Dukle Constuctions, Panaji V. Asst. Commissioner of Income tax, Panaji

CO 11/PAN/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8793 (ITAT-PANAJI)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 19-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Assessee Lawyers: D E ROBINSON
• Keywords: Tangible material; Difference of opinion; Validity of assessment; Assessment record; Reason to believe; Change of opinion
• Section: 143(3); 80IB; 147; 148; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 79 /PNJ/201 2 : (ASST. YEAR : 2005 - 06) ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 1(1), PANAJI, GOA. (APPELLANT) VS. M/S. DUKLE CONSTRUCTION MAHALAXMI CHAMBERS, 18 TH JUNE ROAD, PANAJI, GOA. PAN AABFD1216C (RESPONDENT) CO NO. 11/PNJ/2012 (IN ITA NO. 79 /PNJ/201 2) : (ASST. YEAR : 2005 - 06) M/S. DUKLE CONSTRUCTION MAHALAXMI CHAMBERS, 18 TH JUNE ROAD, PANAJI, GOA. PAN AABFD1216C (CROSS OBJECTOR) VS. ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 1(1), PANAJI, GOA. (RESPONDENT) REVENUE BY : K.M. MAHESH, D.R ASSESSEE BY : D.E. ROBINSON, ADV. DATE OF HEARING : 18/04/2013 DATE OF PRONOUNCEMENT : 14 / 06 /2013 O R D E R PER D.T. GARASIA : 1. THE ABOVE APPEAL IS FILED BY THE DEPARTMENT AND CROSS OBJECTION IS FILED BY THE ASSESSEE . THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL ARE RAISED IN DEPARTMENTS APPEAL AND IN THE CROSS OBJECTION : ITA NO. 79/PNJ/2012 : 1. THE ORDER NO. IN ITA. NO.162/PNJ/O9 - 10/ITO W - 1(L) DATED: 31.07.2012 IN THE ABOVE CASE IS OPPOSED TO LAW AND FACTS OF THE CASE FOR CLAIM OF DEDUCTION U/S 80IB (10) OF THE INCOME TAX ACT, 1961. 2 ITA NO. 79/PNJ/2012 CO NO. 11/PNJ/2012 (ASST. YEAR : 2005 - 06) 2. THE LEARNED CIT(A) HAS ERRED IN APPRECIATING THE ISSUE OF OWNERSHIP OF THE LAND FOR CLAIMING DEDUCTION U/S 80IB (10) OF INCOME TAX ACT, 1961. 3. IN THIS CASE CIT( A) HAS FAILED TO APPRECIATE THAT THE LAND ON WHICH DEVELOPMENT HAD BEEN CARRIED OUT AND BUILDING IS CONSTRUCTED IS IN THE NAME OF M/S AVC INVESTMENTS AND TRADING PVT. LTD., AND NOT IN THE NAME OF ASSESSEE FIRM. FURTHER THE APPROVAL AND ALSO THE OCCUPANCY C ERTIFICATES ISSUED BY LOCAL AUTHORITY IS NOT IN THE NAME OF ASSESSEE SO M/S DUKLE CONSTRUCTIONS IS NOT ELIGIBLE TO CLAIM DEDUCTIONS. 4. FOR THIS AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF LEARNED CIT(A) BE CANCELLED AND THAT OF THE ASSESSING OFFICER BE RESTORED. CO. NO. 11/PNJ/2012 : THE C OMMISSIONER OF I NCOME T AX ( A PPEALS), P ANAJI G OA ERRED IN NOT ACCEPTING THE PLEA OF THE APPELLANT THAT THE ASSESSMENT ORDER PASSED BY THE A SSESSING O FFICER IS BAD IN LAW IN VIEW OF THE INVALIDITY OF ASSESSMENT PROCEEDING FOR THE YEAR. 2. THE CROSS OBJECTION FILED BY THE ASSESSEE GOES TO THE ROOT OF THE CASE. THEREFORE, WE DECIDED THE CROSS OBJECTION FIRST. CO. NO. 11/PNJ/2012 : 3. