2022 (1) TMI 542 - HC - Income Tax

Reopening of assessment u/s 147 - Eligibility of reason to believe - change of opinion - claim of deduction u/s 80IB(10) - HELD THAT - Assessment Officer has no power to review an assessment which has been concluded. AO before he passed the assessment order had in his possession all primary facts necessary for assessment and then he made the original assessment. When the primary facts necessary for assessment are fully and truly disclosed the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment. Where on consideration of material on record one view is conclusively taken by the Assessing Officer it would not be open to reopen the assessment based on the very same material with a view to take another view - See ANANTA LANDMARK PVT. LTD. 2021 (10) TMI 71 - BOMBAY HIGH COURT . We are satisfied that not only material facts were disclosed to the petitioner truly and fully but they were carefully scrutinized and figures of income as well as deduction were viewed carefully by the Assessing Officer. - Decided in favour of assessee.

Summary

Issues:
Impugning a notice under section 148 of the Income Tax Act, 1961 based on relying on the same material to take a different view.

Analysis:

1. The petitioner challenged a notice dated 12th December 2007 issued under section 148 of the Income Tax Act, 1961, arguing that the respondents were attempting to take a different view based on the same material already considered by the Assessing Officer who passed the assessment order dated 17th March 2005.

2. The petitioner's counsel contended that when the Assessing Officer conclusively takes a view based on a set of material and information, it is not permissible to reopen the assessment to take another view using the same material.

3. The reasons for issuing the notice under section 148 were related to the assessee company's claim of deduction under section 80IB(10) for a housing project that included shops, which, according to the assessing authority, made the company ineligible for the deduction.

4. The assessment order highlighted that a show cause notice was previously issued to the assessee, questioning the eligibility for deduction under section 80IB(10) due to the presence of commercial units in the project alongside residential units.

5. The petitioner had submitted detailed explanations and justifications regarding the claim of deduction under section 80IB(10) during the assessment proceedings.

6. The judgment cited established legal principles stating that an Assessing Officer cannot review an assessment that has been concluded based on fully disclosed primary facts necessary for assessment. Once an assessment is made based on a particular view, it cannot be reopened solely for a change of opinion using the same material.

7. The court differentiated between reopening an assessment due to a reasonable belief of income escapement and reopening it based on a change of opinion regarding the computation of deductions. It referenced a relevant case to emphasize that the condition precedent for reopening an assessment was not fulfilled when the basis was solely information disclosed during the original assessment.

8. The court concluded that all material facts were fully disclosed and scrutinized by the Assessing Officer during the original assessment, leading to the decision to allow the petition and quash the impugned notice issued under section 148 of the Act.

9. The petition was disposed of with no order as to costs, affirming the decision to quash the notice based on the legal analysis provided in the judgment.