Invalid Reassessment: Lack of Material for Reopening Assessment

The Appellate Tribunal ITAT Hyderabad partially allowed the appeal, emphasizing the lack of fresh tangible material for reassessment by the Assessing Officer under section 147 and the consequent unsustainability of the reopening of the assessment for the Assessment Year 2008-09. The tribunal did not address the merits of the deduction claim under section 80IB(10) due to the invalid reassessment. The judgment was delivered on 2nd November 2018 by the ITAT Hyderabad.

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Issues:
1. Validity of reassessment proceedings initiated by the Assessing Officer
2. Disallowance of claim of deduction u/s 80IB

Validity of Reassessment Proceedings:
The case involved an appeal for the Assessment Year 2008-09 against the order of the CIT(A)-6, Hyderabad. The Assessing Officer (A.O.) had reopened the assessment under section 147 of the Act, issuing a notice under section 148 to the assessee. The assessee contended that the reassessment was invalid as the A.O. did not have fresh tangible material to justify the reassessment. The A.O. had reopened the assessment based on a revenue audit objection raised by the CAG, and the assessee argued that this was not a valid reason for reassessment. The tribunal observed that the A.O. had not independently formed an opinion that income had escaped assessment, and the reopening of the assessment was not sustainable. Citing a judgment by the Hon’ble Delhi High Court, the tribunal held that even an assessment completed under section 143(1) could only be reopened under section 147 if the A.O. had tangible material that came to his knowledge after the initial assessment.

Disallowance of Deduction u/s 80IB:
The A.O. disallowed the assessee's claim of deduction under section 80IB(10) of the Act, stating that the built-up area of each residential unit exceeded 1500 sq. ft, making the assessee ineligible for the deduction. The CIT(A) upheld this decision. The assessee argued that the portico and open terrace should not be included in the computation of the built-up area, as they were not walls surrounding the area. The tribunal noted that the A.O. had considered the built-up area based on the record and concluded that the units exceeded 1500 sq. ft. The tribunal also highlighted the absence of fresh tangible material to justify the reassessment, leading to the conclusion that the reopening of the assessment was not sustainable. Therefore, the tribunal did not adjudicate on the merits of the deduction claim, as it would be an academic exercise after holding the reassessment as not sustainable.

In conclusion, the tribunal partly allowed the appeal filed by the assessee, emphasizing the lack of tangible material for reassessment and the consequent unsustainability of the reopening of the assessment. The judgment was pronounced on 2nd November 2018 by the Appellate Tribunal ITAT Hyderabad, with Smt. P. Madhavi Devi and Shri S. Rifaur Rahman as the members hearing the case.

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