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CONTENDED THAT THE ORIGINAL ASSESSMENT U/S 143(3) WAS PASSED BY THE AO AFTER BEING COMPLETELY SATISFIED THAT THE ASSESSEE COMPLIED WITH ALL THE CONDITIONS SO AS TO CLAIM BENEFIT OF DEDUCTION U/S 80 - IB(1 0) OF THE ACT. THE ASSESSEE CLAIMS THAT IN ABSENCE OF ANY NEW FINDING, RE - OPENING OF THE ASSESSMENT IN THE PRESENT CASE IS ONLY CHANGE OF OPINION. HENCE, IT IS NOT PERMITTED IN LAW. 3.1 THE LD. AR SUBMITTED THAT THE ASSESSMENT FOR A.Y. 2005 - 06 HAS BEEN RE - OPENED ON THE GROUND THAT ON PERUSAL OF THE APPROVAL FROM LOCAL AUTHORITY, CONSTRUCTION LICENCE, PERMISSION FOR DEVELOPMENT SUBMITTED DURING THE COURSE OF THE ASSESSMENT, IT WAS NOTICED THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS 3 ITA NO. 79/PNJ/2012 CO NO. 11/PNJ/2012 (ASST. YEAR : 2005 - 06) PRESCRIBED HENCE NOT ELIGIBLE FOR DEDUCTION U/S 80 - IB(10) OF THE ACT. THE LD. AR SUBMITTED THAT AS PER PROVISIONS OF SEC. 147 IN ORDER TO RE - OPEN THE ASSESSMENT, THE AO SHOULD HAVE BONA FIDE REASON TO BELIEVE THAT THERE HAS BEEN ANY ESCAPED INCOME OR EXCESSIVE RELIEF/EXE MPTION GRANTED TO THE ASSESSEE. IN ASSESSEES OPINION, RE - ASSESSMENT PROCEEDINGS CAN BE INITIATED ONLY IF PRIMARY FACTS WERE NOT AVAILABLE AT THE TIME OF INITIAL ASSESSMENT OR IF THERE WAS ANY CONCEALMENT OR IN CASE WHERE THE ASSESSMENT ORDER WAS PASSED W ITHOUT APPLICATION OF MIND AT ALL . THE LD. AR SUBMITTED THAT T HERE IS NO WHISPER IN THE ASSESSMENT ORDER REGARDING ANY DISCREPANCY FOUND IN RECORD OR ANY VIOLATION OF PROVISIONS OF LAW OR THAT ASSESSEE WAS UNABLE TO SUBSTANTIATE ITS CLAIM FOR DEDUCTION WI TH APPROPRIATE EXPLANATIONS/REASONS. THUS, THE ORIGINAL ASSESSMENT ORDER U/S 143 WAS PASSED BY THEN AO HAVING COMPLETELY SATISFIED HIMSELF THAT THE ASSESSEE HAS ABIDED BY ALL THE UNDERLYING CONDITIONS SO AS TO CLAIM THE BENEFIT OF DEDUCTION U/S 80 - IB(10) OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT P ERUSAL OF THE ASSESSMENT RECORD WOULD MAKE IT CLEAR THAT THE FACT THAT THE ASSESSEE WAS A DEVELOPER AND HE HAS ACQUIRED DEVELOPMENT RIGHT FROM THE LAND OWNER WAS KNOWN TO THE AO. THIS WAS AMPLY PROVED BY THE LETTER DT. 1 2.3.2007 FROM THE AO CALLING FOR ALL THE DETAILS IN RESPECT OF THE PROJECT AND RESPONSE OF THE ASSESSEE DT. 14.3.2007 WHERE THE ISSUE OF OWNERSHIP WAS CLARIFIED AMPLY. THUS, IN THE ORIGINAL ASSESSMENT ORDER, THE AO WAS WELL AWARE ABOUT THE PR IMARY FACT, THE CLAIM BY THE ASSESSEE, THE PROVISIONS OF LAW APPLIED WHILE CLAIMING THE EXEMPTION AND AO CONSCIOUSLY