TMI Blog2013 (1) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent-Income Tax Officer seeking to reopen the assessment for the A.Y. 2005-2006 was, therefore, beyond his powers and, was illegal. As a result, the impugned notice dated 18.03.2011 under section 148 issued by the respondent is hereby set aside. In favour of assessee - Special Civil Application No. 16872 of 2011 - - - Dated:- 28-9-2012 - V.M. Sahai and N.V. Anjaria, JJ. Mrs. Swati Soparkar for the Petitioner. Pranav G. Desai for the Respondent. JUDGMENT N.V. Anjaria, J. - By way of present petition under Article 226 of the Constitution, the petitioner-assessee questioned the legality of assumption of jurisdiction by respondent-Income Tax Officer under section 147 read with section 148 of the Income-tax Act, 1961, and prayed to quash and set aside notice dated 18.03.2011 issued by the respondent to reopen the assessment for Assessment Year 2005-2006 2. Setting out the relevant facts of the case, the petitioner-assessee was engaged in the business of development and construction of real estate. The petitioner developed a housing project known as 'Sheth Nagar' at Jamnagar road, Rajkot. In the return of income for Assessment Year 2005-2006 filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopened under section 147 of the Act for bringing the escaped income amounting to Rs. 11,50,649/- under tax net. I have, therefore, reasons to believe that the income assessable to tax has escaped assessment within the meaning of section 147 of the Act for A. Y. 2005-2006. Issue notice under section 148 of the Act." 3.1 From the above, it could be seen that the sole ground for reopening the Assessment was that the deduction under section 80-IB(10) was wrongly claimed by the petitioner. It would be worthwhile to consider the provisions section 80-IB(10) as they stood in the accounting year in question being 2004-2005. It reads as under : "(10) The amount of profits in case of an undertaking developing and building housing projects approved before the 31st day of March, 2005 by a local authority, shall be hundred per cent of the profits derived in any previous year relevant to any assessment year from such housing project if,- (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998; (b) the project is on the size of a plot of land which has a minimum area of one acre; and (c) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed 5% under sub-clause (d) of Section 80 IB (10), learned senior counsel submitted that the said clause was inserted in the statute book by the Finance Act, 2004 w.e.f. 1.4.2005. According to his submission, the same was not applicable to the housing project of the petitioner which was approved before 1.4.2005. It was submitted that deduction was allowed by the Assessing Officer as per the Assessment Order dated 5.12.2007 after considering all the material facts which were before him, and impugned notice was based on a mere change of opinion. 4.2 Learned Senior counsel relied on decision of this Court in Gujarat Fluorochemicals Ltd. v. Dy. CIT [2009] 319 ITR 282 to submit that the Assessing Officer in his notice issued under section 148 did not say that he had reason to believe that the assessee had not disclosed fully and truly all material facts at the time of Assessment. A decision of this Court in Ketan Construction Ltd. v. Dy. CIT [SCA 14250 of 2010, dated 28-10-2010] was relied on for the proposition that the reasons recorded did not reflect anything on the basis of which it could be inferred that there was failure on the part of the assessee to disclose the materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctness of the reasons recorded for reopening are not subject to judicial review. 5. Having considered the facts on record and the contentions canvassed by both the sides in the context, admittedly, the reopening of the assessment for Assessment Year 2005-2006 was after a period of four years from the end of the relevant assessment year. The powers of the Assessing Officer to reopen a concluded assessment flow from section 147 of the Act. The section provides for assessment of income which has escaped the assessment. When it comes to the reopening after expiry of four years from end of the relevant assessment year, first the Proviso to section 147 finds operation. Proviso to section 147 reads as under : "Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- and the expenditure claimed on material, labour and other expenses at Rs. 44,12,139/- thereby leaving the gross profit at Rs. 21,05,861/- .." 5.4 Thereafter, the Assessing Officer assessed the income of the petitioner in para 6 of the Assessment Order in the following manner. Rs. Rs. Total income as per statement of income 11,70,128/- Add: Addition on account of profit on sale of shops as discussed in para 3 4 above 26000/- Add: Disallowed out of Administrative expenses as discussed at para 5 above 15000/- 41,000/- 12,11,128/- Less : Profit on sale of shops as discussed at para 3 4 45,479/- 11,65,649/- Less : Deductioin under section 80IB @ 100% of profit on sale of Tenaments 11,65,449/- Total income NIL Add : Profit on sale of shops as discussed at para 3 4 above 45479/- Total Income Assessed 45,479/- Computation of Book Profits as per provisions of Section 115JB of the IT Act 11,70,128/ - 7.5% of Book Profit of Rs. 11,70,128/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the lease agreement. In that context, the Supreme Court observed that the primary fact in the case was the lease agreement entered into by the appellant-assessee with Maharao of Kotah State, which was placed before the Income tax Officer at the time to original assessment, and it was not the duty of the assessee to draw attention of the Income tax officer to any particular clause or portion of the document and invite him to draw any particular inference therefrom. The Supreme Court held that the expression "material facts" refers to only primary facts. It was observed that "there is not duty cast on the assessee to indicate or draw attention of the Income Tax Officer to what factual, legal or other inference can be drawn from the primary facts disclosed." 7. The nature of duty on the part of the assessee to disclose the necessary facts, and the Assessing Officer's enjoinment towards the facts disclosed are thus well settled in law. Applying the primary facts disclosed, the assessing officer may draw inferences. He may deduce certain other facts from the facts disclosed. He may even call for certain additional facts as may may be required by him for the purpose of his assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was on the same ground of deduction in question having been wrongly claimed. Even on demurer, and in any view, as observed by the Supreme Court in ARM Group Enterprises Ltd. v. Waldorf Restaurant [2003] 6 SCC 423, that "there can be no admission on a question of law to be held as binding on the appellant." Decision in Naginimara Veneer Saw Mills (P.) Ltd. (supra) relied on by learned advocate was in different set of facts where the assessment was sought to be reopened on the basis of the statement made by the Chief Executive of the assessee company in course of hearing of assessee's case in the subsequent assessment year, on the basis of which the Assessing Officer had a reason to believe that the assessee had "suppressed stock" in the previous assessment year. Raymond Woollen Mills Ltd. (supra) next relied on behalf of the respondent was on the principle that sufficiency of correctness of the reasons for reopening could to be subject to judicial review which is not the case here. 9. In support of the contention that the requirement under Section 80-IB(10) would not apply to the project of the petitioner, which was approved before 31.3.2005, learned senior counsel invited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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