M/s Cornerstone Properties Private Limited, Bangalore V. ACIT, Bangalore

CO 64/BANG/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3131 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-08-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 01-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Agreed addition; Competent authority; Block assessment
• Section: 143(3); 153A; 80IB; 147; 148; 6; 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHR I LALIET KUMAR, JUDICIAL MEMBER ITA NO S . 17 14 TO 1717 /BANG/201 3 ASSESSMENT YEAR S : 20 0 6 - 0 7 TO 2009 - 10 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 2(2), BANGALORE. VS. M/S. CORNERSTONE PROPERTIES PRIVATE LIMITED, I & II FLOOR, NO. 540, C.M.H. ROAD, INDIRA NAGAR, BANGALORE 560 038. PAN: AACCC 3343B APPELLANT RESPONDENT C.O. NOS. 62 TO 65/BANG/2014 (IN ITA NOS. 1714 TO 1717/BANG/2013) ASSESSMENT YEARS : 2006 - 07 TO 2009 - 10 M/S. CORNERSTONE PROPERTIES PRIVATE LIMITED, I & II FLOOR, NO. 540, C.M.H. ROAD, INDIRA NAGAR, BANGALORE 560 038. PAN: AACCC 3343B VS. THE ASSISTANT COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 2(2), BANGALORE. APPELLANT RESPONDENT A SSESSEE BY : SHRI S. ANANTHAN, CA RE VENUE BY : MS NEERA MALHOTRA, CIT (DR) DATE OF HEARING : 09 .0 8 .2017 DATE OF PRONOUNCEMENT : 08 .0 9 .2017 O R D E R PER BENCH: ALL THESE FOUR APPEALS ARE FILED BY THE REVENUE AN D ALL THE FOUR CROSS OBJECTIONS ARE FILED BY THE ASSESSEE AND THESE ARE DIRECTED AGAINST THE ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 2 OF 27 COMBINED ORDER OF LD. CIT (A)-VI, BANGALORE DATED 1 0.09.2013 FOR ASSESSMENT YEARS 2006-07 TO 2009-10. ALL THESE WER E HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORD ER FOR THE SAKE OF CONVENIENCE. 2. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT C.O. NO . 65/BANG/2014 FOR ASSESSMENT YEAR 2009-10 IS NOT PRESSED AND ACCORDIN GLY THIS CROSS OBJECTION OF ASSESSEE IS DISMISSED AS NOT PRESSED. 3. NOW WE TAKE UP THE REMAINING COS FILED BY THE ASSE SSEE FOR ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09. THE GROUNDS RA ISED BY THE ASSESSEE IN THESE COS ARE IDENTICAL AND HENCE, THE GROUNDS ARE REPRODUCED FROM C.O. NO. 62/BANG/2014 FOR THE ASSES SMENT YEAR 2006- 07. THE GROUNDS ARE AS UNDER 1. THE LEARNED CIT (A) FAILED TO APPRECIATE THE FAC T THAT THE ASSESSMENT MADE BY THE LEARNED ASSESSING OFFICE R U/S 153A OF INCOME-TAX ACT, 1961 IS BEYOND THE SCOPE OF SECTION 153A. 1.1. THE LEARNED CIT (A) FAILED TO APPRECIATE THE F ACT THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIALS COMPL ETED ASSESSMENTS CANNOT BE DISTURBED. 1.2. THE LEARNED CIT (A) ERRED IN RELYING THE ON TH E STATEMENT OF MR. KUMAR BABU TO UPHOLD THE VALIDITY OF THE ASSESSMENT. 1.3. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FA CT THAT DISALLOWANCE OF DEDUCTION U/S 80LB OF THE INCOME TA X ACT, 1961 IS BEYOND THE SCOPE OF SECTION 153A OF THE INC OME TAX ACT, 1961. ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 3 OF 27 FOR THE ABOVE MENTIONED GROUNDS OR ANY OTHER GROUND S THAT MAY BE PRESSED AT THE TIME OF HEARING, THE APP ELLANT PRAYS THAT THE CROSS APPEAL OF THE APPELLANT BE ALL OWED. 4. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT AS PER THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CIT VS. LANCY CONSTRUCTIONS AS REPORTED IN 383 ITR 168 (KAR), IT WAS HELD BY HONBLE KARNATAKA HIGH COURT THAT MERELY BECAUSE A SEARCH I S CONDUCTED IN THE PREMISES OF THE ASSESSEE, IT WOULD NOT ENTITLE THE REVENUE TO INITIATE THE PROCESS OF REASSESSMENT, FOR WHICH THERE IS A SEPAR ATE PROCEDURE. IT WAS ALSO HELD BY HON'BLE KARNATAKA HIGH COURT THAT IF A SSESSMENT IS ALLOWED TO BE REOPENED ON THE BASIS OF SEARCH, IN WHICH NO INCRIMINATING MATERIAL HAD BEEN FOUND, AND MERELY ON THE BASIS OF FURTHER INVESTIGATING THE BOOKS OF ACCOUNT WHICH HAD BEEN ALREADY SUBMITTED B Y THE ASSESSEE AND ACCEPTED BY THE AO AT THE TIME OF REGULAR ASSESSMEN T, THE SAME WOULD AMOUNT TO THE REVENUE GETTING A SECOND OPPORTUNITY TO REOPEN THE CONCLUDED ASSESSMENT, WHICH IS NOT PERMISSIBLE UNDE R THE LAW. HE SUBMITTED THAT IN THE