2021 (10) TMI 418 - AT - Income Tax

Reopening of assessment u/s 147 - reassessment proceedings were initiated on the basis of the explanation inserted to section 80 IA (4) - HELD THAT - Admittedly, the reasons recorded for initiating the reassessment proceedings are not available on record. In this regard, the learned DR was also directed to produce the reasons recorded and for this purpose he was provided enough time at the time of hearing after treating the matter as part heard. However, the learned DR failed to provide the reasons recorded by the AO for initiating the reassessment proceedings. The reopening of the reassessment under section 147 of the Act was challenged by the assessee on the reasoning that explanation inserted to section 80IA(4) of the Act with retrospective effect. Likewise, the objections were disposed of based on the explanation inserted under section 80IA (4) for of the year under consideration. As the proceedings were also initiated under section 147 of the Act in the own case of the assessee for the assessment years 2005-06 and 2006-07 vide notice dated 15th March 2010 under section 148 of the Act. In the present case the notice under section 148 was also issued on the same date i.e. 15th March 2010. In the assessment year 2005-06 and 2006-07 the reassessment proceedings were held to be invalid. Therefore, the issue on technical ground was decided in favour of the assessee. The facts of the present case seems to be similar to the assessment year 2005-06 and 2006-07 as the notice under section 148 was issued on the same date. Accordingly, we can draw an inference that the proceedings were initiated merely on the change of opinion. Thus proceedings in the year under consideration were initiated on account of the insertion of explanation to section 80 IA(4) of the Act which is nothing but change of opinion - Decided in favour of assessee,

Issues Involved:
1. Validity of the assessment framed under section 147 of the Income Tax Act, 1961.
2. Confirmation of disallowance under section 80IA of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Framed under Section 147 of the Income Tax Act, 1961:

The primary issue raised by the assessee was the challenge to the validity of the reassessment proceedings initiated under section 147 of the Income Tax Act, 1961. The assessee contended that the reassessment was based on the explanation inserted below section 80IA(4) by the Finance Act 2009 with retrospective effect from 1st April 2000. The assessee argued that such a retrospective amendment cannot be a basis for initiating reassessment proceedings, as this would amount to a mere change of opinion. The learned AR cited various judicial precedents, including the orders of the tribunal in the assessee's own case for the assessment years 2005-06 and 2006-07, to support this contention.

The learned DR, however, argued that the assessee had not furnished the reasons recorded for initiating the proceedings under section 147, making it difficult to draw any inference. Upon review, the tribunal noted that the reasons recorded for initiating the reassessment proceedings were not available on record. Despite providing the learned DR with ample time to produce these reasons, they were not furnished.

The tribunal referred to the objections raised by the assessee against the initiation of the reassessment proceedings, which emphasized that the original assessment under section 143(3) was completed after verifying all material facts, and the reassessment was merely a change of opinion. The tribunal also reviewed the order of the AO dated 8 October 2010, which disposed of the objections based on the explanation inserted under section 80IA(4).

The tribunal further noted that similar reassessment proceedings were initiated in the assessee's own case for the assessment years 2005-06 and 2006-07, and those proceedings were held to be invalid. The tribunal concluded that the reassessment proceedings for the year under consideration were also initiated on account of the insertion of the explanation to section 80IA(4), which constituted a change of opinion. Consequently, the tribunal held that the proceedings initiated under section 147 were bad in law and liable to be quashed.

2. Confirmation of Disallowance under Section 80IA of the Income Tax Act, 1961:

Given that the tribunal decided the technical issue regarding the validity of the reassessment proceedings in favor of the assessee, it did not proceed to decide the issue of disallowance under section 80IA on merit. The tribunal stated that, as the technical issue was resolved in favor of the assessee, the issues raised on merit became infructuous and were dismissed as such.

Conclusion:

The tribunal allowed the appeal of the assessee partly by quashing the reassessment proceedings initiated under section 147 of the Income Tax Act, 1961, on the grounds that they were based on a mere change of opinion due to a retrospective amendment. Consequently, the tribunal did not address the merits of the disallowance under section 80IA, rendering those issues infructuous. The order was pronounced in court on 07/10/2021 at Ahmedabad.

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