Rule. Learned advocate Shri PG Desai waives service of rule. Looking to the nature of the controversy involved, this petition is taken for final hearing immediately. 2. Petitioner is a limited company assessed to tax regularly. The petitioner challenged the notice dated 18.3.2011 issued by the Assessing Officer seeking to reopen the assessment for the year 2004-05. Reasons communicated for such reopening are as follows:
“On verification of the records, it is noticed that the assesee had undertaken the project known as Sheth Nagar Situated at Jamnagar Road, Rajiot and claim for deduction of an amount equal to 100% of the profit derived in the previous year from such housing project u/s 80IB(10) of the I.T.Act.
On verification of the record, it is noticed that the claim of the assessee for claiming deduction 80IB of the IT Act is not correct and was wrongly claimed as built area of the shops and other commercial establishment of the project is 7.96% which is mar more exceeding the statutory limit of 5% of the aggregate built up area of the housing project or 2000 Sq. fts whichever is less as laid down under sub-section (d) of section 80IB(10) of the I.T.Act, 1961. thus the assessee is not eligible for claiming deduction u/s 80IB(10) of the IT Act,1961.
In view of the above fact, the assessment is required to be reopened u/s.147 of the Act for bringing the escaped income amounting to Rs.15,04,042/- 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.2004-05.
Issue notice u/s 148 of the Act.”
The petitioner raised its objection to the proposed reopening vide its communication dated 17.8.2011. The Assessing Officer, however, rejected the objection by the order dated 10.10.11. At that stage, the petitioner has approached this Court filing the present petition challenging the notice for reopening.
3. On 28.11.11, while issuing notice, we had recorded thus :
“1. Counsel for the petitioner submitted that the assessment previously framed under scrutiny has sought to be reopened beyond a period of 4 years from the end of the relevant assessment year. He submitted that the reasons recorded does not allege that income chargeable to tax has escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts. Counsel further pointed out that the Assessing Officer has found a belief that income has escaped assessment because the project had commercial construction in excess of 5% and that therefore, deduction could not be granted under Section 80IB(10) of the Income Tax Act, 1961, whereas such restriction of the commercial construction, not being in excess of 5%, was introduced later on.
2. Under the circumstances issue notice returnable on 19.12.2011. In the meantime, the Assessing Officer may proceed with the assessment. Pursuant to impugned notice, he shall not pass final order of assessment without permission of the Court.”
4. Counsel for the petitioner submitted that the assessment previously framed after scrutiny is sought to be reopened beyond the period of four years. In the reasons recorded, there is no allegation that income chargeable to tax had escaped assessment due to failure on the part of the assessee in disclosing fully and truly all materials necessary for such assessment. Counsel submitted that the petitioner was granted deduction under section 80IB of the Act in the original assessment. Such deduction is sought to be withdrawn on the premise that in the housing project developed by the petitioner there are commercial establishments occupying 7.96% of the constructed area while as per clause (d) of section 80IB(10), the limit is 5% of the aggregate built up area or 2000 sq. fts. whichever is less. Counsel submitted that such requirement was introduced with effect from the assessment year 2005-06 and that therefore was not applicable during the year under consideration.
5. On the other hand, though counsel for the Revenue was not able to dispute that the requirement of commercial establishment not exceeding 5% of the total construction or 2000 sq. ft. whichever is less was introduced in the assessment year 2005-06, it is submitted that housing project developed by the petitioner contained commercial establishments and was therefore not eligible for deduction under section 80IB(1) of the Act.
6. Having heard the learned counsel for the parties, we have no hesitation in holding that the notice for reopening is wholly invalid. The only reason for which assessment previously framed was sought to be reopened beyond the period of four years was that the housing project developed by the petitioner occupied commercial establishment exceeding 5% of the constructed area. Admittedly, clause (d) of section 80IB(10) of the Act disqualifying the assessee from claiming benefits under section 80IB(10) was introduced subsequently. Admittedly, such amendment is not made with retrospective effect. In that view of the matter, there was no scope for reopening the assessment already closed. Further, the contention that even without the aid of clause (d) of section 80IB(10), assessee was not eligible for deduction cannot be accepted. Firstly, this is not the reason on which the reopening is sought to be done. Secondly, there is no allegation that the assessee had concealed any material particularly. In the reasons records, there is not even any hint to this effect. In the affidavit in reply filed by the respondent although at couple of places it is stated that the assessee did not supply necessary particulars such assertion is with respect to the requirement of commercial establishment not exceeding 5% of the constructed area. In that view of the matter, we do not find that reopening can be sustained.
7. In the result, the impugned notice for reopening is quashed. Rule is made absolute accordingly.
(Akil Kureshi J.) (Ms.Sonia Gokani, J.) (vjn)