S. 148 – Reopening of assessment – Within 4 years – original assessment completed u/s. 143(3) – Change of opinion on the same set of facts – Not permissible

S. 148 – Reopening of assessment – Within 4 years – original assessment completed u/s. 143(3) – Change of opinion on the same set of facts – Not permissible

The petitioner challenged the notice dated 12th December, 2007 issued u/s 148 of the Act, on the ground, inter-alia, that respondents are relying on the same material to take a different view. The Assessing Officer had passed the assessment order dated 17th March, 2005, and conclusively took one view. Therefore, it could not be open to reopen the assessment based on the very same material with a view to take another view.

The reasons for issuing notice u/s 148 is contained in a communication dated 27th December, 2007 and the same reads as under:-
“On close scrutiny of the assessment record, it is observed that the assessee company has claimed deduction u/s. 80IB(10) as it is engaged in the development and building approved housing project. Contrary to the provisions of the statute, the housing project includes shops. As a result, the company is not entitled to deduction u/s. 80IB(10). In the light of the aforesaid fact that I have reason to believe that the granting of deduction u/s. 80IB(10) of Rs.1,42,50,816/- has resulted escapement of income within the meaning of Section 147.”

In the assessment order itself, it was recorded that a show-cause notice was issued on 17th January, 2005 requiring the assessee to substantiate the claim of deduction. In paragraph 7.1 of the assessment order, it was recorded that the petitioner has filed detailed submissions vide letter dated 10th March, 2005 and has shown cause as to why it was entitled to the claim of deduction under section 80IB(10).

It is settled law that the Assessment Officer has no power to review an assessment that has been concluded. The Assessing Officer, before he passed the assessment order, had in his possession all primary facts necessary for assessment and then he made the original assessment. When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled to a change of opinion to commence proceedings for reassessment. Where on consideration of the material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view.

The Court observed that this is not a case where the assessment is sought to be reopened on the reasonable belief that income had escaped the assessment on account. This is a case wherein the assessment is sought to be reopened on account of change of opinion of the Assessing Officer about the manner of computation of deduction under section 80IB(10) of the Act.

The Court was satisfied that not only material facts were disclosed to the petitioner truly and fully, but they were carefully scrutinized, and figures of income, as well as deduction, were viewed carefully by the Assessing Officer.

In the circumstances, the petition was allowed and the notice under section 148 of the Act, dated 12th December, 2007, was quashed.