the reopening of the assessment was unlawful, arguing there was no new tangible material to justify it, and it was based on a mere change of opinion. The original assessment had already considered all relevant facts, including the substantial expansion and the claim under Section 80IC, which were accepted by the Assessing Officer (AO). The Tribunal noted that the AO had no fresh material to establish that there was any suppression of material information by the assessee. The Tribunal relied on judicial precedents, including the Hon'ble Apex Court's decision in Commissioner of Income Tax, Delhi v. Kelvinator of India Ltd., which emphasized that a mere change of opinion cannot justify reopening an assessment. Consequently, the Tribunal held that the reopening of the assessment was bad in law and set it aside.

2. Correctness of the Addition of Rs. 48,43,000 Based on the Share Percentage in Industrial Property:
The AO made an addition of Rs. 48,43,000 based on the difference in the share percentage of the assessee company in industrial property, calculating it at 23% instead of 20%. The assessee challenged this addition, but the Tribunal did not provide a detailed analysis on this specific issue as it primarily focused on the legality of the reopening of the assessment and the deduction under Section 80IC.

3. Legitimacy of the Disallowance of Rs. 4,09,46,317 under Section 80IC:
The AO disallowed Rs. 4,09,46,317, claiming that the assessee was only eligible for a 30% deduction under Section 80IC instead of the 100% claimed. The assessee argued that it had undertaken substantial expansion in the financial year 2008-09 and was eligible for 100% deduction from assessment year 2009-10 onwards. The Tribunal noted that the assessee's claim for 100% deduction had been upheld in earlier years (assessment years 2010-11 and 2013-14) based on the Hon'ble Apex Court's decision in Pr.CIT, Shimla Vs. M/s Aarham Softronics. The Tribunal observed that the Department had accepted the assessee's claim in those years and found no reason to deny it for the assessment year 2012-13. Thus, the Tribunal held that the disallowance under Section 80IC was unjustified.

Conclusion:
The Tribunal concluded that the reopening of the assessment was unlawful and set it aside. Consequently, the additions and disallowances made by the AO were also invalidated. The appeal of the assessee was partly allowed, primarily on the grounds of the invalidity of the reopening of the assessment.