Section 148 Notice Quashed as AO Revisited Already Examined Section 10AA Claim: Bombay HC

Genesys International Corporation Ltd. Vs ACIT (Bombay High Court)

 The Bombay High Court allowed the writ petition filed by the assessee challenging reassessment proceedings initiated for Assessment Year 2017-18 through a notice issued under Section 148 of the Income-tax Act, 1961. The petitioner also challenged the order rejecting its objections to reopening and the draft assessment order proposing denial of deduction under Section 10AA.

The petitioner had claimed deduction under Section 10AA in respect of its eligible Special Economic Zone unit. During the original scrutiny assessment under Section 143(3), the Assessing Officer issued specific queries regarding the deduction claimed as “any other amount allowable as deduction” and called for supporting details. The petitioner furnished the computation of income, computation of deduction under Section 10AA, and explanations in response to these queries. After considering the material placed on record, the Assessing Officer completed the assessment on 20 December 2019 and allowed the deduction as claimed.

Subsequently, a notice under Section 148 dated 30 March 2021 was issued seeking to reopen the assessment. The recorded reasons alleged that the assessee had wrongly claimed deduction under Section 10AA without first setting off losses of other units, that foreign exchange had not been brought into India within six months as reflected in Form 56F, and that the deduction had not been claimed in the prescribed Schedule of the return but through manual computation during assessment proceedings. The petitioner filed objections, which were rejected, and a draft assessment order was thereafter issued proposing complete denial of the deduction.