Court rules reopening of assessments to deny deduction under Section 80IB was without jurisdiction. Petitioner's disclosures were sufficient.

The court held that the reopening of assessments to deny the deduction under Section 80IB was without jurisdiction. The respondent lacked the authority to disturb the deductions allowed in the original assessments as the petitioner had fully disclosed all necessary materials. However, the respondent was permitted to investigate other aspects under Explanation 3 to Section 147. The court directed the petitioner to participate in the proceedings, with the respondent instructed to conclude them within three months. The writ petitions were disposed of accordingly, with no costs awarded.

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Issues Involved:
1. Validity of the notices issued under Section 148 of the Income Tax Act, 1961.
2. Whether the activities undertaken by the petitioner amounted to "manufacture" under Section 2(29BA) of the Income Tax Act, 1961.
3. Whether there was a "change of opinion" by the Assessing Officer.
4. Jurisdiction of the Assessing Officer to reopen the completed assessments.

Detailed Analysis:

1. Validity of the Notices Issued Under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notices dated 30.03.2015 and 30.03.2016 issued by the respondent under Section 148 of the Income Tax Act, 1961, to reopen the completed assessments for the Assessment Years 2009-10 and 2010-11. The respondent rejected the objections of the petitioner, stating that the proceedings were validly initiated under Section 148.

2. Whether the Activities Undertaken by the Petitioner Amounted to "Manufacture" Under Section 2(29BA) of the Income Tax Act, 1961:
The petitioner, engaged in the manufacture of flavour essences, mixed seasoning powders, and formulated perfumery compounds, claimed deductions under Section 80IB. The respondent argued that the petitioner’s activities did not amount to "manufacture" as per Section 2(29BA), which requires a transformation resulting in a different name, character, and use. The respondent's stance was based on a report from the Asst. Commissioner of Income Tax, Circle 1, Jammu, which stated that the petitioner’s activities involved merely blending and mixing, not manufacturing.

3. Whether There Was a "Change of Opinion" by the Assessing Officer:
The petitioner contended that the reopening of assessments was based on a mere change of opinion, which is not permissible under the law. The court noted that the issue of whether the activities amounted to manufacture was deliberated upon before the original assessments were completed. The court referenced the Supreme Court rulings in CIT Vs. Kelvinator of India Ltd and Income Tax Officer Vs. Techspan India Private Limited, emphasizing that a mere change in opinion does not justify reopening assessments.

4. Jurisdiction of the Assessing Officer to Reopen the Completed Assessments:
The court held that reopening the assessments based on a change of opinion was contrary to law. The proviso to Section 147 of the Income Tax Act, 1961, requires a failure to truly and fully disclose material facts for reopening assessments. The court found that the petitioner had fully disclosed all required materials, and the Central Excise Department had accepted the petitioner’s activities as manufacturing. Therefore, the respondent lacked jurisdiction to reopen the assessments under Section 148.

Conclusion:
The court concluded that the reopening of assessments to deny the deduction under Section 80IB was without jurisdiction. The respondent was precluded from disturbing the deductions allowed in the original assessments. However, the respondent could investigate other aspects under Explanation 3 to Section 147. The court directed the petitioner to participate in the proceedings, and the respondent to conclude the proceedings within three months. The writ petitions were disposed of with these observations, and no costs were awarded.

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