2021 (12) TMI 25 - HC - Income Tax

Reopening of assessment u/s 147 - Eligible reason to believe - change of opinion - Denial of deduction under Section 80P (2) - HELD THAT - As in the present case, the Assessing Officer raised a specific query in the original assessment proceedings, to which Petitioner replied. Therefore it is clear that Assessing Officer in the original assessment proceedings was conscious of the issue involved of the eligibility of Petitioner to claim deduction under Section 80P (2) of the Act. The co-ordinate Bench of this Court has succinctly laid down the criteria for reopening of assessment within a period of 4 years in Jainam Investments 2021 (9) TMI 517 - BOMBAY HIGH COURT by holding that the Assessing Officer cannot reopen the assessment even within four years merely on the basis of change of opinion. The Assessing Officer had no power to review the assessment, which has been concluded unless he has tangible material to come to the conclusion that there is escapement of income from assessment. For all these reasons, we are of the view that the exercise of jurisdiction under Section 148 of the Act in the present case is without any tangible material. - Decided in favour of assessee.

Summary

Issues:
Reopening of assessment under Section 148 of the Income Tax Act, 1961 for Assessment Year 2014-2015 challenged in a petition under Article 226 of the Constitution of India.

Analysis:
1. The Petitioner, a Co-operative Credit Society, filed its return of income for Assessment Year 2014-2015 claiming deduction under Section 80P of the Act for interest income received from co-operative Banks.
2. The Assessing Officer issued notices for scrutiny and accepted the claim for deduction under Section 80P during the original assessment proceedings under Section 143(3) of the Act.
3. Subsequently, the Assessing Officer sought to reopen the assessment under Section 148 of the Act based on the premise that deduction under Section 80P was not applicable to income from co-operative Banks, leading to the Petitioner challenging the notice and rejection of objections.
4. The Petitioner argued against the reopening, citing lack of tangible material and the Assessing Officer's prior consideration of the deduction issue during the original assessment.
5. The Revenue contended that the deduction was not applicable to interest received from co-operative Banks as per Section 80P(2)(d) of the Act and that the Assessing Officer was justified in reopening the assessment and rejecting objections.
6. The Court analyzed the provisions of Section 147 and the requirement of "reason to believe" for reopening assessments, emphasizing the distinction between review and reassessment.
7. Relying on legal precedents, the Court concluded that the Assessing Officer lacked tangible material to justify the reopening of the assessment within four years, quashing the notice and rejection of objections.

Conclusion:
The High Court quashed the notice issued under Section 148 of the Act and the order rejecting the Petitioner's objections, ruling that the exercise of jurisdiction under Section 148 was without tangible material.