TMI Blog2010 (1) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... e material facts. - to the provisions of Section 148 read with Section 147 cannot be sustained - 2097 OF 2009 - - - Dated:- 19-1-2010 - Dr. D.Y. Chandrachud J.P. Devadhar, JJ. Advocate with Mr.Niraj Sheth with Mr.Atul K. Jasani for the petitioner. Mr. K.R. Chaudhari for the respondents. JUDGEMENT Dr. D.Y. Chandrachud - Rule. The learned counsel appearing on behalf of the respondents waives service. With the consent of the learned counsel, taken up for hearing and final disposal. 2. The challenge in these proceedings under Article 226 of the Constitution of India is to the validity of a notice issued by the Assistant Commissioner of Income Tax, 16(1), Mumbai seeking to reopen the assessment for assessment year 2003-04 in exercise of powers conferred by Section 148 of the Income Tax Act, 1961. 3. The assessee is a partnership firm, which is engaged in the business of development and construction. The assessee was carrying on development at Mistry Complex, J.B. Nagar, Andheri (East), Mumbai. For assessment year 2002-03, a deduction under Section 80IB(10) was claimed and allowed to the assessee in respect of project IIA. The dispute before the Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t October 1998'. On this ground, it has been held that the Assessing Officer had additional relevant material on the basis of which the Assessing Officer could justifiably arrived at a belief that the income had escaped assessment. The commencement certificate issued by the Municipal Corporation was stated to be a crucial factor in determining the deduction under Section 80IB(10) and it has been alleged that the assessee had furnished wrong information in the course of assessment proceedings. 4. In assailing the proceedings adopted by the Department to reopen the assessment for assessment year 2003-04, learned counsel appearing on behalf of the assessee submitted that: (1) During the course of the assessment proceedings a full disclosure was made by the assessee of all the material facts bearing on the deduction under Section 80IB(10); (2) The assessee had disclosed that the deduction was being claimed only in respect of project II, for which commencement had taken place after 1st October 1998 and as a matter of fact there was no claim for deduction for projects I and II, which were not within the prescribed time period; (3) During the course of assessment, reliance was also pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come chargeable to tax which has escaped assessment and which comes to his notice in the course of the proceedings under the section. The proviso to Section 148 however stipulates interalia that where an assessment under subsection (3) of section 143 has been made, no action shall be taken after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year. In the present case, it is common ground that the notice for reassessment under Section 148 was issued on 31st March 2009. This is after the expiry of four years from the end of assessment year 2003-04. The validity of the notice would, therefore, have to be depend on whether any income chargeable to tax had escaped assessment for assessment y ear 2003-04 by reason of the failure of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year. 7. Now it is an admitted position before the Court that the assessee has been granted the benefit of a deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II have been claimed on the ground that they were "outside the prescribed time period". The Assessing Officer noted that during the year sales had been made in project IIA and IIB. The record before the Court also shows that during the course of assessment proceedings, the assessee had relied upon a circular of the Central Board of Direct Taxes dated 4th May 2001 clarifying that any additional housing project on an existing housing project site can qualify for deduction under Section 80IB(10), subject to the fulfillment of certain conditions. For the purposes of the present case, it is not necessary for the Court to inquire into the merits of the claim for deduction. The question that arises for consideration is as to whether the conditions precedent to the exercise of the jurisdiction to reopen the assessment have been duly established. That in turn would depend upon whether there was a failure on the part of the assessee to disclose fully and truly all necessary facts necessary for the assessment for the assessment year in question. 9. The Notice under section 148 and the reasons which have been disclosed to the assessee proceed on the basis that on 18th March 2009 the Joint Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion precedent to the exercise of powers to reopen an assessment beyond a period of four years namely, the failure of the assessee to disclose fully and truly all material facts necessary for the assessment has not been established. Significantly, the reasons which have been recorded by the Assessing Officer for reopening the assessment show that reliance is placed on a commencement certificate which it is now common ground before the Court was already on record before the Assessing Officer when the original order under Section 143(3) was passed. The reasons disclosed to the assessee state that copies of the commencement certificates were made available by the Joint Commissioner of Income Tax subsequent to the order of assessment under section 143(3). Since the documents on the basis of which assessment was sought to be reopened had already been furnished to the Assessing Officer in the course of the proceedings under Section 143(3), it cannot possibly be contended that the assessee had failed to disclose documents or the material facts. 10. Moreover, it is also common ground before the Court that a deduction has been granted under section 80IB(10) to the assessee for assessment y ..... 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