PRESENT CASE ALSO, NO INCRIMI NATING MATERIAL WAS FOUND IN THE COURSE OF SEARCH AND ORIGINAL ASSESSME NT FOR THE ASSESSMENT YEAR 2007-08 WAS COMPLETED U/S. 143(3) ON 30.12.200 9 AND THE COPY OF THE ASSESSMENT ORDER IS AVAILABLE ON PAGES 54 TO 55 OF THE PAPER BOOK. HE ALSO SUBMITTED THAT ON PAGES 56 AND 57 OF THE PAPER BOOK IS THE QUERY LETTER ISSUED BY THE AO ON 08.09.2009 IN COURSE OF ORIGINAL ASSESSMENT ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 4 OF 27 PROCEEDINGS FOR ASSESSMENT YEAR 2007-08 AND IN THAT QUERY LETTER, THE ISSUE REGARDING CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 80IB OF IT ACT FOR RS. 6,14,61,531/- WAS ENQUIRED BY THE AO AND BEING SATISFIED WITH REPLY OF ASSESSEE, NO DISALLOWANCE WAS MADE AS PER THE AS SESSMENT ORDER PASSED ON 30.12.2009. HE ALSO SUBMITTED THAT AS PER THE A SSESSMENT ORDER PASSED BY THE AO U/S. 153C R.W.S. 143 (3) OF THE IT ACT, 1 961, THERE IS NO REFERENCE TO ANY INCRIMINATING MATERIAL. THE ONLY SEIZED MATERIAL REFERRED TO IN THE ASSESSMENT ORDER IS THE COPY OF JDA DATED 09.08.2004 ENTERED BY THE ASSESSEE COMPANY WITH M/S. SHRIRAM PROPERTIE S LTD. (SPL) IN RESPECT OF THE PROJECT UNDER THE NAME SHRIRAM SPAND HANA. HE SUBMITTED THAT THE JDA FOUND IN COURSE OF SEARCH CANNOT BE SA ID TO BE INCRIMINATING MATERIAL BECAUSE THE SAME WAS DULY EXAMINED BY THE AO IN COURSE OF REGULAR ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT Y EAR 2007-08 FOR WHICH THE ASSESSMENT ORDER U/S. 143(3) DATED 30.12. 2009 IS AVAILABLE ON RECORD ON PAGES 54 AND 55 OF THE PAPER BOOK. HE SU BMITTED THAT THEREFORE, IN THE FACTS OF THE PRESENT CASE AND AS PER THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CIT VS. LANCY CONSTRUCTIONS (SUPRA), THE ASSESSMENT ORDER PASSED BY THE AO FOR THESE THREE ASSESSMENT YEARS U/S. 143(3) R.W.S. 153A ARE BAD IN LAW AND SHOULD BE QUASHED. ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 5 OF 27 5. AS AGAINST THIS, THE LD. DR OF REVENUE PLACED RELIA NCE ON THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CANARA HOUSING DEVELOPMENT CO. VS. DCIT AS REPORTED IN 274 CTR 122 (KARNATAKA) WHEREIN IT WAS HELD THAT FOR ASSESSMENT U/S. 153A O F IT ACT, FINDING OF INCRIMINATING MATERIAL IN THE COURSE OF SEARCH IS N OT ESSENTIAL. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CANARA HOUSING DEVELOPMENT CO. VS. D CIT (SUPRA) ON WHICH RELIANCE IS PLACED BY THE LD. DR OF REVENUE. AS PER THIS JUDGMENT IN THE PARA NO. 7 OF JUDGMENT, THE ISSUE WHICH WAS CONSIDERED BY HON'BLE KARNATAKA HIGH COURT WAS AS UNDER:- 'WHEN ONCE THE PROCEEDINGS UNDER SECTION 153A OF THE ACT IS INITIATED, WHETHER THE COMMISSIONER OF INCOME TAX CAN INVOKE THE POWER UNDER SECTION 263 OF THE ACT TO REVIEW THE ORDER OF ASSESSMENT PASSED BY THE ASSESSING AUTHORITY?' 7. HENCE IT IS SEEN THAT IN THAT CASE, THE ISSUE UNDER CONSIDERATION OF HON'BLE KARNATAKA HIGH COURT WAS NOT THIS AS TO WHETHER THE FINDING OF INCRIMINATING MATERIAL IN COURSE OF SEARCH IS ESSEN TIAL OR NOT FOR THE PURPOSE OF ASSESSMENT U/S. 153A BUT THE ISSUE UNDER CONSIDERATION WAS THIS THE AS TO WHETHER THE COMMISSIONER CAN INVOKE THE POWER OF REVISION U/S. 263 OF THE IT ACT TO REVIEW THE ORDER OF ASSES SMENT PASSED BY THE AO U/S. 153A OF THE IT ACT. AS PER THE FACTS OF THAT CASE, RETURN OF INCOME ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 6 OF 27 WAS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2 008-09 AND THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT ORDER U/S. 143(3) OF IT ACT WAS PASSED ON 31.12.2010 AND THEREAFTER, A SEARCH TOOK PLACE IN THE PREMISES OF ASSESSEE ON 12.04.2011. THIS IS ALSO NOTED IN P ARA NO. 2 OF THE JUDGMENT THAT IN THE COURSE OF SEARCH, INCRIMINATIN G MATERIAL LEADING TO INCOME WAS SEIZED AND THE PROCEEDING WAS INITIATED U/S. 153A OF THE IT ACT CALLING UPON THE ASSESSEE TO FILE THE RETURN OF INCOME U/S. 153A OF THE IT ACT. THIS NOTICE WAS ISSUED ON 13.01.2012. IN PURSUANCE TO THAT NOTICE, THE ASSESSEE FILED THE RETURN OF INCOME ON 03.02.2012 FOR SIX YEARS AND WHEN THE SAID RETURN WAS UNDER CONSIDERATION, O N 14.03.2013, THE LD. CIT INITIATED THE PROCEEDINGS