2016 (5) TMI 1267 - HC - Income Tax

Reopening of assessment - claim of deduction under Section 36(1)(viia) - Held that - On being satisfied with the basis of the petitioner s claim for deduction under Section 36(1)(viia) of the Act, the Assessing Officer passed orders dated 29th January, 2013 for Assessment Year 201011 and 12th March, 2014 for Assessment Year 201112. On the date when the Assessing Officer passed the orders under Section 143(3) of the Act, the decision of the Apex Court in Catholic Syrian Bank Ltd. (2012 (2) TMI 262 - SUPREME COURT OF INDIA ) was very much available. Thus, prima facie, the Assessing Officer would have formed a necessary opinion taking a view that the decision of the Apex Court in Catholic Syrian Bank Ltd. (supra) would not militate against the view canvassed by the respondent assessee and allow the claim of the petitioner for deduction under Section 36(1)(viia) of the Act. In the above view, prima facie, this is a case of change of opinion. Consequently, without jurisdiction.

Summary

Issues:
Challenge to reopening of assessments for Assessment Years 2010-11 and 2011-12 under Article 226 of the Constitution of India based on interpretation of Section 36(1)(viia) of the Income Tax Act, 1961.

Analysis:
The petitions challenge Notices dated 31st March, 2015, seeking to reopen assessments for the mentioned Assessment Years. The reasons for reopening assessments are based on the interpretation of Section 36(1)(viia) of the Income Tax Act. The reasons rely on the decision of the Apex Court in Catholic Syrian Bank Ltd. Vs. Commissioner of Income Tax, 343 ITR 270. During the assessment proceedings, the petitioners had already explained the basis of their claim for deduction under Section 36(1)(viia) to the Assessing Officer.

The Assessing Officer had previously passed orders for both assessment years, i.e., 2010-11 and 2011-12, after being satisfied with the basis of the petitioner's claim for deduction under Section 36(1)(viia). At that time, the decision of the Apex Court in Catholic Syrian Bank Ltd. was available. Hence, it is argued that the Assessing Officer had already formed an opinion considering the Court's decision and allowed the claim for deduction.

The Court observes that the Assessing Officer's actions seem to indicate a change of opinion, making the reopening of assessments without jurisdiction. Therefore, interim relief is granted to the petitioners in both cases. The previous order directing the petitioner to address office objections is to be followed within a specified timeframe; failure to do so may result in the dismissal of the petition.

In conclusion, the Court finds that the Assessing Officer's decision to reopen assessments appears to be based on a change of opinion, which is not permissible. The petitioners are granted interim relief, subject to complying with the previous order regarding office objections.