Re-Assessment can’t be done merely because some Aspects of Deduction Claim was not Examined in Original Assessment: Gujarat HC [Read Judgment]

The Gujarat High Court has recently held that Re-Assessment under section 147/ 148 of the Income Tax Act, 1961 cannot be re-opened merely on the ground that some aspects of the claim for deduction made by the assessee was not examined in the original assessment.

In the instant case, the petitioner made a claim for deduction under Section 10B of the Income Tax Act which grants benefit to a newly established 100% Export Oriented Undertaking. When the Assessing Officer, during scrutiny of returns, proposed to deny the claim, the assessee made an alternative claim under section 10A of the Act. During such scrutiny assessment, the petitioners claim for deduction under section 10A was discussed by the Assessing Officer in detail and the same was granted to assessee.

Later, the assessment was re-opened on the ground that the petitioner’s Unit is not situated in the Software Technology Park, Gandhinagar and the petitioner’s claim, therefore, for deduction under section 10A for its standalone unit was not valid. The AO also noted that the petitioner’s Unit is not situated in the Software Technology Park, Gandhinagar and the petitioner’s claim, therefore, for deduction under section 10A for its standalone unit was not valid.

The division bench comprising Justices Akil Kureshi and B N Karia noted that from the petitioner’s letter written during the assessment proceedings it would reveal that the petitioner had given detailed reply with respect to the query raised by the Assessing Officer with respect to his claim.

“Thus, it was after a detailed scrutiny, the Assessing Officer had originally accepted the petitioner’s claim for deduction under section 10A of the Act. Not only that he raised multiple queries, but such queries were also replied to by the petitioner. In the order of assessment also, he had given brief reasons for accepting the petitioner’s claim,” the bench observed.

While quashing the re-assessment order, the bench said that “It would now, therefore, not be open for the Assessing Officer to reopen such assessment on the principal claim of the petitioner for deduction on the ground that some other elements or aspects of the claim were not examined. This would clearly be a case of change of opinion.”

Senior Advocate B S Soparkar appeared for the petitioner.