Case Note & Summary
The petitioner, M/s. Poonam Builders, an Association of Persons (AOP) engaged in construction business, completed a residential project named 'Harsh Vihar' at Mira Road, Thane during the financial year 2007-2008. For the Assessment Year 2008-2009, the petitioner filed its return of income on 30th September 2008 under Section 139(1) of the Income Tax Act, 1961, claiming a deduction of Rs.4,47,30,649/- under Section 80-IB(10) of the Act. The return was processed under Section 143(1). Subsequently, a search action under Section 132 was conducted on some entity, and pursuant thereto, a notice under Section 153C was issued to the petitioner on 2nd August 2010. In response, the petitioner filed a return declaring nil income after claiming the same deduction. An assessment order under Section 153A/C was passed on 29th October 2010 denying the deduction under Section 80-IB. The petitioner appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who by order dated 30th March 2015 allowed the appeal and set aside the denial of deduction. However, on the very next day, i.e., 31st March 2015, the Assessing Officer issued a notice under Section 148 of the Act seeking to reopen the assessment for A.Y. 2008-09 on the same issue of deduction under Section 80-IB(10). The petitioner challenged this notice by way of a writ petition under Article 226 of the Constitution. The court, after hearing the parties, found that the reasons recorded for reopening were based on the same issue that had already been decided by the CIT(A) in favour of the assessee. The court held that the reopening was a mere change of opinion and was hit by the third proviso to Section 147 of the Act, which bars reopening if the issue was already considered and decided in appellate proceedings. Consequently, the court quashed the impugned notice dated 31st March 2015 and allowed the petition.
Headnote
A) Income Tax - Reassessment - Section 147, 148, Income Tax Act, 1961 - Change of Opinion - The impugned notice under Section 148 was issued on the same issue which was subject matter of appeal before CIT(A) and was decided in favour of the assessee. The court held that the reopening is based on a mere change of opinion and is hit by the proviso to Section 147, as the Assessing Officer had no fresh tangible material to justify reopening. (Paras 1-5) B) Income Tax - Deduction under Section 80-IB(10) - Section 80-IB(10), Income Tax Act, 1961 - Validity of Reopening - The assessee had claimed deduction under Section 80-IB(10) which was initially denied in assessment under Section 153C but was allowed by CIT(A) on 30th March 2015. The reassessment notice issued on 31st March 2015 on the same ground was held to be invalid as it amounted to reviewing the appellate order without any change in circumstances. (Paras 2-5)
Issue of Consideration
Whether the notice dated 31st March 2015 issued under Section 148 of the Income Tax Act, 1961 for reopening assessment for A.Y. 2008-09 is valid when the same issue was already decided by the CIT(A) in favour of the assessee.
Final Decision
The court allowed the writ petition and quashed the notice dated 31st March 2015 issued under Section 148 of the Income Tax Act, 1961 for A.Y. 2008-09. Rule made absolute.
Law Points
- Reassessment notice under Section 148 is invalid if based on change of opinion
- Section 147 proviso bars reopening when issue already decided by appellate authority
- Section 80-IB(10) deduction claim cannot be reopened after CIT(A) allowed it
