Assessing Officer lacked jurisdiction in re-opening assessment based on audit, Court grants interim relief.

The Court held that the Assessing Officer's reliance on the audit's interpretation of the law for re-opening the assessment lacked jurisdiction. It was noted that the Officer should have formed an independent reasonable belief rather than borrowing from external sources. The audit objections contradicted the findings of the subsequent assessment year, which were not contested. As a result, the re-opening notice was deemed invalid, and interim relief was granted to the Petitioner.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for re-opening assessment for Assessment Year 2010-11 based on valuer's report and audit objections.

Analysis:
The Petition challenges a notice issued by the Assessing Officer under Section 148 of the Income Tax Act, seeking to re-open the assessment for the year 2010-11. The reasons for re-opening the assessment are based on information received for the next assessment year, 2011-12. Specifically, the notice questions the Assessee's entitlement to the benefit under Section 80(IB) (10) of the Act, as per the valuer's report indicating some flats exceed 1,500 square feet. It is noted that during the initial assessment for 2010-11, queries were raised regarding this benefit, and it was found that some flats indeed exceeded the specified size. However, in the subsequent assessment for 2011-12, the Assessing Officer accepted a different interpretation of the law regarding the calculation of built-up area, excluding certain terraces. This interpretation was also supported by a decision of the Tribunal. The foundation of the re-opening notice is the audit observations based on the valuer's report, which highlights that including certain terraces would lead to some flats exceeding the size limit.

The Court observes that the Assessing Officer seems to have relied heavily on the audit's interpretation of the law rather than forming an independent reasonable belief. This approach is deemed impermissible, as the belief should be that of the Assessing Officer, not borrowed from external sources. Moreover, the audit objections contradict the findings of the Assessing Officer in the subsequent assessment year, which have not been challenged. Therefore, the Court finds that the re-opening notice lacks jurisdiction, as it appears the Assessing Officer did not apply his mind independently to the valuer's report. Consequently, interim relief is granted to the Petitioner in light of these observations.

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