2023 (8) TMI 1077 - HC - Income Tax

Reopening of assessment u/s 147 - Reopening beyond period of four years - Change of opinion - as observed that on scrutiny of profit and loss account, balance sheet, computation of income, it was found that the assessee had claimed and allowed deduction u/s 80- IA - HELD THAT - The petitioner had truly and fully disclosed all the material facts which were called upon by the revenue at the relevant time. The reopening of the assessment is nothing but a mere change of opinion on the part of AO. If the AO could not discover even with due diligence, the petitioner cannot be blamed for that. If the AO did not examine the issue of allowability of the deduction during the course of regular assessment, the revenue has no jurisdiction to reopen the assessment. Decided in favour of assessee.

Summary

Issues: The judgment involves the legality of a notice issued under Section 148 of the Income Tax Act, 1961 for reopening the assessment for the Assessment Year 2012-13, specifically regarding the claim of deduction under Section 80-IA of the Act.

Summary:

1. The petitioner, engaged in pollution control and environmental engineering, maintained separate books for bio-medical waste projects, claiming deduction u/s 80-IA in the original return for AY 2012-13. After scrutiny, assessment was done on 30.1.2015. Subsequently, a notice u/s 148 was issued on 28.3.2019 to reopen the case, which the petitioner objected to, citing full disclosure of material facts during the original assessment.

2. The petitioner argued that the reopening was beyond the 4-year limit and there was no failure to disclose material facts. The AO's action was deemed a change of opinion, not permissible under the law. The petitioner relied on legal precedents to support their case.

3. The respondent contended that all procedures were followed in issuing the notice, and the reopening was based on new facts discovered post-original assessment. The AO had not examined the issue during the regular assessment, justifying the reopening.

4. The court found that the reopening notice was issued after 4 years, and the petitioner had fully disclosed all necessary facts during the original assessment. The AO's failure to discover certain facts did not warrant reopening. Citing legal precedent, the court quashed the notice and the order disposing of objections against it.

5. The judgment concluded in favor of the petitioner, quashing the impugned notice and the order disposing of objections. The petition was allowed, with no costs imposed.