U/S. 263 OF IT ACT ON THE GROUND THAT THE ORDER DATED 31.12.2010 PASSED U/S. 143(3) OF IT ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE AS SESSEE FILED ITS OBJECTIONS. BUT THE COMMISSIONER PASSED THE ORDER U/S. 263 OF THE IT ACT ON 28.03.2013 DIRECTING THE AO TO ENHANCE THE TOTAL INCOME AS MENTIONED IN THE CITS ORDER AND BEING AGGRIEVED, THE ASSESSE E FILED APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL HELD THAT IF ASSESSMENT ORDER WAS ALREADY PASSED BEFORE INITIATING PROCEEDINGS U/S. 153A, THE SAID ORDER DOES NOT ABATE AND THEREFORE IN THE PROCEEDINGS U/S. 153A OF IT ACT, THE AO HAS TO CONFINE THE ASSESSMENT TO THE INCRIMINATING MATERIA L FOUND DURING THE SEARCH AND HE CANNOT TAKE INTO CONSIDERATION THE OT HER MATERIALS WHILE ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 7 OF 27 MAKING THE ASSESSMENT ORDER AND THEREFORE, IT IS OP EN TO THE CIT TO INVOKE HIS POWERS U/S. 263 OF IT ACT AND FOR COMING TO THI S CONCLUSION, THE TRIBUNAL RELIED ON THE JUDGMENT OF SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT AS REPORTED IN 16 ITR 380(T) (MUMBAI) (SPECIAL BENCH). BEING AGGRIEV ED, THE ASSESSEE FILED APPEAL BEFORE THE HON'BLE KARNATAKA HIGH COUR T. THE HON'BLE KARNATAKA HIGH COURT REVERSED THE TRIBUNAL ORDER AN D UPHELD THE REVISIONARY ORDER PASSED BY THE COMMISSIONER U/S. 2 63 OF IT ACT. THE DIRECTION OF HON'BLE KARNATAKA HIGH COURT AS PER PA RA 10 AND 11 ARE REPRODUCED HEREIN BELOW. 10. SECTION 153A OF THE ACT STARTS WITH A NON OBSTANTE CLAUSE. THE FETTERS IMPOSED UPON THE ASSESSING OFFICER BY THE STRICT PROCEDURE TO ASSUME JURISDICTION TO REOPEN THE ASSESSMENT UNDER SECTIONS 147 AND 148, HAVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB- SECTION (1) OF SECTION 153A OPENS. THE TIME-LIMIT WITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE ISSUED, AS PROVIDED IN SECTION 149 HAS ALSO BEEN MADE INAPPLICABLE BY THE NON OBSTANTE CLAUSE. SECTION 151 WHICH REQUIRES SANCTION TO BE OBTAINED BY THE ASSESSING OFFICER BY ISSUE OF NOTICE TO REOPEN THE ASSESSMENT UNDER SECTION 148 HAS ALSO BEEN EXCLUDED IN A CASE COVERED BY ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 8 OF 27 SECTION 153A. THE TIME-LIMIT PRESCRIBED FOR COMPLETION OF AN ASSESSMENT OR REASSESSMENT BY SECTION 153 HAS ALSO BEEN DONE AWAY WITH IN A CASE COVERED BY SECTION 153A. WITH ALL THE STOPS HAVING BEEN PULLED OUT, THE ASSESSING OFFICER UNDER SECTION 153A HAS BEEN ENTRUSTED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE IS COVERED BY SECTION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS, IF NEED BE. THEREFORE, IT IS CLEAR EVEN IF AN ASSESSMENT ORDER IS PASSED UNDER SECTION 143(1) OR 143(3) OF THE ACT, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. AFTER SUCH REOPENING OF THE ASSESSMENT, THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSESS THE TOTAL INCOME OF THE AFORESAID YEARS. THE CONDITION PRECEDENT FOR APPLICATION OF SECTION 153A IS THERE SHOULD BE A SEARCH UNDER SECTION 132. INITIATION OF PROCEEDINGS UNDER SECTION 153A IS NOT DEPENDENT ON ANY UNDISCLOSED INCOME BEING UNEARTHED DURING SUCH SEARCH. THE PROVISO TO THE AFORESAID SECTION MAKES IT CLEAR THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS. IF ANY ASSESSMENT PROCEEDINGS ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 9 OF 27 ARE PENDING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THE AFORESAID SUB-SECTION ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132, THE SAID PROCEEDING SHALL ABATE. IF SUCH PROCEEDINGS ARE ALREADY CONCLUDED BY THE ASSESSING OFFICER BY INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE LEGAL EFFECT IS THE ASSESSMENT GETS REOPENED. THE BLOCK ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED; RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION 153A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO ASSESS OR REASSESS THE TOTAL INCOME OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL, INCOME, TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. HE HAS BEEN ENTRUSTED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE IS COVERED BY