2019 (3) TMI 427 - HC - Income Tax

Reopening of assessment - notice issued beyond a period of four years from the end of the relevant Assessment Year - non entitlement to benefit of Section 80IB - HELD THAT - We find that, the reasons in support of the impugned notice, merely mentions about the Assessment for Assessment Year 2015-16. However, it does not mention of any failure to disclose the correct date of commencement being a fact which came to the knowledge of the Revenue while passing the Assessment Order for Assessment Year 2015-16. As during regular assessment proceedings, for the subject Assessment Year 2011-12, the Petitioner had at the instance of the Assessing Officer given complete details with regard to the purchase of the flat, the date of agreement of purchase of the flats and also date of possession to the Assessing Officer. The same was examined by the Assessing Officer. At that time, the Assessing Officer was satisfied that the flats were sold prior to the amendment of 2010. It is consequent to the above that the Assessing Officer passed an order dated 26th March, 2014 under Section 143 (3) of the Act and accepted Petitioner s claim for deduction under Section 80IB (10) As held in HINDUSTAN LEVER LTD. VERSUS RB. WADKAR, ASSISTANT COMMISSIONER OF INCOME-TAX AND OTHERS (NO. 1). 2004 (2) TMI 41 - BOMBAY HIGH COURT reasons recorded by the Assessing Officer cannot be supplemented by filing an affidavit or making an oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches the court, on the strength of the affidavit or oral submissions advanced. Therefore, in facts of this case, the reasons in support of the impugned notice not having alleged/ particularized any failure on the part of the Petitioner to disclose fully and truly all material facts necessary for the assessment, the impugned notice is without jurisdiction. - Decided in favour of assessee.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reopening assessment for Assessment Year 2011-12.

Analysis:
1. The Petitioner, a Limited Liability Partnership engaged in construction activity, filed its return of income for Assessment Year 2011-12, claiming 100% deduction under Section 80IB of the Act, resulting in a declared taxable income of "Nil." The Assessing Officer, after scrutiny, passed an Assessment Order allowing the claimed deduction.
2. Subsequently, a notice dated 27th March, 2018 sought to reopen the assessment, alleging violations of Section 80IB (10)(f) of the Act due to multiple flats being registered in violation of the conditions. The reasons for reopening highlighted discrepancies in the flats registered and advances received, alleging a violation of the Act since the project's commencement in 2010.
3. The Petitioner objected to the reopening, arguing that the notice was issued beyond the permissible four-year period without alleging any failure to disclose material facts. The Petitioner contended that all necessary details were provided during the initial assessment, and the Assessing Officer had accepted the claim for deduction under Section 80IB.
4. The Revenue justified the reopening based on an assessment order for a subsequent year, claiming a failure to disclose the correct commencement date of the project. However, the Court emphasized that the reasons for reopening must explicitly state any failure on the part of the assessee to disclose necessary facts, as per legal precedents.
5. The Court held that the reasons for reopening lacked specific allegations of failure to disclose material facts, rendering the notice without jurisdiction. The Court referred to the importance of clear, unambiguous reasons to establish a link between the conclusions and evidence, emphasizing the need for justifiable reasons based on recorded evidence.
6. Consequently, the Court quashed and set aside the impugned notice, ruling in favor of the Petitioner. The judgment highlighted the necessity for reasons supporting a notice under Section 148 to precisely identify any failure to disclose material facts, ensuring the legality and validity of such actions.