Reopening under Sections 147/148 invalid where AO already examined and allowed Section 80IC deduction under section 143(3)

ITAT MUMBAI held for the assessee that reopening under sections 147/148 was invalid because the AO had examined and allowed the section 80IC deduction in the original assessment framed u/s 143(3), including consideration of a revised return; reopening cannot substitute for review or effect a mere change of opinion. The Tribunal noted a Bombay HC decision supporting this principle and found no jurisdictional basis to reassess, deciding in favour of the assessee.

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Issues Involved:
1. Validity of reopening the assessment under Section 147 of the Income-tax Act, 1961.
2. Allowability of deduction under Section 80IC when claimed in a revised return of income filed under Section 139(5).

Detailed Analysis:

1. Validity of Reopening the Assessment under Section 147
The Revenue contended that the reopening of the assessment was justified as the assessee did not claim the deduction under Section 80IC in the original return filed under Section 139(1), which constitutes a failure to disclose fully and truly all material facts necessary for assessment. The Revenue argued that the revised return filed under Section 139(5) could not rectify this omission, and the assessment was reopened based on new tangible material.

The Tribunal noted that the original assessment was completed under Section 143(3) after considering the revised return and the claim for deduction under Section 80IC. The Assessing Officer (AO) had allowed the deduction after detailed deliberation. The Tribunal held that the reopening of the assessment was based merely on a change of opinion, which is not permissible under the law. The Tribunal referred to the decision in CIT v. Kelvinator Ltd. (320 ITR 561), which held that reassessment based on a change of opinion is not valid.

2. Allowability of Deduction under Section 80IC
The assessee initially filed the return of income under Section 139(1) without claiming the deduction under Section 80IC. Subsequently, a revised return was filed under Section 139(5), claiming the deduction supported by a revised tax audit report and certificate in Form 10CCB.

The Tribunal observed that Section 80AC requires the filing of a return under Section 139(1) to claim deductions under Section 80IC, but it does not mandate that the deduction must be claimed in the original return itself. The Tribunal held that the revised return filed within the time stipulated under Section 139(5) is an extension of the original return and satisfies the requirement of Section 80AC. The Tribunal cited the decision of the Gujarat High Court in ITO v. VXL India Ltd. (312 ITR 187), which held that non-furnishing of the audit report at the time of the original return but before the completion of the assessment does not disqualify the claim for deduction.

The Tribunal also referred to the decision in Parmeshwar Cold Storage (P) Ltd. v. ACIT (49 SOT 67), which held that the condition for claiming the benefit under Section 80IC is that the original return should be filed in time, and the claim can be made subsequently.

Conclusion
The Tribunal concluded that the reopening of the assessment was invalid as it was based on a change of opinion without any new tangible material. On the merits, the Tribunal held that the assessee was entitled to the deduction under Section 80IC claimed in the revised return filed under Section 139(5). The appeal of the Revenue was dismissed.

Order
The appeal of the Revenue is dismissed. The assessee's claim for deduction under Section 80IC as allowed in the original assessment is upheld. The order was pronounced in the open court on 12.02.2018.

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