SECTION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. WHEN ONCE THE PROCEEDINGS ARE INITIATED UNDER SECTION 153A OF THE ACT, THE LEGAL EFFECT IS EVEN I N ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 10 OF 27 CASE WHERE THE ASSESSMENT ORDER IS PASSED IT STANDS REOPENED. IN THE EYE OF LAW THERE IS NO ORDER OF ASSESSMENT. RE-OPENED MEANS TO DEAL WITH OR BEGIN WITH AGAIN. IT MEANS THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS. ONCE THE ASSESSMENT IS REOPENED, THE ASSESSING AUTHORITY CAN TAKE NOTE OF THE INCOME DISCLOSED IN THE EARLIER RETURN, ANY UNDISCLOSED INCOME FOUND DURING SEARCH OR AND ALSO ANY OTHER INCOME WHICH IS NOT DISCLOSED IN THE EARLIER RETURN OR WHICH IS NOT UNEARTHED DURING THE SEARCH, IN ORDER TO FIND OUT WHAT IS THE 'TOTAL INCOME' OF EACH YEAR AND THEN PASS THE ASSESSMENT ORDER. THEREFORE, THE COMMISSIONER BY VIRTUE OF THE POWER CONFERRED UNDER SECTION 263 OF THE ACT GETS NO JURISDICTION TO INITIATE PROCEEDINGS UNDER THE SAID PROVISION BECAUSE THE CONDITION PRECEDENT FOR INITIATING PROCEEDINGS UNDER SECTION 263 IS ANY ORDER PASSED UNDER THE ACT BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE . ONCE THE ORDER PASSED BY THE ASSESSING OFFICER GETS REOPENED, THERE IS NO ORDER WHICH CAN BE SAID TO BE ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE - INTEREST OF THE REVENUE WHICH CONFERS JURISDICTION ON THE COMMISSIONER TO EXERCISE THE POWER OF THE JURISDICTION. ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 11 OF 27 11. THE TRIBUNAL HAS PROCEEDED' ON THE ASSUMPTION BY VIRTUE OF THE JUDGMENT OF THE SPECIAL BENCH OF THE MUMBAI, THE SCOPE OF ENQUIRY UNDER SECTION 153A IS TO BE CONFINED ONLY TO THE UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND IF THERE IS ANY OTHER INCOME WHICH IS NOT THE SUBJECT-MATTER OF SEARCH, THE SAME CANNOT BE TAKEN INTO CONSIDERATION. THEREFORE, THE REVISIONAL AUTHORITY CAN EXERCISE THE POWER UNDER SECTION 263. IN THE ENTIRE SCHEME OF 153A, OF THE ACT, THERE IS NO PROHIBITION FOR THE ASSESSING AUTHORITY TO TAKE NOTE OF SUCH INCOME. ON THE CONTRARY, IT IS EXPRESSLY PROVIDED UNDER SECTION 153A OF THE ACT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE 'TOTAL INCOME' OF SIX ASSESSMENT YEARS WHICH MEANS THE SAID TOTAL INCOME INCLUDES INCOME WHICH WAS RETURNED IN THE EARLIER RETURN, THE INCOME WHICH WAS UNEARTHED DURING SEARCH AND INCOME WHICH IS NOT THE SUBJECT-MATTER OF AFORESAID TWO INCOME. IF THE COMMISSIONER HAS COME ACROSS ANY INCOME THAT THE ASSESSING AUTHORITY HAS NOT TAKEN NOTE OF WHILE PASSING THE EARLIER ORDER, THE SAID MATERIAL CAN BE FURNISHED TO THE ASSESSING AUTHORITY AND THE ASSESSING AUTHORITY SHALL TAKE NOTE OF THE SAID INCOME ALSO IN DETERMINING THE TOTAL INCOME OF THE ASSESSEE WHEN THE EARLIER PROCEEDINGS ARE REOPENED AND THAT INCOME ALSO SHALL BECOME THE SUBJECT-MATTER ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 12 OF 27 OF SAID PROCEEDINGS. IN THAT VIEW OF THE MATTER THE REASONING GIVEN BY THE TRIBUNAL IS NOT JUSTIFIED. THE COMMISSIONER DID NOT HAVE JURISDICTION TO INITIATE ANY PROCEEDINGS UNDER SECTION 263 OF THE ACT. 8. IN OUR CONSIDERED OPINION, AS PER THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, IN COURSE OF ASSESSMENT PROCEEDINGS U/S . 153A OF IT ACT, THE AO HAS TO CONSIDER THE INCOME DISCLOSED IN THE EARL IER RETURN, ANY OTHER INCOME FOUND DURING SEARCH OR AND ALSO ANY OTHER IN COME WHICH IS NOT DISCLOSED IN THE EARLIER RETURN OR WHICH IS NOT FOU ND DURING THE SEARCH IN ORDER TO FIND OUT WHAT IS THE INCOME OF EACH YEAR O UT OF THE SIX ASSESSMENT YEARS FOR WHICH THE ASSESSMENT ORDERS ARE TO BE PAS SED U/S. 153A OF IT ACT. IN OUR CONSIDERED OPINION, THIS JUDGMENT HAS NOT LAID DOWN A RATIO THAT EVEN IF THERE IS NO INCRIMINATING MATERIAL FOU ND IN THE COURSE OF SEARCH, SECTION 153A CAN BE INVOKED BECAUSE IN THAT CASE, INCRIMINATING MATERIAL WAS FOUND IN COURSE OF SEARCH AND INVOCATI ON OF SECTION 153A WAS NOT IN DISPUTE. THE JUDGMENT IN THIS CASE IS T HIS THAT HAVING INVOKED THE PROVISIONS OF SECTION 153A IN PROPER MANNER, IN COME TO BE ASSESSED IS NOT ONLY THE INCOME FOUND IN SEARCH BUT ALSO THE IN COME DECLARED BY THE ASSESSEE IN THE ORIGINAL RETURN AND ALSO ANY OTHER INCOME WHICH COMES TO LIGHT IN THE ASSESSMENT PROCEEDINGS U/S 153A. ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 13 OF 27 9. NOW, WE EXAMINE THE APPLICABILITY OF THE LATER JUDG MENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS . LANCY CONSTRUCTIONS (SUPRA). THE QUESTION OF LAW NO. 1 B EFORE THE HON'BLE KARNATAKA HIGH COURT IN THIS CASE WAS AS UNDER. 'I. WHETHER ACCOUNTS IN TALLY COPIED AND SEIZED AT THE TIME OF SEARCH DO NOT COME WITHIN THE PURVIEW OF 'MATERIAL FOUND DURING THE COURSE OF SEARCH' AS PER THE RATIO OF THE DECISION OF THE SPECIAL BENCH OF THE BANGALORE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. V. CIT 18 ITR (TRIB.) 106. 10. HENCE IT IS SEEN THAT IN THIS CASE, THE QUESTION BE FORE THE HON'BLE KARNATAKA HIGH COURT WAS THIS AS TO WHETHER THE ACC OUNTS IN TALLY COPIED AT THE TIME OF SEARCH IS INCRIMINATING MATERIAL FOU ND DURING THE COURSE OF SEARCH. AFTER HOLDING THAT THE SAME IS NOT INCRIMIN ATING MATERIAL, IT WAS HELD BY THE HON'BLE KARNATAKA HIGH COURT THAT ASSES SMENT CANNOT BE REOPENED ON THE BASIS OF SEARCH IN WHICH NO INCRIMI NATING MATERIAL WAS FOUND. FOR THE SAKE OF READY REFERENCE, WE REPRODU CE PARA NO. 6 OF THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT AND THE SA ME IS AS UNDER:- 6. IN OUR VIEW, IF ASSESSMENT IS ALLOWED TO BE REOPENED ON THE BASIS OF SEARCH, IN WHICH NO INCRIMINATING MATERIAL HAD BEEN FOUND, AND MERELY ON THE BASIS OF FURTHER INVESTIGATING THE BOOKS OF ACCOUNT WHICH HAD BEEN ALREADY SUBMITTED BY THE ASSESSEE ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 14 OF 27 AND ACCEPTED BY THE ASSESSING OFFICER AT THE TIME OF REGULAR ASSESSMENT, THE SAME WOULD AMOUNT TO THE REVENUE GETTING A SECOND OPPORTUNITY TO REOPEN THE CONCLUDED ASSESSMENT, WHICH IS NOT PERMISSIBLE UNDER THE LAW. MERELY BECAUSE A SEARCH IS CONDUCTED IN THE PREMISES OF THE ASSESSEE, WOULD NOT ENTITLE THE REVENUE TO INITIATE THE PROCESS OF REASSESSMENT, FOR WHICH THERE IS A SEPARATE PROCEDURE PRESCRIBED IN THE STATUTE. IT IS ONLY WHEN THE CONDITIONS PRESCRIBED FOR REASSESSMENT ARE FULFILLED THAT A CONCLUDED ASSESSMENT CAN BE REOPENED. THE VERY SAME ACCOUNTS WHICH WERE SUBMITTED BY THE ASSESSEE, ON THE BASIS OF WHICH ASSESSMENT HAD BEEN CONCLUDED, CANNOT BE REAPPRECIATED BY THE ASSESSING OFFICER MERELY BECAUSE A SEARCH HAD BEEN CONDUCTED IN THE PREMISES OF THE ASSESSEE. 11. AS PER THIS LATER JUDGMENT OF HON'BLE KARNATAKA HIG H COURT, THE ISSUE IN DISPUTE BEFORE THE HIGH COURT WAS THIS AS TO WHETHE R THE MATERIAL FOUND IN THE COURSE OF SEARCH CAN BE SAID TO BE INCRIMINATIN G MATERIAL FOR THE PURPOSE OF INVOKING THE PROVISIONS OF SECTION 153A OF IT ACT. IN THAT CASE, THE MATERIAL IN DISPUTE WAS ACCOUNTS IN TALLY COPIED AND SEIZED AT THE TIME OF SEARCH. THERE WAS A SPECIFIC FINDING OF FA CT RECORDED BY THE TRIBUNAL AS WELL AS CIT(A) THAT THERE IS NO INCRIMI NATING MATERIAL FOUND IN ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 15 OF 27 THE COURSE OF SEARCH BECAUSE THE ACCOUNTS WHICH WER E SUBMITTED BY THE ASSESSEE AT THE TIME OF REGULAR ASSESSMENT WERE DUL Y VERIFIED DURING THE COURSE OF ASSESSMENT AND ACCEPTED BY THE AO. IN TH E PRESENT CASE ALSO, THE JDA COPY FOUND IN THE COURSE OF SEARCH WAS THE BASIS OF DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB OF THE IT ACT AND THIS CLAIM WAS VERY MUCH EXAMINED BY THE AO BY MAKING BELATED ENQUIRY A S PER THE ENQUIRY LETTER AVAILABLE ON PAGES 56 TO 57 OF PAPER BOOK IN RESPECT OF THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 80IB OF RS. 6,14,61 ,531/-. HENCE IN THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT THE JDA COPY CANNOT BE CONSIDERED AS AN INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH AND THERE IS NO REFERENCE TO ANY OTHER SEIZED MATER IAL IN THE ASSESSMENT ORDER AND THEREFORE, IN THE ABSENCE OF ANY INCRIMIN ATING MATERIAL FOUND IN THE COURSE OF SEARCH, THE ASSESSMENT PROCEEDINGS U/ S. 153A OF IT ACT IS BAD IN LAW AS PER THIS JUDGMENT OF HON'BLE KARNATAK A HIGH COURT RENDERED IN THE CASE OF CIT VS. LANCY CONSTRUCTIONS (SUPRA) ON WHICH RELIANCE IS PLACED BY THE LD. AR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, WE QUASH THE ASSESSMENT ORDERS PASSED BY THE AO U/S. 143(3) R.W. S. 153A FOR ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09. 