2007 (12) TMI 131 - HC - Income Tax

Assessee had not correctly disclosed the actual assets of the plot used for construction to claim deduction u/s 80-IB(10) failure to disclose material facts required for assessment - merely because the information was contained in annexures by itself cannot be said to be disclosure of information case is covered under Explanation 2(c)(iv) of section 147 - reasonable belief that income had escaped assessment so reassessment notice even after 4 years is valid

Issues:
1. Reopening of assessment under section 147 of the Income-tax Act, 1961 based on alleged income escaping assessment.
2. Validity of the reasons recorded for reopening the assessment.
3. Disclosure of information by the assessee and the Assessing Officer's formation of opinion.
4. Interpretation of requirements for claiming deduction under section 80-IB(10) regarding the size of the plot of land.
5. Application of Explanation 2(c)(iv) of section 147 of the Act.
6. Assessment of whether there was a failure to disclose full and true relevant information by the petitioner.
7. Consideration of extraordinary jurisdiction of the court and granting of stay.

Analysis:

1. The case involves a notice served under section 148 of the Income-tax Act, 1961, stating that income had escaped assessment for the assessment year 2001-02. The petitioner challenged the reopening of assessment, arguing that all information was available before the Assessing Officer and no income had escaped assessment. The petitioner cited relevant judgments to support their case.

2. The Revenue contended that the petitioner did not disclose the true size of the plot, which is a requirement for claiming deduction under section 80-IB(10). The formation of the Assessing Officer's opinion was questioned, relying on the touchstone of reasonable belief as per legal precedents.

3. The court examined the requirement for claiming benefit under section 80-IB, emphasizing the minimum size of the plot of land. It was noted that the petitioner's declaration mentioned a size higher than one acre, but discrepancies were found in the information provided. The court considered whether the reasons recorded for issuing the notice were valid.

4. The court analyzed the information contained in annexures and the valuation report regarding the plot of land. It was observed that the size of the plot and the construction activities were crucial factors in determining the eligibility for deduction under section 80-IB(10).

5. The court referred to Explanation 2(c)(iv) of section 147 of the Act in assessing the adequacy of information disclosure by the petitioner. It was highlighted that the failure to disclose the exact size of the plot at the time of new construction commencement could impact the assessment of income escaping.

6. Considering legal tests laid down by the Supreme Court, the court evaluated whether the Assessing Officer had a prima facie reason to believe that income had escaped assessment. The court found that there was no true and full disclosure by the petitioner, leading to the dismissal of the petition.

7. In conclusion, the court dismissed the petition, ruling that there was no merit in the petitioner's case due to inadequate disclosure. The application for stay was also rejected, emphasizing that it was not a fit case for granting a stay order.

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