GULMOHAR RESIDENCY V. ASSISTANT COMMISSIONER OF INCOME TAX,

SCA/2121/2015

AI Insights

The case involves Gulmohar Residency, the petitioner, who challenged the reopening of their income tax assessment for the Assessment Year 2009-10 by the Assistant Commissioner of Income Tax, the respondent. The reopening was based on the grounds that the petitioner had incorrectly claimed a deduction under section 80IB(10) of the Income Tax Act, 1961, which resulted in underassessment of income. The High Court examined whether the reopening of the assessment constituted a change of opinion by the Assessing Officer, which would render the reopening invalid. The court concluded that since the issue had been previously addressed and the deduction allowed after thorough scrutiny, the subsequent reopening was indeed a change of opinion and thus not permissible.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 768250 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 27-04-2015
• Assessment Year: misc
• Other Referred Cases: Calcutta Discount Company Limited Vs. ITO, Garden Silk Mills Limited Vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: PRANAV DESAI
• Assessee Lawyers: B S SOPARKAR
• Keywords: Assessment Year 2009-10; Change of opinion; Deduction under Section 80IB(10); Income Tax; Reopening of assessment
• Section: 147; 148; 143(3); 142(1); 143(2); 234B; 80IB(10)

Judgement Text

"C/SCA/2121/2015 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 2121 of 2015 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE S.H.VORA =========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? ================================================================ GULMOHAR RESIDENCY....Petitioner(s) Versus ASSISTANT COMMISSIONER OF INCOME TAX,....Respondent(s) ================================================================ Appearance: MR B S SOPARKAR, ADVOCATE for the Petitioner(s) No. 1 MR PRANAV G DESAI, ADVOCATE for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE S.H.VORA Date : 27/04/2015 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 10 C/SCA/2121/2015 JUDGMENT 1. By way of this petition under Article 226 of the Constitution of India, the petitioner – assessee has prayed for appropriate writ, direction and/or order to quash and set aside the impugned notice dated 27.8.2013 (Annexure A) under section 148 of the Income Tax Act (for short “the Act”), by which the Assessing Officer has reopened the assessment for the AY 2009-10. 2. That the petitioner engaged in the business of developing and building of housing project filed its return of income on 25.9.2009 declaring total income at Rs. NIL for deduction of Rs.5,02,32,358/- under Chapter VI – A under section 80IB(10) of the Act. That the return was selected for scrutiny and notice u/s 143(2) of the Act was issued and duly served upon the petitioner. It appears that further notice u/s 142(1) of the Act along with questionnaire was also issued to the petitioner. It is averred in the petition that during the course of the assessment proceedings, details of advances from the customers, TDS details, copy of layout plan approved by the local authority and commencement certificate of the housing project issued by the local authority, details of fulfillment of conditions for claim under section 80IB of the Act in form No.10CCB were also called for and duly provided by the petitioner to the Assessing Officer. That thereafter, the Assessing Officer framed assessment order under section 143(3) of the Act on 29.12.2011 allowing deduction claimed by the assessee under section 80IB(10) of the Act. 2.1 That thereafter, the petitioner has been served with the impugned notice under section 148 of the Act, by which assessment for AY 2009-10 has been reopened stating that the Page 2 of 10 C/SCA/2121/2015 JUDGMENT income chargeable to tax has escaped the assessment within the meaning of section 147 of the Act. That at the instance of the respondent, vide communication dated 23.9.2014, the petitioner has beens served with the reasons recorded for reopening of the assessment under section 147 of the Act. From the reasons recorded, it appears that the assessment for AY 2009-10 is reopened on the ground that the assessee had obtained approval of the local authority in November, 2004 for the first time for 155 units and out of which, 99 units were completed from 11.11.2008 to 16.8.2010 and since the assessee has failed to fulfill the conditions laid down in the provisions of the Act, he was not entitled for the deduction under section 80IB(10) of the Act and therefore, incorrect allowance of deduction had resulted in under assessment of income of Rs.5,02,32,358/- involving charge leviable of tax of Rs.2,27,08,391/- including interest of Rs.56,34,412/- under section 234B of the Act and therefore, chargeable to that extent has escaped the assessment. 2.2 That on receipt of the reasons recorded for reopening of the assessment, the petitioner submitted the objections against initiation of the action under section 47 of the Act vide communication dated 5.11.2014. That by communication dated 15.1.2015, the Assessing Officer had disposed of/overruled the objections raised by the petitioner against reopening of the assessment for the year under consideration. Hence, the petitioner has preferred the present Special Civil Application under Article 226 of the Constitution of India challenging the reopening of the assessment for AY 2009-10 and challenging the impugned notice under section 148 of the Act. Page 3 of 10 C/SCA/2121/2015 JUDGMENT 3. Shri Soparkar, learned advocate appearing on behalf of the petitioner has vehemently submitted that the impugned notice under section 148 of the Act and reopening of the assessment for AY 2009-10 for the reasons recorded is absolutely illegal and invalid. 3.1 It is submitted by Shri Soparkar, learned advocate appearing on behalf of the petitioner that reopening of the assessment for AY 2009-10, for the reasons recorded is nothing but a change of opinion by the Assessing Officer and therefore, on change of opinion by the Assessing Officer, the reassessment is not permissible. 3.2 It is submitted that the claim with respect to the deduction under section 80IB(10) of the Act claimed by the assessee came to be verified and considered in detail after specific question and thereafter, the Assessing Officer having satisfied with the explanation given by the assessee allowed the deduction under section 80IB(10) of the Act. It is submitted that therefore, initiation of reassessment proceedings/reopening of the assessment on the same ground is nothing but a change of opinion and therefore, in light of the decision of the Hon'ble Supreme Court in the case of Calcutta Discount Company Limited Vs. ITO reported in (1961) 41 ITR 191 SC and decision of the Division Bench of this Court in the case of Garden Silk Mills Limited Vs. CIT (1996) 222 ITR (Gujarat), the same is not permissible. 3.3 Making the above submissions and relying upon the decision, it is requested to allow the present Special Civil Page 4 of 10 C/SCA/2121/2015 JUDGMENT Application. 4. Present petition is opposed by Shri Pranav G. Desai, learned advocate appearing on behalf of the revenue. An Affidavit-in-reply is filed on behalf of the respondent opposing the present petition. It is vehemently submitted by Shri Desai, learned advocate appearing on behalf of the respondent that as such, the Assessing Officer was of the opinion that the income chargeable to tax has escaped assessment as though the assessee was not entitled to deduction under section 80IB(10) of the Act due to non- fulfillment of the conditions laid down in the provisions of the Act and the deduction under section 80IB(10) of the Act was wrongly allowed by the Assessing Officer, the Assessing Officer has rightly reopened the assessment to withdraw the wrong claim of the deduction under section 80IB(10) of the Act. 4.1 It is submitted that reopening of the assessment by the Assessing Officer is after having opined and satisfied that the assessee wrongly claimed the deduction under section 80IB(10) of the Act and the Assessing Officer wrongly granted the said benefit and the assessment is reopened after recording the reasons for the same and even the objections raised by the petitioner has been dealt with by the Assessing Officer. It is submitted that therefore, the reopening of the assessment by the Assessing Officer in exercise of the powers under section 147 of the Act and the impugned notice under section 148 of the Act is absolutely just and proper. Therefore, it is requested to dismiss the present petition. Page 5 of 10 C/SCA/2121/2015 JUDGMENT 5. Heard learned advocates appearing on behalf of the respective parties at length. 6. At the outset, it is required to be noted that in the present case, the assessment for AY 2009-10 is reopened in exercise of powers under section 147 of the Act and the reasons recorded for reopening of the assessment by the Assessing Officer reads as under: Reasons recorded for re-opening of assessment u/s 147 of the I.T. Act, 1961. In this case, the assessee filed return of income on 29/09/2009 declaring total income Rs. Nil and assessment u/s 143(3) was finalized on 29/12/2011 determining total income at Rs.Nil. 2. IT was observed that the assessee had obtained approval of the local authority in November-2004. for the first time for 155 units. Out of 99 units were completed as under: Residential units Date of completion 83 11/11/2008 10 24/04/2009 06 16/08/2010 Since the assessee failed to fulfill the condition laid down in the provisions of the Act, he was not entitled for the deduction under section as stated above. In correct allowance of deduction had resulted in under assessment of income of Rs.5,02,32,358/- involving the short levy of tax Rs.2,27,08,391/- including interest of Rs.56,34,412/- u/s 234B of the Act. Therefore, the chargeable to that extent has escaped the assessment.” 6.1 Further, it is required to be noted that while filing the Page 6 of 10 C/SCA/2121/2015 JUDGMENT return of income, the assessee claimed the deduction under section 80IB(10) of the Act of Rs.5,02,32,358/-, the return was selected for scrutiny and notice under section 143(2) of the Act was issued. A further notice under section 143(1) of the Act along with questionnaire was also issued to the petitioner. It appears from the course of the assessment proceedings, the details with respect to the completion of the housing project and more particularly, copy of the layout plan approved by the local authority and commencement certificate of the housing project issued by the local authority and details of fulfillment of conditions for claim under section 80IB of the Act in form No.10CCB were also called for and the assessee duly provided the same to the Assessing Officer. That the Assessing Officer also issued show cause notice dated 23.12.2011 to the assessee, by which the assessee was called upon to show cause why the deduction claimed under section 80IB(10) of the Act may not be disallowed. The show cause notice dated 23.12.2011 reads as under: “2. You are aware that assessment proceedings for the AY 2009-10 are in progress in your case. In this context, certain discrepancies were noticed in your case, which are as here below:— (a) As per the Layout plan submitted by you, 155 plots were earmarked for building residential units. However, it is noticed that Building Development Permission was obtained in two phases, dated 22/08/2006 and 16/10/2006 (for 104 units) and Completion Certificate (Building Use Permission) was obtained for only 102 residential units in two phases; dated 11/11/2u08 and 24/04/2009. The remaining plots remained vacant. (b) Inspector of this circle was deputed for site visit. During site visit of the inspector, it was noticed that still work was underway in about 38- 40 units and for which Building Use Permission Page 7 of 10 C/SCA/2121/2015 JUDGMENT was not obtained. (Photographs enclosed as evidence) As the result of the above, it can be concluded that the project has not been completed within four years of approval by Local Authority. (C) The project should have been on a single plot of land which has a minimum area of one acre. in the instant case, it is noticed that you have brought together 04 different pieces of land, all individually admeasuring less than one acre of area. The same is also verifiable from the Layout Plan, wherein, the different plots on which project of \"Gulmohar Residency\" was started has been numbered “657,115,116, 640, 641 & 642\". Further, section 80lB(10)(b) of the l.T. Act, 1961 envisages that “the project is on the size of a plot of land which has a minimum area of one acre: 3. You are hereby show caused as to why the deduction claimed by you u/s.80/B(10) of the income Tax Act, 1961 of Rs.5,02,32,358/- should not be disallowed for the reasons mentioned here above and added back to your total income. 4, You are requested to file your reply to the above queries at 11:00 AM on 27/12/2011. Please note that if nothing is heard from your end, it shall be presumed that you have nothing to say in the matter and assessment shall be finalized accordingly. Please note that no further adjournments will be granted. This may be treated as notice u/s. 142(1) of the learned Tribunal Act, 1961.” 6.2 That the assessee replied to the said show cause notice by letter dated 27.12.2011 and submitted that because of the stay granted by the High Court, the project could not be completed within the stipulated time provided under the Act. The assessee submitted detailed explanation/clarifications with respect to its claim of deduction under section 80IB(10) of the Act. That thereafter, having accepted the submissions/ clarifications by the assessee, the Assessing Officer while Page 8 of 10 C/SCA/2121/2015 JUDGMENT finalizing the original assessment, allowed the deduction under section 80IB(10) of the Act as claimed by the assessee. In view of the above, subsequent reopening of the assessment on the very ground can certainly be said to be a change of opinion by the Assessing Officer and in view of the catena of the decision of the Hon'ble Supreme Court as well as this Court including in the case of Calcutta Discount Company Limited (supra), mere on change of opinion, the reopening of the assessment is not permissible. As observed herein above, the Assessing Officer specifically raised the query with respect to the deduction claimed under section 80IB(10) of the Act and after due application of mind, the Assessing Officer allowed the deduction under section 80IB(10) of the Act as claimed by the assessee. 6.3 In view of above, the reopening of the assessment for AY 2009-10 is nothing but a change of opinion of the Assessing Officer and the same is not permissible. 7. Under the circumstances, on the aforesaid ground alone, the present petition deserves to be allowed and the impugned Notice under section 148 of the Act deserves to be quashed and set aside. 8. In view of the above, the petition succeeds. The impugned notice (Annexure A) under section 148 of the Act to reopen the assessment for AY 2009-10 is hereby quashed and set aside. Consequently, the assessment for AY 2009-10 stands quashed and set aside. Rule is made absolute to the aforesaid extent. No costs. Page 9 of 10 C/SCA/2121/2015 JUDGMENT (M.R.SHAH, J.) (S.H.VORA, J.) shekhar Page 10 of 10 "