12. IN THE RESULT, THESE THREE CROSS OBJECTIONS OF ASSE SSEE ARE ALLOWED. ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 16 OF 27 13. NOW WE TAKE UP THE APPEALS FILED BY THE REVENUE. I N THE APPEALS FILED BY THE REVENUE FOR THESE FOUR YEARS, THE ONLY GRIEVANC ES OF THE REVENUE IS REGARDING ALLOWABILITY OF DEDUCTION TO ASSESSEE U/S 80IB (10) OF IT ACT WHICH WERE DISALLOWED BY THE AO BUT HELD TO BE ALLO WABLE BY THE LD. CIT(A). IN OUR CONSIDERED OPINION, ONCE THE ASSESS MENT ORDER WHICH WERE FRAMED BY THE AO U/S. 153A OF IT ACT ITSELF AR E QUASHED BY US FOR THREE ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09 , THE APPEALS OF REVENUE FOR THESE THREE YEARS DO NOT SURVIVE. HENC E THESE THREE APPEALS OF REVENUE ARE DISMISSED. 14. NOW WE DECIDE THE REMAINING ONE APPEAL OF REVENUE F OR ASSESSMENT YEAR 2009-10 IN ITA NO. 1717/BANG/2013. THE GROUNDS RAI SED BY THE REVENUE ARE AS UNDER. GROUND NO .1 . THE LEARNED CIT(APPEALS) ERRED IN LAW AND IN FACT IN HOLDING THAT 80IB (10) IS ALSO AVAILABLE TO THE CONTRIBUTOR OF LAND IN A JOINT DEVELOPMENT AGREEMEN T WITH THE BUILDER AND THUS ALLOWED THE CLAIM OF RS. 61,61 ,991/- MADE BY THE ASSESSEE U/S.80IB OF THE I.T. ACT. GROUND NO.2 THE LEARNED CIT(APPEALS) ERRED IN LAW AND FACT BY RELYING ON THE DECISION OF THE HON'BLE HIGH COURT O F KARNATAKA IN THE CASE OF M/S.SHRAVANEE CONSTRUCTION S AS THE FACTS ARE DISTINGUISHABLE. THE LAND OWNER THERE HAD UNDERTAKEN DEVELOPMENTAL WORKS AND EVIDENCES WERE FURNISHED TO SUBSTANTIATE THE SAME. GROUND NO.3 ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 17 OF 27 THE LEARNED CIT(APPEALS) HAS NOT CONSIDERED THE FACT THAT THE ASSESSEE HAS NOT UNDERTAKEN ONLY DEVE LOPMENT WORKS IN THE PROJECT AND HENCE THE JUDGMENT OF M/S.SHRAVANEE CONSTRUCTIONS OF HON'BLE HIGH COURT O F KARNATAKA IS NOT APPLICABLE. GROUND NO.4 THE LEARNED CIT(APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE ASSESSEE HAS NOT UNDERTAKEN ANY DEVELOPMENT WORKS AND HAS ONLY PROVIDED THE LAND FO R DEVELOPMENT. ACCORDINGLY, THE ASSESSEE IS NOT ELIGI BLE FOR DEDUCTION U/S.80IB(10). 15. THE REVENUE HAS RAISED ADDITIONAL GROUNDS WHICH ARE REPRODUCED HEREIN BELOW. I) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS BY ADM ITTING ASSESSEE'S APPEAL, EVEN THOUGH ASSESSEE 'VOLUNTARIL Y AGREED TO WITHDRAW THE CLAIM' FAILING TO APPRECIATE THAT NO APPEAL LIES AGAINST AGREED ADDITION UNLESS ASSESSEE PROVES COERCION OR MALAFIDE. II) THE LD. CIT(A) HAS FAILED TO CALL FOR AND EXAMI NE THE RELEVANT DOCUMENTS IN REGARD TO DEDUCTION UNDER SEC TION 80IB IN SPITE OF THE FACT THAT NO DOCUMENTS IN SUPP ORT OF THE CLAIM HAD BEEN FILED BEFORE THE ASSESSING OFFICER. III)THE LD CIT(A) HAS ERRED IN ALLOWING DEDUCTION U NDER SECTION 80IB WITHOUT ASCERTAINING WHETHER THE ASSES SEE HAS FULFILLED THE CONDITIONS STIPULATED IN THE SAID SEC TION. IV) THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECESSAR Y. 16. LEARNED DR OF THE REVENUE DRAWN OUR ATTENTION T O PAGE 9 PARA 11 OF THE ORDER OF CIT (A) FOR THIS YEAR AND POINTED OUT THAT LEARNED CIT (A) HAS VERY CLEARLY STATED HERE THAT ON FACTS, IT IS C LEAR THAT THE ASSESSEE WAS MERELY OWNER OF LAND AND HAS ENTERED INTO A JDA ON 09.08.2004 WITH M/S ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 18 OF 27 SHRIRAM PROPERTIES LIMITED, CHENNAI AND WHEN THE A. O. STATED IN THE ASSESSMENT PROCEEDINGS THAT THE DEDUCTION U/S 80IB (10) IS NOT ALLOWABLE FOR THIS REASON, THE ASSESSEE AGREED TO THIS DISALL OWANCE PROPOSED BY THE A. O. THE CIT (A) HAS ALSO NOTED THAT EVEN BEFORE H IM, IT WAS THE CONTENTION RAISED THAT ALTHOUGH THE ASSESSEE IS LAN D OWNER ONLY; DEDUCTION U/S 80 IB (10) IS ALLOWABLE BECAUSE THE ASSESSEE IS A STAKE HOLDER IN THE JDA AND THE SAID CONSTRUCTION WAS CARRIED OUT JOINT LY. SHE SUBMITTED THAT THE LEARNED CIT (A) HAS NOT GIVEN ANY FINDING ON TH IS CLAIM OF THE ASSESSEE THAT THE SAID CONSTRUCTION WAS CARRIED OUT JOINTLY AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE JU DGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF SHRAVA NEE CONSTRUCTIONS AS REPORTED IN 209 TAXMAN 006. SHE SUBMITTED THAT IN T HE ABSENCE OF ANY FINDING ON FACTUAL ASPECT THAT THE SAID CONSTRUCTIO N WAS CARRIED OUT BY THE ASSESSEE JOINTLY WITH THE BUILDER AS PER JDA, THE O RDER OF CIT (A) IS NOT SUSTAINABLE AND IT SHOULD BE REVERSED AND THAT OF T HE A.O. SHOULD BE RESTORED. 17. AS AGAINST THIS, THE LEARNED AR OF THE ASSESSEE SUP PORTED THE ORDER OF CIT (A). REGARDING THE ADDITIONAL GROUNDS, HE SUBMITTED THAT THERE IS NO ESTOPPELS AGAINST THE RIGHT OF THE ASSESSEE TO FILE APPEAL IF THE CONCESSION IS ON LEGAL POSITION. HE DRAWN OUR ATTENTION TO PAG E 8 OF THE IMPUGNED ORDER OF CIT(A) AND POINTED OUT THAT A CLEAR FINDIN G IS GIVEN BY CIT (A) ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 19 OF 27 THAT THE CONCESSION GIVEN BY THE ASSESSEE WAS ON AC COUNT OF LEGAL ISSUE AND NOT ON LACK OF EVIDENCE IN DETERMINING THE FACT S. HE ALSO POINTED OUT THAT THE CIT (A) HAS FOLLOWED A TRIBUNAL ORDER REND ERED IN THE CASE OF BAMBINO INVESTMENT & TRADING CO. LTD. VS. DCIT IN I TA NO. 27/MUM/1996. HE ALSO DRAWN OUR ATTENTION TO PAGE 10 OF THE ASSESSMENT ORDER FOR 2006 07 AND POINTED OUT THAT ON THAT PA GE, THE A.O. HAS REPRODUCED THE LETTER OF THE ASSESSEE AND FROM THAT , HE POINTED OUT THAT THE SUBMISSION OF THE ASSESSEE WAS THIS THAT THE ASSESS EE BONAFIEDLY BELIEVE THAT THE DEDUCTION U/S 80IB (10) IS ALLOWABLE TO TH E ASSESSEE BUT VOLUNTARILY AGREEABLE TO OFFER DIFFERENTIAL INCOME FOR TAXATION. HE ALSO SUBMITTED THAT THE DISALLOWANCE IS ULTIMATELY MADE BY THE A.O. AS PER SIX REASONS GIVEN BY HIM IN PARA 4.11 OF THE ASSESSMENT ORDER FOR THAT YEAR WHICH DO NOT INCLUDE THAT THE ASSESSEE HAS AGREED F OR DISALLOWANCE. HE FINALLY SUBMITTED THAT UNDER THIS FACTUAL AND LEGAL POSITION, IT SHOULD BE HELD THAT LEARNED CIT (A) HAS RIGHTLY ADMITTED THE APPEAL OF THE ASSESSEE ON THIS ISSUE BY FOLLOWING THE TRIBUNAL ORDER RENDE RED IN THE CASE OF BAMBINO INVESTMENT & TRADING CO. LTD. VS. DCIT (SUP RA). 18. ON MERIT, HE DRAWN OUR ATTENTION TO PAGE 4 OF JDA AS AVAILABLE ON PAGE 85 OF PAPER BOOK AND POINTED OUT THAT IT IS VE RY CLEARLY STATED IN THE JDA THAT FIRST PARTY I.E. THE ASSESSEE BEING DESIRO US OF DEVELOPING THE SCHEDULE B PROPERTY WITH RESIDENTIAL APARTMENT BU ILDINGS WHICH WOULD ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 20 OF 27 BE ADVANTAGEOUS AND BENEFICIAL TO THE FIRST PARTY I .E. THE ASSESSEE WAS ON A LOOKOUT FOR A DEVELOPER TO FORMULATE A SCHEME OF DEVELOPMENT AND UNDERTAKE CONSTRUCTION ON THIS PROPERTY. HE ALSO D RAWN OUR ATTENTION TO PARA NO. 2.1 OF THIS JDA AVAILABLE ON PAGE NO. 89 O F PAPER BOOK AND POINTED OUT THAT IT HAS BEEN MADE CLEAR THAT THE FI RST PARTY I.E. THE ASSESSEE UNDERTAKES THE RESPONSIBILITY OF SECURING KHATA OF THE PROPERTY IN QUESTION FROM COMPETENT AUTHORITY IN THE NAME OF FIRST PARTY AT HIS COST AND FURTHER UNDERTAKES TO DO ALL THAT ACTS AND DEEDS AS REQUIRE D FOR OBTAINING COMBINED KHATA IN RESPECT OF PROPOSED COMPOSITE DEV ELOPMENT OF SCHEDULE A PROPERTY OF WHICH THE SCHEDULE B PRO PERTY IS A PART. HE ALSO POINTED OUT THAT THE FIRST PARTY I.E. THE ASSE SSEE WILL PAY ANY CHARGES LEVIED ON THE SCHEDULE B PROPERTY INCLUDING BETTE RMENT CHARGES. THEREAFTER HE DRAWN OUR ATTENTION TO PARA NO. 5.2 O F JDA AVAILABLE ON PAGE NO. 92 OF PAPER BOOK AND POINTED OUT THAT IT W AS AGREED THAT THE PARTY HAS MUTUALLY AGREED TO SHARE THE SALE PROCEED S BETWEEN THE LANDOWNERS INCLUDING FIRST PARTY AND THE DEVELOPER IN THE RATIO OF 33:67 RESPECTIVELY. THEREAFTER HE DRAWN OUR ATTENTION TO PARA NO. 15 OF JDA AVAILABLE ON PAGES 103 OF PAPER BOOK AND POINTED OU T THAT IT WAS A RIGHT OF THE ASSESSEE TO INSPECT THE PROGRESS OF WORK. H E ALSO DRAWN OUR ATTENTION TO PARA NO. 10 OF JDA AVAILABLE ON PAGES 100 AND 101 OF PAPER BOOK AND POINTED OUT THAT AS PER THIS PARA OF JDA, THE ASSESSEE HAD THE ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 21 OF 27 OBLIGATION