Court sets aside assessment reopening notice for 2012-2013 due to delayed objections

The court allowed the petition, setting aside the notice for reopening the assessment for the year 2012-2013. The court emphasized that the petitioner had fully disclosed the subsidy treatment during scrutiny assessment, and the Assessing Officer's objections should have been raised earlier. Reopening the assessment beyond four years was deemed impermissible under the circumstances.

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Issues:
Challenge to notice for reopening assessment for the assessment year 2012-2013 based on treatment of subsidy amount in the balance sheet.

Analysis:
The petitioner, a company engaged in infrastructure development, challenged a notice issued by the Assessing Officer to reopen its assessment for the year 2012-2013. The notice was based on the treatment of a capital subsidy received by the company, which was directly credited to the Capital Reserve account in the balance sheet. The Assessing Officer contended that this treatment distorted the computation of the company's book profit under section 115JB of the Act. The petitioner had filed its return declaring a loss, which was scrutinized, and the assessment order was passed. Subsequently, the notice was issued as the subsidy amount was not considered for the book profit calculation. The petitioner raised objections, which were rejected, leading to this petition.

During the scrutiny assessment, the issue of the subsidy treatment had been discussed, and the petitioner had made full disclosures. The Assessing Officer's main objection was the direct crediting of the subsidy to the Capital Reserve account, which he believed affected the book profit computation. However, the petitioner had disclosed the treatment of the subsidy in the return and during assessment proceedings. The petitioner had provided details of the subsidy received, including relevant sanction orders. The court noted that there was sufficient disclosure in the return and the Assessing Officer had the opportunity to object during the scrutiny assessment if there were any doubts about the treatment. Reopening the assessment beyond four years was deemed impermissible under the circumstances.

In conclusion, the court allowed the petition, setting aside the impugned notice for reopening the assessment. The court emphasized that the petitioner had made full disclosures regarding the subsidy treatment, which had been noticed during the scrutiny assessment. The Assessing Officer's objections should have been raised earlier, and reopening the assessment after four years was not permissible in this case.

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