CONSIDERED THE FACT AND ARRIVED AT A DECISION ALLOWING THE CLAIM. THE ASSESSMENT CANNOT BE RE - OPENED MERELY BECAUSE SUBSEQUENTLY THE OFFIC ER HAD A DIFFERENT VIEW IN THIS REGARD. WHETHER THE ASSESSEE HAS MADE FULL DISCLOSURE OF FACTS RELEVANT TO ITS COMPUTATION OF INCOME IN THE RETURN OF INCOME AS WELL AS IN THE COURSE OF INITIAL ASSESSMENT PROCEEDINGS, THE ASSESSMENT CANNOT BE RE - OPENED U/S 147 UNLESS THERE IS ANY TANGIBLE MATERIAL TO COME TO CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME. AS 4 ITA NO. 79/PNJ/2012 CO NO. 11/PNJ/2012 (ASST. YEAR : 2005 - 06) PER PROVISION OF SEC. 147, THE AO SHOULD HAVE APPROPRIATE REASONS TO BELIEVE THAT THERE HAVE BEEN ANY UNDISCLOSED INCOME OR FURNISHING OF INACCURATE PA RTICULARS OR THAT THE ASSESSEE HAS CLA I MED ANY EXCESSIVE RELIEF. AFTER THE AMENDMENT ON 1.4.1989 THE POWER TO RE - OPEN IS WIDER. HOWEVER, MERE CHANGE OF OPINION CANNOT PER SE BE THE REASON TO RE - OPEN. ACCORDINGLY, THE AO HAS POWER TO RE - ASSESS BUT NO POW ER TO REVIEW. APART FROM T HE FACT THAT DETAILS INCLUDING OWNERSHIP OF LAND WAS ON RECORD IN THE ORIGINAL ASSESSMENT FOR A.Y. 2005 - 06 , T HIS ISSUE WAS ALSO RAISED IN A.Y. 2006 - 07. THE ASSESSEE HAS MADE SUBMISSION ON 26.12.2008 INCLUDING IN REGARDS TO THE OWNERSHIP. IN THE ASSESSMENT ORDER, THE ISSUE ABOUT OWNERSHIP IS DISCUSSED AND AFTER DISCUSSION, THE CLAIM IS ALLOWED. THE LD. AR SUBMITTED THAT IN ONE ORDER DEPARTMENT ACCEPTS THE CLAIM AFT ER DETAILED DISCUSSION AND ALSO VIRTUALLY SIMULTANEOUSLY PROCEEDS TO RE - OPEN THE ASSESSMENT OF EARLIER YEAR ON THE SAME ISSUE. THIS IS CLEAR ABUSE OF PROVISIONS OF SEC. 147. THE LD. AR FURTHER SUBMITTED THAT IN THE PRESENT CASE, RE - OPENING OF THE ASSESSM ENT IS ONLY ON ACCOUNT OF CHANGE OF OPINION AND NOT ON ACCOUNT OF NEW FINDING OF FACTS. THE AO HAS RE - OPENED THE CASE WITHOUT HAVING ANY FRESH INFORMATION OR CORROBORATIVE EVIDENCE IN SUPPORT OF HIS CLAIM TO PROVE THAT THERE IS AN INCOME WHICH HAS ESCAPED ASSESSMENT. THE AO BELIEVES THAT THERE IS INCOME ESCAPED ASSESSMENT ON THE BASIS OF DOCUMENTS AND MATERIALS WHICH WERE ALREADY AVAILABLE ON RECORD. THEREFORE, WHEN THE ENTIRE MATERIAL WAS PLACED BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSMENT AND THE A SSESSEES CLAIM HAS BEEN ACCEPTED WITHOUT ANY ADVERSE RECORDING, THE ASSESSMENT ORDER CANNOT BE RE - OPENED ON THE GROUND THAT THE AO DID NOT EXPRESS THIS EXPLICITLY IN THE ORDER AND THIS CANNOT GIVE THE AO OR HIS SUCCESSOR IN OFFICE A REASON TO CONTEND THAT FULL DISCLOSURE WAS NOT MADE. THE ASSESSEE RELIED UPON THE DECISION S IN THE ACIT VS. KELVINATOR OF INDIA LTD. 320 ITR 561 SC, AVENTIS PHARMA LTD. VS. ACIT & ORS. 323 ITR 570 MUM HC AND CIT VS. EICHER LTD. 294 ITR 310 DEL HC. 5 ITA NO. 79/PNJ/2012 CO NO. 11/PNJ/2012 (ASST. YEAR : 2005 - 06) 3.2 THE LD. DR RELIED UPON THE ORDER OF THE REVENUE AUTHORITIES. 