2024 (2) TMI 609 - HC - Income Tax

Reopening of assessment - deduction u/s 80IB in respect of income received from sale of flats in buildings - HELD THAT - In the assessment order the details of the project have been stated. It is also stated that Assessee was claiming deduction u/s 80IB in respect of income received from sale of flats in buildings that Assessee had declared from residential units of buildings and declared profit subject to claim of deduction u/s 80-IB. There is also a note on deduction u/s 80-IB where the residential buildings No. 3,4,7 and 8 have been discussed. Therefore, once a query is raised during the assessment proceedings and Assessee has replied to it, it follows that the query raised was the subject of consideration of the AO while completing the assessment. Moreso, when the assessment order contains reference and/or discussion to disclose its satisfaction in respect of the query raised. Therefore, there can be no doubt in the present facts that the deduction claimed u/s 80-IB was a subject matter of consideration by the AO during the original assessment proceedings leading to passing of the assessment order. Therefore, the reopening of the assessment by the impugned notice is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings leading to the order dated 25th March 2013. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Decided in favour of assessee.

Summary

Issues involved:
The issues involved in the judgment are related to the reopening of the assessment for Assessment Year 2010-11 under Section 147 of the Income Tax Act, 1961 based on the belief that income has escaped assessment. The key contention is whether the notice issued for reopening the assessment was justified and whether there was tangible material before the Assessing Officer to reopen the assessment.

Assessment Year 2010-11 Reopening:
The Petitioner, a partnership firm engaged in construction activities, filed a return of income for AY 2010-11 declaring income and claiming deduction under Section 80-IB(10) of the Income Tax Act. The scrutiny assessment was completed, determining total income. Subsequently, a notice was issued under Section 148 stating that income has escaped assessment. Reasons for the notice included the failure to complete the housing project by the required date, exceeding the built-up area limit, and not meeting conditions for claiming deduction under Section 80IB(10) of the Act.

Change of Opinion Argument:
The Petitioner argued that the notice for reopening the assessment was a clear case of change of opinion and did not justify the belief that income had escaped assessment. The Respondent, on the other hand, contended that the notice was issued within the prescribed timeframe and emphasized the requirement of tangible material before reopening the assessment.

Judgment and Conclusion:
The Court observed that the impugned notice for reopening the assessment was based on a change of opinion by the Assessing Officer from the original assessment proceedings. The assessment order already considered and discussed the details of the project, the deduction claimed under Section 80-IB, and the relevant buildings. As the query raised during the original assessment was responded to by the Petitioner, it was deemed to have been considered by the AO. Therefore, the reopening of the assessment solely on the basis of a change of opinion was deemed unjustified. Consequently, the assessment order was quashed and set aside, granting the relief sought in the petition through a Writ of Certiorari under Article 226 of the Constitution of India.

This summary provides a detailed overview of the issues involved in the judgment, the arguments presented by both parties, and the ultimate conclusion reached by the Court regarding the reopening of the assessment for Assessment Year 2010-11.