2023 (9) TMI 1525 - HC - Income Tax

Validity of reassessment proceedings u/s 147 - deduction claimed u/s 80P(2)(d) - HELD THAT - The issue of deduction under Section 80P which is itself a part of Chapter VI-A of the Act was examined and gone into by the scrutiny carried out under various notices u/s 142(1) and responses thereto. The turn-around therefore was, in absence of any fresh tangible material, it was nothing but a mere change of opinion. Here a full and true disclosure based on queries in scrutiny notices was and is on record based on which the issue of deduction under Chapter VI-A of the Act which includes Section 80P was examined. It was therefore not open for the Revenue to undertake the exercise of reassessment. Decided in favour of assessee.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act and order disposing of objections.

Analysis:
The petition was filed by a Cooperative Milk Producers Union challenging a notice under Section 148 of the Income Tax Act and the order disposing of objections. The petitioner filed the original return of income for the assessment year 2017-18, declaring a total income of Rs. 3,44,90,840. The case was selected for scrutiny assessment, and details were requested under Section 142(1) regarding deductions claimed under Chapter VI-A of the Act. The petitioner provided details and documentary evidence in support of the deduction claimed under Section 80P(2)(d) of the Act. Despite this, a notice under Section 148 was issued, leading to the challenge by the petitioner.

The petitioner argued that the initiation of Section 148 proceedings was merely a change of opinion, as the issue on Section 80P should have been closed based on the feedback provided. The Revenue contended that interest received from a cooperative bank was not eligible for deduction under Section 80P. The Revenue relied on a Division Bench decision and emphasized that the petitioner did not fully disclose all material facts, specifically regarding interest income from cooperative banks.

The reasons to believe indicated that interest received from a cooperative bank was not eligible for deduction under Section 80P. The issue of deduction under Section 80P was thoroughly examined during the assessment proceedings, and the assessment order addressed the matter. The Court found that the Revenue's action was a mere change of opinion without fresh tangible material, citing a previous judgment. Another case cited by the Revenue was distinguished as being based on different facts.

Ultimately, the Court quashed the notice under Section 148 and the order disposing of objections, ruling in favor of the petitioner. The Court held that the issue of deduction under Section 80P had been adequately examined during the assessment process, and the Revenue's attempt at reassessment was unwarranted. The petition was allowed, with no order as to costs.

This detailed analysis of the judgment highlights the arguments presented by both parties, the legal principles applied, and the reasoning behind the Court's decision to quash the notice and order in question.