3.3 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IN THIS CASE THE ASSESSMENT WAS PROCESSED U/S 143(3) OF THE ACT. THE AO HAS CONSIDERED A LL THE RELEVANT FACTS OF THE CASE WHILE PASSING THE ORIGINAL ASSESSMENT ORDER. ONLY AFTER BEING SATISFIED THAT PRESCRIBED CONDITIONS FOR CLAIM OF DEDUCTION UNDER SEC. 80 - IB(10) OF THE ACT WERE COMPLIED WITH, THE DEDUCTION WAS ALLOWED TO THE ASSESSEE. IN THE ASSESSMENT ORDER IT IS STATED THAT THE ASSESSMENT WAS ORIGINALLY COMPLETED U/S 143(3) ON 2 8 . 3 .2007 ON TOTAL INCOME OF RS.11,95,000/ - AFTER ALLOWING DEDUCTION U/S 80 - IB OF THE ACT FOR RS.85,79,483/ - . SUBSEQUENTLY, THE CASE WAS RE - OPENED U/S 147 AFTER O BTAINING THE PRIOR APPROVAL AND NOTICE U/S 148 WAS ISSUED ON 10.12.2008 WHICH WAS DULY SERVED ON THE ASSESSEE ON 12.12.2008. WE FIND THAT THE ASSESSEE HAS NOT FILED NEW RETURN BUT ASSESSEE HAS REQUESTED THAT THE ORIGINAL RETURN MAY BE TREATED AS RETURN FI LED IN COMPLIANCE OF SEC. 147 OF THE ACT. WE FIND THAT THE ASSESSEE HAS FURNISHED ALL THE RELEVANT DETAILS TO CLAIM THE DEDUCTION U/S. 80 - IB(10) OF THE ACT. WE FIND THAT IN THE ORIGINAL ASSESSMENT ORDER, THE AO HAS DISCUSSED THE ISSUE WHILE COMPLETING THE ASSESSMENT ORDER. WE FIND THAT THE AO HAS VERIFIED THE CONDITIONS STIPULATED TO CLAIM DEDUCTION U/S. 80 - IB(10) OF THE ACT. WE FIND THAT THE OWNERSHIP ISSUE WAS DISCUSSED BY THE AO IN THE ORIGINAL ORDER PASSED U/S. 143 OF THE ACT. WE ALSO FIND THAT T HE ISSUE OF OWNERSHIP WAS ALSO RAISED IN A.Y. 2006 - 07. IN THE A.Y. 2006 - 07 THE AO HAS ALLOWED THE DEDUCTION U/S. 80 - IB(10) OF THE ACT TO THE ASSESSEE. THE OWNERSHIP ISSUE IS ALSO DISCUSSED BY THE AO. WE FIND THAT THE AO HAS RE - OPENED THE CASE WITHOUT HA VING ANY FRESH INFORMATION OR CORROBORATIVE EVIDENCE IN SUPPORT OF HIS CLAIM TO PROVE THAT THERE IS ANY INCOME WHICH HAS ESCAPED ASSESSMENT. WE ALSO FIND THAT THE ASSESSEE HAS FILED ALL THE DOCUMENTS AND MATERIALS WHICH ARE AVAILABLE ON THE RECORD. THERE FORE, IN OUR 6 ITA NO. 79/PNJ/2012 CO NO. 11/PNJ/2012 (ASST. YEAR : 2005 - 06) OPINION, THE AO HAS VERIFIED ALL THE DOCUMENTS AND CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED WITHOUT ANY ADVERSE RECORDING. WE ALSO FIND THAT THE CIT(A) HAS RE - OPENED THE ASSESSMENT FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CAS E OF ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. 