2023 (10) TMI 1281 - HC - Income Tax

Reopening of completed assessment - petitioner was not eligible for exemption u/s 10 AA being profits not derived from any export from its unit of Special Economic Zone - HELD THAT - As in coming to the conclusion that the petitioner was not entitled or not eligible for exemption u/s 10AA and that the assessee had wrongly claimed the exemption, what is evident from reading the reasons and the order disposing the objections is that the author of these communications is the very same Officer who in response to a notice u/s 142 having been satisfied with the explanation given by the petitioner vide its communication dated 11.12.2019 passed an assessment order, accepting the explanation tendered by the petitioner in the communication of 11.12.2019. This case can be no better example of a case where an Officer at the drop of the hat has sought to change his opinion which is contrary to the decision of the Supreme Court in the case of CIT Vs. Kelvinator of India Ltd 2010 (1) TMI 11 - SUPREME COURT Thus the petition is allowed. The impugned notice and the order disposing of objections are quashed and set aside. Decided in favour of asssessee.

Summary

Issues involved:
The challenge in the petition is to the notice proposing to reopen the completed assessment for Assessment Year 2017-18 and the order disposing of objections. The main issue is whether the petitioner was eligible for exemption under Section 10 AA of the Income Tax Act.

Assessment of the completed assessment:
The petitioner, a company, filed its return of income for Assessment Year 2017-18 and later filed a revised return. The petitioner claimed exemption under Section 10 AA of the Act for a foreign exchange fluctuation gain treated in the capital account. The respondent initially accepted this claim and passed an assessment order. However, a notice was issued proposing that the petitioner was not eligible for the exemption, leading to the challenge in the petition.

Change of opinion and retrospective amendment:
The petitioner argued that the notice was based on a "change of opinion" as the same officer who initially accepted the claim later sought to revise it. The respondent contended that the petitioner revised its return due to a retrospective amendment to the Finance Act, not just a change of opinion. The court noted that the officer's actions were contrary to established principles, citing the Supreme Court decision in CIT Vs. Kelvinator of India Ltd.

Judgment:
The court allowed the petition, quashing the impugned notice and the order disposing of objections. The court found that the officer's decision to change his opinion abruptly was unjustified and not in line with legal principles, leading to the ruling in favor of the petitioner.