2024 (7) TMI 794 - HC - Income Tax

Reopening of assessment - notice beyond period of four years - deduction u/s 80IA(4) - HELD THAT - The observation of the AO in the reasons recorded are based on the assessment records comprising Profit and Loss account, Balance-sheet, Tax audit report, Form 10CCB provided by the petitioner. There is no case of the respondent that the petitioner did not submit full details pertaining to the claim for deduction under section 80IA. On the contrary, the petitioner along with the return, filed on statutory declaration in Form 10CCB, audited accounts and as such there is no failure on the part of the petitioner to fully and truly disclose all material facts relevant for the assessment. The reasons recorded for reopening would amount to mere change of opinion of the respondent without there being any live link or nexus with the material relied upon as during the regular assessment proceedings. AO had examined the claim u/s 80IA(4)(iv) in detail by raising various queries which were duly answered by the petitioner-assessee. It is true that the specific query with regard to the issue pertaining to claim under section 80IA on account of amalgamation may not have been under consideration of the AO however, the entire claim made by the petitioner for deduction u/s 80IA was before the AO which was processed while passing the assessment order u/s 143(1)(3) of the Act. Notice for reopening issued beyond the period of four years cannot be sustained. In that view of the matter, it is not necessary to examine the rival contention with respect to validity or otherwise of the claim for deduction under section 80IA(4)(iv) of the Act. Decided in favour of assessee.

Issues Involved:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 for reopening the assessment.
2. Whether there was a failure on the part of the petitioner to fully and truly disclose all material facts necessary for assessment.
3. Applicability of sub-sections (12) and (12A) of Section 80IA of the Income Tax Act, 1961.
4. Whether the reopening of assessment amounts to a mere change of opinion.

Detailed Analysis:

1. Validity of Notice Issued under Section 148:
The petitioner challenged the notice dated 19.03.2020 issued under Section 148 of the Income Tax Act, 1961 for the Assessment Year (A.Y.) 2014-15. The petitioner argued that the notice was issued beyond the period of four years and there was no failure on their part to fully and truly disclose all material facts necessary for the assessment. The court observed that the Assessing Officer (AO) had already scrutinized the petitioner’s claim for deduction under Section 80IA(4)(iv) during the original assessment proceedings and had passed an assessment order under Section 143(3) on 30.11.2016.

2. Full and True Disclosure of Material Facts:
The petitioner contended that during the regular assessment proceedings, they had provided all necessary details, including the tax audit report, audited annual accounts, and Form 10CCB, which supported their claim for deduction under Section 80IA(4)(iv). The court noted that there was no case made by the respondent (Income Tax Department) that the petitioner had failed to submit full details pertaining to the claim for deduction. The court concluded that the petitioner had fully and truly disclosed all material facts relevant for the assessment.

3. Applicability of Sub-sections (12) and (12A) of Section 80IA:
The respondent argued that the petitioner had claimed the deduction under Section 80IA(4)(iv) contrary to the provisions of the Act, as the eligible enterprise was transferred in the scheme of amalgamation after 01.04.2007, which disqualified the petitioner from claiming the deduction. The petitioner countered this by stating that the deduction was claimed post-amalgamation and was never claimed by the amalgamating company prior to the amalgamation. The court, however, did not delve deeply into the merits of this issue, given its conclusion on the primary issue of reopening.

4. Reopening of Assessment as a Mere Change of Opinion:
The court held that the reasons recorded for reopening amounted to a mere change of opinion by the respondent without any new material or information coming into possession after the original assessment order was passed. The court emphasized that the AO had already examined the claim under Section 80IA(4)(iv) in detail during the original assessment proceedings. Hence, the reopening of the assessment beyond the period of four years was not justified.

Conclusion:
The court quashed and set aside the impugned notice dated 19.03.2020 under Section 148 of the Act and the consequential order rejecting the objections. The court ruled that the reopening of the assessment was not sustainable as it was based on a mere change of opinion without any new tangible material. The petition was allowed, and the rule was made absolute to the extent mentioned, with no order as to costs.

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