161 TAXMANN 316. WE FIND THAT IN THIS CASE THE ORIGINAL ASSESSMENT ORDER WAS PASSED U/S 143(1) OF THE ACT. THEREFORE, THE HON'BLE COURT HAS HELD THAT THE ASSESSMENT CAN BE RE - OPENED BECAUSE THERE WAS NO ASSESSMENT MADE U/S 143(1) OF THE ACT. IN THE INSTANT CASE, THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE INCOME TAX ACT. WE FIND THAT THE AO HAS VERIFIED THE CLAIM AND AFTER EXAMINING ALL THE CONDITIONS, THE CLAIM HAS BEEN ACCEPTED. THEREFORE, W E ARE OF THE VIEW THAT IT IS MERELY CHANGE OF OPINION AND WHEN IT IS MERELY CHANGE OF OPINION, IT CANNOT BE RE - OPENED U/S 147 OF THE ACT. WE HAVE ALSO GONE THROUGH THE REASONS RECORDED FOR ISSUE OF NOTICE U/S 148 OF THE ACT WHEREIN THE AO DID NOT FIND ANY NEW FACTS IN THE NOTICE ITSELF. WE FIND THAT THE RE - ASSESSMENT PROCEEDING WILL BE INVALID IN THE CASE. THE ASSESSMENT ORDER ITSELF RECORDS THAT THE ISSUE WAS RAISED AND DECIDED IN THE FAVOUR OF THE ASSESSEE. THE RE - ASSESSMENT PROCEEDING IN THIS CASE WILL BE HIT BY PRINCIPL E OF CHANGE OF OPINION. I N THE RE - ASSESSMENT PROCEEDING IS INVALID IN THIS CASE ON THE GROUND THAT IN THE ORIGINAL ASSESSMENT PROCEEDING T HE ASSESSING OFFICER HAS EXAMINED CLAIM OF DEDUCTION UNDER SECTION 80 - IB(10) OF THE INCOME TAX ACT , T HE ASSESSING OFFICER FOUND A OPINION IN ORIGINAL ASSESSMENT AND HE HAS RECORDED REASONS. WE FIND THAT NO NEW FACTS MATERIAL OR INFORMATION COMES TO THE KNOWLEDGE OF ASSESSING OFFICER WHICH WAS NOT ON THE REGARD AND AVAILABLE AT THE TIME OF ASSESSMENT, TH EREFORE, THIS AMOUNTS TO CHANGE OF OPINION. WE FIND THAT THE SUPREME COURT IN THE CASE OF CIT VS. KEL VINATOR OF INDIA 320 ITR 561, WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT AFTER APRIL 1ST 1989. THE ASSESSING OFFICER HAS POWER TO REOPEN ASSESSMENT PR OVIDED, T HERE IS TANGIBLE MATERIAL TO COME TO CONCLUSION THAT THERE WAS ESCAPEMENT INCOME FROM THE ASSESSMENT. WE RESPECTFULLY FOLLOWING THE JUDGEMENT OF HONBLE 7 ITA NO. 79/PNJ/2012 CO NO. 11/PNJ/2012 (ASST. YEAR : 2005 - 06) SUPREME COURT . WE ALLOWED THE CO FILED BY THE ASSESSEE. WE THEREFORE, HELD THAT THE ASSESSMEN T ORDER PASSED BY THE ASSESSING OFFICER IS BAD IN LAW. IN VIEW OF THE INVALIDITY OF THE RE - ASSESSMENT PROCEEDING FOR THE YEAR. IN THE RESULT CO. IS ALLOWED. 3.4 IN THE RESULT THE CROSS OBJECTION IS ALLOWED THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS BAD IN LAW IN VIEW OF INVALIDITY OF RE - ASSESSMENT PROCEEDING. WE, THEREFORE, DID NOT DECIDE DEPARTMENT APPEAL IN ITAT NO.79/PNJ/2012, BECOME INFRUCTUOUS FO R ADJUDICATION. 4. ORDER PRONOUNCED IN THE OPEN COURT ON 14 /06/2013. SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER SD/ - (D.T.GARASIA) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 14 /06/ 2013 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA