Invalid Notice of Reopening for Assessment Year 2010-2011

The High Court held that the notice of reopening issued by the Assessing Officer for the assessment year 2010-2011 was invalid as there was no failure to disclose material facts for that year. The court ruled that the Assessing Officer could not reexamine the deduction claim based on a breach in a subsequent year. Consequently, the petition was allowed, the notice of reopening was set aside, and the petition was disposed of.

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Issues:
Challenge to notice of reopening dated 31.3.2017 issued by the Assessing Officer for the assessment year 2010-2011.

Analysis:
The petitioner, a partnership firm engaged in housing projects, filed a return for the assessment year 2010-2011, declaring income and claiming deduction under section 80IB(10) of the Income Tax Act. The Assessing Officer raised queries, and after compliance, passed the assessment order on 27.11.2012. The notice of reopening was issued based on the sale of specific flats to a husband and wife, breaching the conditions of deduction under section 80IB(10). The Assessing Officer disallowed the deduction and added it back to the total income. The petitioner argued that the notice was issued beyond the prescribed period and no failure to disclose facts existed. The department contended that the breach of conditions in a subsequent year would disentitle the petitioner from claiming deductions in earlier years.

The High Court noted that there was no allegation of breach in the assessment year 2010-2011. The Assessing Officer sought to reexamine the deduction claim based on a breach in a subsequent year. As there was no failure to disclose material facts for the assessment year in question, the notice of reopening was deemed invalid. The court did not delve into the argument that deductions granted in earlier years could be withdrawn due to breaches in later years.

Therefore, the petition was allowed, the notice of reopening was set aside, and the petition was disposed of.

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