2019 (11) TMI 106 - HC - Income Tax

Reopening of assessment u/s 147 - eligibility of reasons to believe - benefit of deduction under section 80IB(10) - HELD THAT - The reasons in support of the impugned notice itself proceed on the above facts viz. - completion certificate was received on 25 September 2012 while the project had to be completed before 31 March 2012 and therefore, this has led to the reason to believe that the income chargeable to tax has escaped assessment. Therefore the basis of the reasons to believe that income chargeable to tax has escaped assessment was that the completion certificate was not obtained on or before 31 March 2012. This was a subject matter of consideration by the Assessing Officer while passing the Assessment Order under section 143(3) of the Act for Assessment Year 2012-13. Thus the reason in support would be a clear case of change of opinion and the reopening notice would be without jurisdiction. Facts which are being relied upon by Mr.Walve are only recorded in the order disposing of the Petitioner s objections and do not form a part of the reasons for the Assessing Officer to come to reason to believe that income chargeable to tax has escaped assessment. The reasons set out in the order of disposing of objections cannot form basis of his reason to believe that income chargeable to tax has escaped assessment at the time he issued the impugned notice. As pointed out above the reasons recorded prior to issue of the impugned notice were on facts which was a subject of consideration in proceedings under section 143(3) of the Act. Thus a clear case of change of opinion and notice 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 2012-13.

Analysis:
1. The petitioner, engaged in housing projects, claimed deduction under section 80IB(10) for the Assessment Year 2012-13. The completion certificate for the project was received in September 2012, but the project was completed before March 2012. The Assessing Officer accepted the claim and granted the deduction under section 80IB(10) in the assessment order dated 23 March 2015 under section 143(3) of the Act.

2. The impugned notice issued on 29 March 2019 sought to reopen the assessment based on the belief that income amounting to a specific sum had escaped assessment due to the petitioner wrongly claiming the deduction under section 80IB(10). The notice was challenged on the grounds of jurisdiction and change of opinion by the petitioner.

3. The petitioner argued that the notice was issued beyond the four-year period from the end of the relevant Assessment Year, and there was no failure to disclose material facts during the original assessment. The petitioner contended that the reasons for reopening were a clear case of change of opinion and lacked jurisdiction.

4. The Revenue, supporting the notice, argued that tangible material discovered during the subsequent Assessment Year 2014-15 led to the belief that the benefit under section 80IB(10) was not applicable to the entire project. However, the reasons for reopening should be based on the original recorded facts, not subsequent discoveries.

5. The Court found that the reasons for reopening were based on facts already considered during the original assessment under section 143(3) for the Assessment Year 2012-13. The Court emphasized that the reasons recorded at the time of issuing the notice were crucial for determining jurisdiction to reopen the assessment.

6. The Court held that the reasons for reopening must be solely based on the original recorded facts and not subsequent discoveries. Relying on a subsequent order disposing of objections was deemed unjustified. The Court cited previous judgments emphasizing that the reasons for reopening must stand or fall based on the original recorded reasons.

7. The Court concluded that the notice lacked jurisdiction as it was a clear case of change of opinion, and the reasons did not indicate any failure to disclose material facts during the original assessment. The Court set aside the impugned notice and allowed the petition, emphasizing that the jurisdiction to reopen an assessment is strictly dependent on meeting the jurisdictional requirements based on the reasons recorded at the time of issuing the notice.