2016 (8) TMI 271 - HC - Income Tax

Reopening of assessment - Eligibility for deduction under section 80IA(4) - as per AO assessee was not carrying on the business of developing or operating and maintaining or developing, operating and maintaining any infrastructure facility - Held that - The petitioner s sole claim that the return was for deduction under section 80IA(4) of the Act, came to be examined by the Assessing Officer during the scrutiny assessment. During such assessment, the Assessing Officer collected full information from the assessee in addition to what was already produced along with the returns. In the assessment order, he made no disallowance. In the order itself, he had noted that this is a partnership firm and is enterprise of two partners Avadh Infrastructure Pvt. Ltd. and Narayan Infrastructure Pvt. Ltd. who had jointly applied to the Executive Engineer Valsad. The assessee s tender was sanctioned by the Government of Gujarat for construction of bridge. Thus full details pertaining to the assessee s activities were at large before the Assessing Officer. Conscious of such details, he had framed the assessment. It would therefore, not be permissible for the Assessing Officer to reopen such issue and that too beyond a period of four years from the end of relevant assessment year. Quite apart from the question of change of opinion, there was simply no failure on part of the assessee to disclose truly and fully material facts. As noted, in the original returns, the assessee had while claiming deduction, provided supporting materials in the form of audit report in Form No.10CCB. During the assessment proceedings, the assessee provided further details as called for by the Assessing Officer. Even the reasons recorded by the Assessing Officer for issuing notice for reopening do not even indirectly suggest that there was any failure on part of the assessee to disclose true and full facts. In fact, the reasons rely solely on the materials already on record. It can thus be seen that the Assessing Officer merely desires to revisit the claim which was granted after full scrutiny in the original assessment. His opinion that the claim was not properly examined during such assessment would not authorise him to reopen the assessment. The reasons are based on materials already on record. - Decided in favour of assessee

Summary

Issues Involved:
1. Legality of the notice issued for reopening the assessment.
2. Eligibility of the petitioner for deduction under section 80IA(4) of the Income Tax Act.
3. Alleged failure of the petitioner to fully disclose material facts.
4. Validity of reopening the assessment beyond four years.

Issue-wise Detailed Analysis:

1. Legality of the Notice for Reopening the Assessment:
The petitioner challenged the notice dated 18.2.2016 issued by the respondent Assessing Officer for reopening the assessment for the year 2010-2011. The notice was based on the claim that the petitioner was not eligible for deduction under section 80IA(4) of the Income Tax Act. The court examined whether the notice was justified under the provisions of the Act.

2. Eligibility for Deduction under Section 80IA(4):
The petitioner, a company engaged in construction, claimed a deduction of ?70.52 lacs under section 80IA(4). The Assessing Officer initially scrutinized the returns and allowed the deduction. However, the reopening notice claimed that the petitioner was involved in works contracts with the government, which, according to the explanation to section 80IA(13) introduced by the Finance Act 2009, retrospectively effective from 1.4.2000, disqualified them from such deductions. The court noted that the petitioner had provided all necessary documents and audit reports justifying the deduction during the original assessment.

3. Alleged Failure to Fully Disclose Material Facts:
The petitioner argued that there was no failure on their part to disclose all material facts fully and truly. The court observed that the petitioner had submitted detailed information, including audit reports in Form No.10CCB and responses to specific queries from the Assessing Officer during the original assessment. The court found that the Assessing Officer had all the relevant details and had consciously allowed the deduction.

4. Validity of Reopening Beyond Four Years:
The reopening notice was issued beyond four years from the end of the relevant assessment year. The court emphasized that for reopening beyond this period, there must be a failure on the part of the assessee to disclose fully and truly all material facts. Since the court found no such failure, it held that reopening the assessment was not permissible. The reasons recorded for reopening relied solely on materials already on record, indicating that the Assessing Officer merely sought to revisit the original claim, which is not a valid ground for reopening.

Conclusion:
The court concluded that the Assessing Officer's attempt to reopen the assessment was not justified. The petitioner had fully disclosed all material facts during the original assessment, and the reasons for reopening were based on the same materials already scrutinized. Therefore, the notice dated 18.2.2016 was set aside, and the petition was allowed and disposed of.