2012 (5) TMI 27 - HC - Income Tax

Revised return declaring Nil income after claiming deduction u/s 80HHC and 80IB - Revenue stated that no deduction u/s 80IB available as the machinery was found to have been used previously for some other purpose AO issued notice for reassessment - Held that - No concealment on the part of the assessee in disclosing the facts to the Assessing Officer, thus not open to the AO to invoke the provisions of Section 148 for the purposes of reassessment - change of opinion on the same facts cannot constitute basis for exercise of jurisdiction under Section 147/148 in favour of assessee.

Summary

Issues:
1. Reopening of assessment under Section 147 of the Income Tax Act, 1961 based on change of opinion.
2. Claiming deductions under Sections 80HHC and 80IB of the Act.
3. Manufacturing activity at the Rajkot Branch office.
4. Legal infirmity in the reassessment proceedings.

Analysis:

Issue 1: Reopening of assessment under Section 147 of the Income Tax Act
The High Court dealt with the issue of reopening the assessment under Section 147 of the Income Tax Act. The Tribunal had dismissed the appeals by the revenue, upholding the view of the CIT(A) that there was no failure on the part of the assessee in making full and true disclosure. The Court noted that the conditions of the first proviso to Section 147 were not satisfied for reopening the assessment after the expiry of four years from the end of the relevant assessment year. It was observed that the Assessing Officer had exceeded jurisdiction by issuing a notice under Section 147 as it was deemed a change of opinion rather than concealment.

Issue 2: Claiming deductions under Sections 80HHC and 80IB
The case involved the assessee claiming deductions under Sections 80HHC and 80IB of the Act. The Assessing Officer had initially allowed deductions under Section 80HHC but disallowed deductions under Section 80IB. Subsequently, the CIT(A) allowed the appeal, stating that deduction under Section 80IB was admissible to the assessee. The High Court noted the sequence of events leading to the reassessment proceedings and the subsequent decisions by the authorities regarding the deductions claimed by the assessee.

Issue 3: Manufacturing activity at the Rajkot Branch office
Regarding the manufacturing activity at the Rajkot Branch office, the Assessing Officer contended that there was no manufacturing activity, which was a basis for disallowing deductions claimed by the assessee under Section 80IB. However, the CIT(A) quashed the reassessment proceedings, stating that there was no legal infirmity in the view taken by the CIT(A) and upheld by the Tribunal. The High Court concurred with the lower authorities that it was a case of change of opinion and not concealment by the assessee.

Issue 4: Legal infirmity in the reassessment proceedings
The High Court found no legal infirmity in the reassessment proceedings as upheld by the CIT(A) and the Tribunal. It was concluded that there was no concealment on the part of the assessee in disclosing the facts to the Assessing Officer, and the Assessing Officer had sought to change his opinion based on various judgments, which was not a valid basis for reassessment under Section 147/148 of the Act. The Court held that the appeals were devoid of merit and dismissed them accordingly.