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2015 (8) TMI 721 - GUJARAT HIGH COURT

2015 (8) TMI 721 - GUJARAT HIGH COURT - TMI - Reopening of assessment - petitioner assessee was not entitled to the deduction under Section 80IB(10) - Held that:- While finalizing original assessment under Section 143(3) of the Act, the AO along with notice under Section 142(1) of the Act sent questionnaire to the petitioner, more particularly, with respect to deduction claimed under Section 80IB of the Act by the assessee and to which petitioner assessee supplied necessary details as required b .....

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al and invalid. - Decided in favour of assessee. - Special Civil Application No. 3806 of 2015 - Dated:- 5-5-2015 - M. R. Shah And S. H. Vora, JJ. For the Appellant : Mr SN Divatia, Adv. For the Respondent : Mr KM Parikh, Adv. JUDGMENT ( Per : Honourable Mr. Justice M. R. Shah ) 1.0. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for an appropriate writ, direction and order to quash and set aside the impugned notices dated 29.03.2014 and 31.03.20 .....

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the present Special Civil Application in nutshell are as under: 2.1. That the assessee filed his return of income for AY 2009-10 declaring total income at ₹ 15,69,994/- after claiming deduction under Section 80IB(10) of the Act of ₹ 77,41,250/-. That the return of income was selected for scrutiny. Detailed questionnaire also asked by the AO more particularly, with respect to deduction under Section 80IB (10) of the Act claimed by the petitioner-assessee. That the petitioner responde .....

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8 of the Act for AY 2009-10 proposing to reassess the total income. That in response to the said notice, the petitioner by letter dated 3.4.2014 requesting the AO to treat the return file on 13.08.2009 in response to the impugned notices under Section 148 of the Act and also sought copy of reasons recorded for reopening, vide communication dated 3.4.2014. That after a period of approximately four months, the petitioner has been served with the reasons recorded on 29.03.2014, along with letter da .....

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on and therefore, to reopen the said issue in exercising the powers under Section 147 of the Act is nothing but change of opinion of the AO and therefore, reopening is not permissible. 2.2. That vide communication dated 2.1.2015 the AO has disposed of the said objection raised by the petitioner assessee to the reopening of the assessment and has overruled the same. Hence, the petitioner has preferred present Special Civil Application under Article 226 of the Constitution of India challenging the .....

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that though the petitioner assessee was not entitled to the deduction under Section 80IB(10) of the Act of ₹ 77,41,250/-, the AO had allowed the same and therefore, the income of amounting to ₹ 77,41,250/- has escaped assessment. It is submitted that as such the deduction claimed by the assessee under Section 80IB(10) of the Act of ₹ 77,41,250/- came to be considered by the AO in detailed. It is submitted that as such the case was selected for scrutiny assessment and the petit .....

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t thereafter it not now open for the AO to reopen the complete and finalize the assessment on the very issue. It is submitted that as such in light of the aforesaid fact reopening can be said to be of change of opinion of the AO. It is submitted that as per the catena of decisions mere change of opinion of the AO, the reassessment / reopening of the assessment under Section 147 of the Act is not justified, more particularly, in absence of any other tangible documents available with AO. Making ab .....

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tried to oppose the present petition. He has heavily relied upon the affidavit in reply filed by the AO in support of his request to dismiss present Special Civil Application . 4.1. It is submitted that after forming an opinion that the income amounting to ₹ 77,41,250/- has escaped assessment within the meaning of Section 147 of the Act for AY 2009-10, though the deduction under Section 80IB(10) of the Act of ₹ 77,41,250/- was itself allowable, same came to be allowed mechanically a .....

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claim under Section 80IB(10) of the Act of ₹ 77,41,250/-. It is submitted that therefore, when it was found that AO allowed the deduction under Section 80IB(10) of the Act of ₹ 77,41,250/- mechanically and without making any discussion with respect to such claim and thereafter having forming an opinion and having reason to believe that the income amounting to ₹ 77,41,250/- as escaped assessment, assumption of the jurisdiction by the AO to reopen the assessment for AY 209-10 is .....

