1. Petitioner is a registered partnership firm engaged in business activities of construction and development of properties. For Assessment Year 2010-11, Petitioner filed return of income on 30th September 2010 declaring income of Rs.3,01,791/- after claiming deduction under Section 80-IB(10) of the Income Tax Act, 1961 (“ the”) to the tune of Rs.21,53,45,489/-. The scrutiny assessment under Section 143(3) of thewas completed at 25th March 2013 determining total income at Rs.3,09,060/-

2. Petitioner thereafter received a notice dated 16th March 2015 under Section 148 of thestating that there was reason to believe income for AY 2010-11 has escaped assessment within the meaning of Section 147 of the. Reasons recorded for issuance of notice was also made available to Petitioner. The reasons recorded reads as under:

“REASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961.

1. The assessee filed return of income on 30.09.2010 declaring income of Rs. 3,01,791/- after claiming deduction U/s: 80(1B) (10) of the Income Tax Act, 1961 to the tune Of Rs. 21,53,45,489/- The scrutiny assessment u/s 143(3) of the Income Tax Act, 1961 was completed on 25.03.2013 determining total income at Rs. 3,09,060/-.

2. The assessee is a registered partnership firm engaged in the business activities of construction and development of the properties. It is seen from the record that during the previous year relevant to A.Y. 2010-11, the assessee had partly completed a project called "Balaji Garden" at Kopar (E), near Dombivali, consisting of 9 buildings (numbered building Nos. 1A/1B & 2 to 8). The commencement certificate (C.C.) for the housing project was first issued by Kalyan Dombivali Municipal Corporation (KDMC) on 08.02.2007 for construction of building No. 2 to 5 & 7 to 8 (building types D & F respectively) and later amended on 30.03.2007 to include building No. 6 (building type E).

3. It is also seen from the record that the part completion Occupation Certificate was issued by KDMC on 28.07.2009 in respect of building Nos. 3, 4, 7 & 8. For building Nos. 2 & 5, again part completion Occupation Certificate was Issued on 17.09.2013, by the Municipal Corporation, Occupation Certificate in respect of building No. 6 has not produced. The same was the case with building Nos. 1A &1B included in the project.

4. As per provisions of section 80IB (10) of the Act, the assessee was required to complete the project by 31.03.2012 to be eligible, to claim exemption. However the assessee has not yet been granted the final occupation certificate by the concerned Municipal Corporation, Therefore, the assessee has failed to complete the requirement stated in the section 80IB(10) of thetowards time limit for completion of the housing project.

5. It has also been observed from the record that the built up area of some of the flats have exceeded the limit of 1000 sq. ft. prescribed in the by virtue of closed balcony, which was not counted / included in the certificate of the architect. Further, the said project falls within 25 Kms. from the municipal limits of Mumbai. As the assessee has failed to fill some of the conditions of section 80IB of the Act, the assessee is not eligible for deduction u/s 80IB(10) of the Income Tax Act, 1961.

6. In view of the above, I have reason to believe that income chargeable to tax has escaped assessment to the extent of Rs. 21,53,45,489/- for A.Y. 2010- 11. Therefore, the proposal for re-opening the case by issue of notice u/s 148 of the Income Tax Act is being made for kind perusal and approval.”

3. Mr. Agrawal submitted detailed notices and questionnaires were received during the assessment proceedings and the provisions of Section 80-IB(10) of thein respect of Building No.3,4,7 and 8 were extensively discussed and considered during the assessment proceedings. Therefore, according to Mr. Agrawal, it is nothing but a clear case of change of opinion and it does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment.

4. Mr. Sharma submitted that the notice having been issued within four years of the end of the relevant assessment year, what is required to be seen is only whether there was some tangible material before the Assessing Officer (“AO”) to reopen the assessment.

5. Having considered the submissions and the pleadings, in our view, the reopening notice which is impugned in the petition has been issued merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings leading to the assessment order dated 25th March 2013. In the assessment order itself it is admitted that notices under Section 143(2) of thewere issued and served upon Assessee from time to time along with questionnaires. Assesseee had also responded. In the assessment order the details of the project have been stated. It is also stated that Assessee was claiming deduction under Section 80IB of thein respect of income received from sale of flats in buildings of Rs.21,53,45,489/- that Assessee had declared from residential units of buildings No.3,4,7 and 8 of Rs.42,59,20,940/- and declared profit of Rs.2,15,34,489/- subject to claim of deduction under Section 80-IB of the. There is also a note on deduction under Section 80-IB of the Act, where the residential buildings No.3,4,7 and 8 have been discussed. Therefore, once a query is raised during the assessment proceedings and Assessee has replied to it, it follows that the query raised was the subject of consideration of the AO while completing the assessment. Moreso, when the assessment order contains reference and/or discussion to disclose its satisfaction in respect of the query raised.

6. Therefore, there can be no doubt in the present facts that the deduction claimed under Section 80-IB of thewas a subject matter of consideration by the AO during the original assessment proceedings leading to passing of the assessment order dated 25th March 2013. Therefore, the reopening of the assessment by the impugned notice dated 16th March 2015 is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings leading to the order dated 25th March 2013. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment.

7. In view of the above, the assessment order dated 31st March 2016 passed which is also impugned in the petition also stands quashed and set aside. Rule issued on 29th June 2016 is made absolute in terms of prayer clause (a), which reads as under:

“(a) this Hon'ble Court be pleased to issue a Writ of Certiorari or any other writ order or direction under Article 226 of the Constitution of India calling for the records of the case leading to the issue of the impugned notice (Exhibit K); passing of the impugned order (Exhibit T) and passing of the impugned assessment order (Exhibit W) and after going through the same and examining the question of legality thereof quash, cancel and set aside the impugned notice (Exhibit K), impugned order (Exhibit T) and the impugned assessment order (Exhibit W);”