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2016 (7) TMI 522 - AT - Income TaxReopening of assessment - Claim for deduction under section 10A - Held that - As in the light of the findings rendered by the Coordinate Bench of this Tribunal in the assessee s own case for A.Y. 2009-10 upholding on merits the eligibility of the assessee s claim for deduction under section 10A of the Act for A.Y. 2009-10, the basis upon which the AO recorded the reasons for reopening the assessments for assessment years 2005-06 to 2008-09 (extracted supra), being struck down, does not now survive thereby rendering the reasons recorded for the aforesaid four assessment years unsustainable both in law and on facts. In this view of the matter, we find no merit in the grounds raised by Revenue on this count and uphold the quashing of the reassessment orders for assessment years 2005-06 to 2008-09 dated 18.03.2013 for being unsustainable in law. Further, following the decision of the Coordinate Bench of this Tribunal in assessee s own case for A.Y. 2009-10 we also uphold the orders of the CIT(A) in allowing the assessee s claim for deduction under section 10A of the Act for assessment years 2005-06 to 2008-09 on merits. It is accordingly ordered. - Decided in favour of assessee.
Issues Involved:
1. Validity of reopening assessments under section 147/148 of the Income Tax Act. 2. Legitimacy of the assessee’s claim for deduction under section 10A of the Income Tax Act. Detailed Analysis: 1. Validity of Reopening Assessments under Section 147/148: The assessee, a firm engaged in ITES related to civil engineering, filed returns for A.Y. 2005-06 to 2008-09 declaring NIL income, which were initially processed under section 143(1) and later assessed under section 143(3), accepting the assessee's claim for deduction under section 10A. Subsequently, the Assessing Officer (AO) initiated proceedings under section 147, issuing notices under section 148, based on the belief that the assessee's claim for deduction under section 10A was not genuine, as found in A.Y. 2009-10. The CIT(A) allowed the assessee's appeal, quashing the reassessment orders on the grounds that the reopening was based solely on the denial of the claim for A.Y. 2009-10 and not on any failure by the assessee to disclose material facts. The CIT(A) cited several judgments, including CIT vs Kelvinator India and Voltas Ltd. v ACIT, emphasizing that reopening beyond four years requires a failure to disclose fully and truly all material facts, which was not established by the AO. In the present case, the original assessments for A.Y. 2005-06 and 2006-07 were completed after due scrutiny, and the reopening notices were issued after four years from the end of the relevant assessment years. The CIT(A) held that the AO did not bring on record any failure on the part of the assessee to disclose material facts, rendering the reopening invalid. 2. Legitimacy of the Assessee’s Claim for Deduction under Section 10A:The CIT(A) also allowed the assessee's appeal on the merits of the claim for deduction under section 10A. The AO had disallowed the deduction based on the findings for A.Y. 2009-10, where the claim was found to be not genuine. However, the CIT(A) noted that the assessee's claim for deduction under section 10A for A.Y. 2009-10 was allowed by the CIT(A) in appeal, and there were no new facts presented for the earlier years under consideration. The ITAT upheld the CIT(A)'s decision, noting that the basis for reopening the assessments for A.Y. 2005-06 to 2008-09 was the denial of the claim for A.Y. 2009-10, which was subsequently allowed by the CIT(A) and upheld by the ITAT. The ITAT found that the reasons recorded for reopening were unsustainable in law and on facts, and upheld the CIT(A)'s orders quashing the reassessment orders and allowing the assessee's claim for deduction under section 10A. Conclusion:The ITAT dismissed the Revenue's appeals for A.Y. 2005-06 to 2008-09, upholding the CIT(A)'s orders on both the technical grounds of the validity of reopening the assessments under section 147/148 and on the merits of the assessee's claim for deduction under section 10A. Order Pronounced:The order was pronounced in the open court on 8th July, 2016.
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