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s recorded. "The assessee is engaged in the building construction business, has filed his return of income for AY 2009-10 on 29.09.2009 declaring income of ₹ 15,69,994/-. The assessment was completed under Section 143(3) and income and returned income was accepted vide order dated 04.11.2011. As per subsection 10 of the section 80IB, the date of completion of construction of the housing project shall be taken to the date on which the completion certificate in respect of such housing p .....

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of construction project. It was further noticed from the condition no. 25 of the said order that breach of any condition of the order would render the permission liable for cancellation. It was noticed that the project of the assessee was not completed till 14.10.2011 as is evident the fact that assessee in his submission dated 14.10.2011 has mentioned that the project is in progress and did not furnish any completion certificate. Since neither the condition of local authority to complete the pr .....

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x Act, 1961 for the assessment year 2009-10. I therefore, issue notice under section 148 of he Act for AY 2009-10 to the assessee." 6.1. However, it is required to be noted that while filing return of income the petitioner assessee claimed deduction under Section 80IB(10) of the Act of ₹ 77,41,250/-. That the return of income was selected for scrutiny. The AO issued detail questionnaire with notice under Section 142(1) of the Act on dated 29.07.2011. Question no.7 was with respect to .....

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using projects in respect of which the deduction is claimed. c. Copy of Plan & Layout with approval letter of Local Authority for the housing projects under reference with original for verification. Please also furnish the Broacher of the housing projects. d. Details of residential unit wise built up area of each residential unit with supporting evidence. Please note that the "built up area" is defined to mean the inner measurements of the residential unit at the floor level includ .....

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for whom sold / booked Complete communication address Pan, if any Date of sale/ booking (Rs.) Amount of sale / booking (Rs.) Total consideration for which residential unit with sold or agreed to sold to sale Residential unit number sold/ booked. 6.3. In response to the same, the petitioner submitted necessary details along with communication / reply dated 14.10.2011, more particularly, with respect to the deduction under Section 80IB(10) of the Act. Para 17 of the said reply reads as under: &quo .....

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are enclosed. e. The details, as desired, are mentioned in the 80IB Report and the supporting evidences are enclosed. f. The details, in prescribed format, are enclosed." 6.4. That thereafter, AO finalized assessment and passed order of assessment under Section 143(3) of the Act allowing deduction claim by the assessee, claimed under Section 80IB(10) of the Act. Therefore, it cannot be said that while finalizing the original assessment, the AO did not apply its mind and / or amicably allow .....

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fore, it can be said that reopening of the assessment on the aforesaid ground / reason is passed on mere change of opinion of the AO. As held by the Hon'ble Supreme Court as well as this Court in catena of decision in the case of Kelvinator of India Ltd (supra), reassessment on mere change of opinion of the AO is not permissible. In the case of Gujarat Power Corporation Ltd (supra), the Division Bench of this Court in para 42 and 43 has observed and held as under: "42. Bearing in mind t .....

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r allows such a claim, rejects such a claim or partially allows and partially rejects the claim, are all options available with the Assessing Officer, over which the assessee beyond trying to persuade the Assessing Officer, would have no control whatsoever. Therefore, while framing the assessment, allowing the claim fully or partially, in what manner the assessment order should be framed, is totally beyond the control of the assessee. If the Assessing Officer, therefore, after scrutinizing the c .....

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ims so made and accepted by him, it would even otherwise cast an unreasonable expectation which within the short frame of time available under law would be too much to expect him to carry. Irrespective of this, in a given case, if the Assessing Officer on his own for reasons best known to him, chooses not to assign reasons for not rejecting the claim of an assessee after thorough scrutiny, it can hardly be stated by the revenue that the Assessing Officer can not be seen to have formed any opinio .....

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f a claim without formation of opinion. Any other view would give arbitrary powers to the Assessing Officer. 43. We are, therefore, of the opinion that in a situation where the Assessing Officer during scrutiny assessment, notices a claim of exemption, deduction or such like made by the assessee, having some prima facie doubt raises queries, asking the assessee to satisfy him with respect to such a claim and thereafter, does not make any addition in the final order of assessment, he can be state .....

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