2020 (3) TMI 284 - HC - Income Tax

Reopening of assessment u/s 147 - benefit under section 80IB(10) denied - HELD THAT - In the present case, approval in respect of housing project is obtained for the first time on 06.02.2008 and hence, that is the relevant date for considering the eligibility for deduction under section 80IB(10) of the Act. It is an admitted position, as reflected in the reasons recorded for reopening the assessment, that the project was completed on 31.03.2012, which is well within the period prescribed for completion of the project for the purpose of availing the benefit of deduction under section 80IB(10) of the Act. Since the previous approval granted by the Kudasan Gram Panchayat was not for a housing project, the decision of this court in Radhe Developers case 2011 (12) TMI 248 - GUJARAT HIGH COURT would have no applicability to the facts of the present case. An assessment under section 143(3) came to be framed by AO allowing the deduction claimed under section 80IB(10) of the Act. The impugned notice has been issued on 13.03.2018, in respect of assessment year 2011-12, which is clearly beyond a period of four years from the end of the relevant assessment year. Therefore, the first proviso to section 147 of the Act would be attracted and for the purpose of assuming jurisdiction under section 147 of the Act by the Assessing Officer, there has to be failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year under consideration. The facts reveal that the petitioner had duly furnished the approval dated 06.02.2008 granted by the GUDA for the housing project; however, the Assessing Officer, in the reasons recorded has termed such approval as a fictitious document on the ground that the original approval was granted on 16.03.2005. Approval dated 16.03.2005 granted by the local authority was for an office building and not a housing project and hence, not submitting the same at the time of the scrutiny assessment cannot in any manner be termed as non-disclosure of relevant facts necessary for the assessment. Under the circumstances, in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment, the Assessing Officer has failed to cross the first threshold for assuming jurisdiction under section 147 of the Act, beyond a period of four years from the end of the relevant assessment year. Besides, even on merits, since the permission dated 06.02.2008 was the first approval granted for a housing project on the subject land, there is no material on the basis of which the Assessing Officer could have formed the belief that income chargeable to tax has escaped assessment. The impugned notice dated 13.03.2018 issued by the respondent under section 148 of the Act, therefore, cannot be sustained. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the notice issued under section 148 of the Income-tax Act, 1961 for reopening the assessment.
2. Whether the reopening of the assessment is based on a mere change of opinion.
3. Determination of the correct date of approval for the housing project for eligibility under section 80IB(10) of the Income-tax Act.
4. Whether there was a failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment.

Detailed Analysis:

1. Validity of the notice issued under section 148 of the Income-tax Act, 1961 for reopening the assessment:
The petitioner challenged the notice dated 13.03.2018 issued under section 148 of the Income-tax Act, 1961, seeking to reopen the assessment for the assessment year 2011-12. The petitioner argued that the reasons recorded for reopening the assessment are factually incorrect and based on incorrect facts. The court observed that the approval granted on 16.03.2005 by the Kudasan Gram Panchayat was for an office building and not for a housing project. The first approval for the housing project was granted by the Gandhinagar Urban Development Authority (GUDA) on 06.02.2008. Therefore, the notice issued under section 148 of the Act was found to be based on incorrect facts and was quashed.

2. Whether the reopening of the assessment is based on a mere change of opinion:
The petitioner contended that the reopening of the assessment was based on a mere change of opinion, as the Assessing Officer had already examined the records during the scrutiny assessment and allowed the deduction under section 80IB(10) of the Act. The court noted that the approval dated 06.02.2008 was the first approval for the housing project, and the reopening of the assessment was based on the incorrect assumption that the approval was granted on 16.03.2005. Therefore, the reopening of the assessment was indeed based on a mere change of opinion.

3. Determination of the correct date of approval for the housing project for eligibility under section 80IB(10) of the Income-tax Act:
The core issue was determining the correct date of approval for the housing project. The respondent argued that the approval granted by the Kudasan Gram Panchayat on 16.03.2005 should be considered the first approval, while the petitioner contended that the approval granted by GUDA on 06.02.2008 was the first approval for the housing project. The court examined the approvals and concluded that the approval granted on 16.03.2005 was for an office building and not for a housing project. The first approval for the housing project was granted on 06.02.2008 by GUDA. Therefore, the petitioner was entitled to the deduction under section 80IB(10) of the Act, as the project was completed within the prescribed period.

4. Whether there was a failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment:
The court observed that the petitioner had duly furnished the approval dated 06.02.2008 granted by GUDA for the housing project. The Assessing Officer's assumption that the approval dated 16.03.2005 was the first approval was incorrect. Therefore, there was no failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment. Consequently, the Assessing Officer did not have the jurisdiction to reopen the assessment under section 147 of the Act beyond the period of four years from the end of the relevant assessment year.

Conclusion:
The court allowed the petition, quashing the notice dated 13.03.2018 issued under section 148 of the Income-tax Act, 1961, for the assessment year 2011-12, and all proceedings pursuant thereto. The court ruled that the reopening of the assessment was based on incorrect facts and a mere change of opinion, and there was no failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment.