By K. B. Bhujle | Advocate
New Page 1
Not Reported
:
50 Reassessment: Proviso to S. 147 and 148 of I. T. Act,
1961: A. Y. 2002-03: Assessment u/s. 143(3): Notice u/s. 148 beyond 4 years:
Conditions not satisfied: Notice invalid:
[Bhavesh
Developers Vs. AO (Bom); W. P. No. 2580 of 2009 dated 12/01/2010]
The petitioner assessee was engaged in the business of
developing and constructing buildings. The petitioner was entitled to deduction
u/s. 80-IB(10) of the Income-tax Act, 1961 and the same was granted by the
Assessing Officer. For the A. Y. 2002-03 the Assessing Officer had passed the
assessment order u/s. 143(3) of the Act on 17/01/2005 allowing deduction of Rs.
3,85,75,992/- u/s. 80-IB(10) of the Act. Subsequently, he issued a notice u/s.
148 dated 30/03/2009 for reopening the assessment. The following reasons were
recorded for reopening the assessment:
“On verification of case records, it is seen that the
assessee is claiming deduction u/s. 80-IB for an amount of Rs. 3,85,75,992/-.
However, as per details filed and P & L A/c. it is further observed that during
the year assessee has other income of Rs. 50,13,307/- which mainly comprises of
society deposit of Rs. 47,80,517/-, stilt parking Rs. 1,25,000/- and Sundry
Credit Balances of Rs. 1,07,712/-. Since this income does not qualify as the
income eligible for deduction u/s. 80-IB, I have reason to believe that the
income to this extent has escaped assessment and it is a fit case for issuing
notice u/s. 148 of the I. T. Act, 1961.”
The Bombay High Court allowed the writ petition challenging
the validity of the notice and held as under:
“i) In support of the claim for deduction u/s. 80-IB(10),
the assessee had placed certain material before the Assessing Officer. The
material that was filed with the return of income included a duly filled up
Form 10CCD. The form contained details as specified, including item 19, the
total sales of the undertaking; in item 21, the profits and gains derived by
the undertaking from the eligible business; and, in item 22, disclosed that
the deduction has been claimed under sub-section (10) of section 80-IB. The
form was certified by a Chartered Accountant. The statement of total income
and the balance sheet as on 31st March 2002 was appended to the return. The
profit and loss account for the year ending 31st March 2002 contained a
disclosure of other income in the amount of Rs. 50,13,307.16. Schedule G to
the Balance Sheet contains a break-up of the other income of Rs. 50.13 lakhs.
In addition to this disclosure, during the course of the assessment
proceedings, a letter was addressed on behalf of the assessee, by its
Chartered Accountant to the Assessing Officer. The letter inter alia contains
an explanation of the other income as reflected in the profit and loss
account. The assessee also furnished to the Assessing officer a statement of
sales and other income for each wing and for the flats comprised in the
construction as of 31st March 2002.
ii) In this background, it would be necessary to scrutinize
the basis on which a notice was issued u/s. 148 for reopening the assessment.
Ex-facie, the reasons which have been disclosed to the assessee would show
that the inference that the income has escaped assessment is based on the
disclosure made by the assessee itself. The reasons show that the finding is
based on the details filed by the assessee and from the profit and loss
accountant. Quite clearly, therefore, it was impossible for the Assessing
Officer to even draw the inference that there was a failure on the part of the
assessee to disclose fully and truly all material facts necessary for his
assessment for A. Y. 2002-03.
iii) Significantly, the reasons that have been disclosed to
the assessee do not contain a finding to the effect that there was a failure
to fully and truly disclose all necessary facts, necessary for the purpose of
assessment. In these circumstances, the condition precedent to a valid
exercise of the power to reopen the assessment, after lapse of four years from
the relevant Assessment Year, is absent in the present case.”
