DCIT 3(2)(1), MUMBAI vs. MAHARASHTRA AIRPORT DEVELOPEMENT. CO LTD, MUMBAI

The learned CIT(A), after considering the submissions of the assessee and perusing the material on record found that during the original assessment proceedings the AO has made specific enquiries about the assessee’s claim of deduction under Section 80IAB of the Act andafter applying mind to the facts and material brought on record has completed assessment computing admissible deduction under Section 80IAB of the Act. He also noticed, against the decision of the AO with regard to assessee’s claim of deduction under Section 80IAB of the Act in the original assessment order further appeals were filed before the CIT(A) and thereafter before the Tribunal. On perusing the reasons recorded for reopening of assessment the CIT(A) found that the AO has not referred to any fresh tangible material which came to his possession and led him to believe that income has escaped assessment. He observed that once the assessee’s claim of deduction under Section 80IAB was examined and enquired into during the original assessment proceedings and the AO has recomputed such deduction while completing the original assessment, reopening of assessment on very same issue would amount reopening of assessment on mere change of opinion. Thus, relying upon certain judicial precedents learned CIT(A) ultimately held that reopening of assessment under Section 147 of the Act was invalid and accordingly declared the impugned assessment order to be bad in law and void. Aggrieved, Revenue is in appeal before us.

The learned Departmental Representative (D.R.), though, accepted the fact that during the original assessment proceedings the AO has enquired into assessee’s claim of deduction under Section 80IAB, however,he submitted that AO has not specifically examined whether the income derived from house property is eligible for deduction under Section 80IAB of the Act. That being the case, in the original assessment order AO

The learned A.R. submitted that during the original assessment proceedings the AO had made specific enquiries with regard to assessee’s claim of deduction under Section 80IAB of the Act and called for all relevant information and details. He submitted that after examination and applying her mind to the information called for and material available on record the AO partially disallowed the deduction claimed by the assessee under Section 80IAB of the Act. Drawing our attention to the reasons

We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. The undisputed facts are that the assessee filed its return of income under Section 139(1) of the Act claiming deduction under Section 80IAB. The return filed by the assessee was selected for scrutiny and in the course of assessment proceedings, the AO through notices issued under Sections 142(1) and 143(2) made enquiries and asked the assessee to furnish various details relating to the claim made in the return of income. Information and material available on record clearly reveal that during the original assessment proceedings the AO made specific enquiry regarding assessee’s claim of deduction under Section 80IAB of the Act. In this regard the AO has called for details of income in respect of which assessee has claimed deduction under Section 80IAB of the Act and after verifying the details AO has also raised objection with regard to assessee’s claim of deduction under Section 80IAB of the Act in respect of interest income and after considering the submissions of the assessee has disallowed assessee’s claim of deduction under Section 80IAB of the Act in respect of interest income of `6,86,16,552/-. As could be seen, against the aforesaid decision of the AO in the original assessment proceedings, assessee went in appeal. Be that as it may, the original assessment order clearly reveals that the AO in the course of original assessment proceedings has made specific enquiry with regard to assessee’s claim of deduction under Section 80IAB and has examined the issue in-depth and, thereafter recomputed the deduction under Section 80IAB of the Act. On a perusal of the reasons recorded for reopening of assessment,which is also incorporated in the impugned assessment order, it is revealed that the AO has not referred to any fresh tangible material coming to his possession revealing escapement of income. From the reasons recorded it is clear that he was of the view that income `7,96,173/- being in the nature of house property income, cannot be treated to be derived from business of development of 7 CO 45/M/2018 Maharashtra AirportDevelopment Co. Ltd. infrastructure, hence not eligible for deduction under Section 80IAB of the Act. Thus, it is crystal clear that the AO has no fresh tangible material in his possession while recording his reasons for reopening of assessment. Rather, it is evident that on re-appreciation and re-examination of material available on record during the original assessment proceedings and examined by the AO during the original assessment proceedings, the AO has formed his belief that income has escaped assessment. When from the original assessment order it is evident that the AO has enquired into and examined assessee’s claim of deduction under Section 80IAB of the Act, the Department’s contention that the AO has overlooked the particular aspect of allowability of deduction under Section 80IAB of the Act in respect of house property income is farfetched and unacceptable. It is difficult to accept that in the original assessment the assessing officer has dealt with the issue of claim of deduction under section 80IAB on piecemeal basis by examining some part of it while overlooking the other. Undisputedly, in the present case the deduction claimed by the assessee under Section 80IAB of the Act in the return of income was subjected to scrutiny in the original assessment proceedings and the AO, after proper application of mind, has computed the deduction under the said provision. Thus, the original assessment order passed under Section 143(3) of the Act deserves to be given some sanctity. Merely because reopening of assessment under Section 147 of the Act was before expiry of four years from the end of the relevant assessment year, that by itself will not give licence to the AO to exercise his powers under Section 147 of the Act with impunity even in the absence or lack of fresh tangible material coming to his possession. The issues decided in the original assessment order cannot be reviewed or reopened unless there are strong reasons on the basis of tangible material to do so. In the present case nothing has been brought on record to demonstrate that the AO had tangible material before him to form belief that income has escaped assessment. That being the case the reopening of assessment on the basis of the very same material on which the original assessment was completed after proper enquiry and examination will lead to the conclusion that the assessment has been 8 CO 45/M/2018 Maharashtra AirportDevelopment Co. Ltd. reopened under Section 147 of the Act on a mere change of opinion, hence legally impermissible. The decisions relied upon by the learned A.R. including the decision of the Hon'ble Supreme Court in the case of CIT vs. Kelvinator India Ltd. (supra) clearly support this view. As regards the decisions relied upon by the learned D.R. before us, on careful reading of the said decisions we found them to be factually distinguishable, hence not applicable to the facts of the present case. In view of the aforesaid, we uphold the order of the learned CIT(A) on this issue. Grounds raised are dismissed.

In the result, appeal filed by Revenue is dismissed.

In the result, Revenue’s appeal and assessee’s cross objections are dismissed.