TO CARRY OUT SUCH ACTS, DEEDS AND THINGS AS MAY BE REASONABLY REQUIRED BY THE SECOND PARTY IN ORDER TO ENABLE THE M TO SUCCESSFULLY DEVELOP THE PROPERTY IN QUESTION. THEREAFTER HE DR AWN OUR ATTENTION TO PAGE NO. 81 OF PAPER BOOK IN WHICH A CERTIFICATE DA TED 10.06.2013 ISSUED BY SHRIRAM PROPERTIES PVT. LTD. AS PER WHICH IT IS CERTIFIED BY THEM THAT THE PROJECT WAS IMPLEMENTED UNDER THE JOINT CONTROL AND SUPERVISION OF M/S. CORNER STONE PROPERTIES PRIVATE LIMITED (CPPL) I.E. THE ASSESSEE AND SPL I.E. SHRIRAM PROPERTIES PVT. LTD. HE ALSO POINTED OUT THAT AS PER THIS CERTIFICATE, THE ASSESSEE WAS INVOLVED IN VARI OUS DECISION MAKING PROCESS SUCH AS PROJECT PLANNING, DESIGN, APPOINTME NT OF ARCHITECTS, CONTRACTORS ETC, FINALIZATION OF CONTRACT TERM AND RATE RELATING TO CONSTRUCTION, DECIDING ON THE SALE PRICE ETC AND FO R THIS PURPOSE, A JOINT COMMITTEE CONSISTING OF MEMBERS FROM BOTH SIDES WAS FORMED WHICH MET AT REGULAR INTERVALS DURING THE IMPLEMENTATION OF T HE PROJECT. HE SUBMITTED THAT FROM THESE FACTS IT IS VERY MUCH CLE AR AND APPARENT THAT THE PROPERTY IN QUESTION WAS JOINTLY DEVELOPED BY THE A SSESSEE WITH SPL. THEREAFTER HE PLACED BEFORE US THE COPY OF BROCHURE AND POINTED OUT THAT AS PER THIS BROCHURE ALSO, THE PROPERTY IN QUESTION WAS SAID TO BE OF DEVELOPED BY SPL IN JOINT VENTURE WITH THE ASSESSEE I.E. M/S. CORNER STONE PROPERTIES PRIVATE LIMITED. THEREAFTER HE DR AWN OUR ATTENTION TO PAGE NO. 58 OF PAPER BOOK WHICH CONTAINS THE BALANC E SHEET OF THE ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 22 OF 27 ASSESSEE AS ON 31.03.2005 AND POINTED OUT THAT AS P ER THIS BALANCE SHEET, THERE WAS WORK IN PROGRESS OF RS. 779.48 LAKHS AS O N 31.03.2005. THEREAFTER HE DRAWN OUR ATTENTION TO PAGE NO. 59 OF PAPER BOOK BEING THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2005 AND POINTED OUT THAT AS PER THE SAME, THERE WAS OPENING WIP OF RS. 105.5 2 LAKHS. HE SUBMITTED THAT ADMITTEDLY, THE JDA IS DATED 09.08.2 004 BUT THE ASSESSEE HAD INCURRED EXPENDITURE ON THE PROJECT TO THE EXTE NT OF RS. 105.52 LAKHS TILL 31.03.2004 AND THEREFORE, IT HAS TO BE ACCEPTE D THAT EVEN BEFORE THE JDA WAS ENTERED INTO, THE ASSESSEE WAS DEVELOPING T HE PROPERTY. REGARDING THE NATURE OF EXPENSES INCURRED DURING TH E FINANCIAL YEAR 2004-05 ON ACCOUNT OF WORK IN PROGRESS, HE DRAWN OU R ATTENTION TO PAGE NO. 70 OF PAPER BOOK WHICH IS LEDGER ACCOUNT OF LAN D DEVELOPMENT CHARGES AS PER WHICH AN AMOUNT OF RS. 1,54,900/- WA S INCURRED ON ACCOUNT OF JCB RENT FOR LAND LEVELING AND THE CORRE SPONDING VOUCHERS AND BILLS ARE AVAILABLE ON PAGES 71 TO 79 OF THE PAPER BOOK. 18. AT THIS JUNCTURE, A QUERY WAS RAISED BY THE BENCH T HAT WHETHER ANY REMAND REPORT WAS OBTAINED BY LD. CIT(A) FROM THE A O ON THIS ASPECT THAT THE ASSESSEE WAS ACTIVELY ENGAGED IN THE CONST RUCTION WORK BECAUSE AS PER THE ASSESSMENT ORDER, A CLEAR FINDING IS GIV EN BY THE AO ON PAGE NO. 10 OF ASSESSMENT ORDER THAT THE ASSESSEE WAS NO T INVOLVED IN ANY MANNER IN PROJECT CONSTRUCTION AND ENTIRE PROJECT W AS CARRIED OUT BY M/S. ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 23 OF 27 SHRIRAM PROPERTIES PRIVATE LIMITED. IN REPLY, IT W AS SUBMITTED BY LD. AR OF ASSESSEE THAT FOR FACTUAL VERIFICATION ABOUT INV OLVEMENT OF ASSESSEE IN THE CONSTRUCTION WORK, THE MATTER MAY BE RESTORED B ACK TO THE FILE OF AO FOR FRESH DECISION WITH PROPER DIRECTION. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGARDIN G THE ADDITIONAL GROUND RAISED BY THE REVENUE, WE ARE OF THE CONSIDE RED OPINION THAT IN VIEW OF THE FACTS OF THE PRESENT CASE AND IN VIEW O F THE TRIBUNAL ORDER RENDERED IN THE CASE OF BAMBINO INVESTMENT & TRADIN G CO. LTD. VS. DCIT (SUPRA), THERE IS NO INFIRMITY IN THE ORDER OF CIT (A) ON THIS ASPECT AND THEREFORE, THE ADDITIONAL GROUNDS RAISED BY THE REV ENUE ARE REJECTED. 19. ON MERIT, WE FIND THAT IN PARA NO. 4.11 OF ASS ESSMENT ORDER FOR ASSESSMENT YEAR 2009-10, THE AO HAS SUMMARIZED THE REASONS FOR HIS DECISION THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDU CTION U/S. 80IB(10) OF THE IT ACT. THEREFORE FOR THE SAKE OF REFERENCE, W E REPRODUCE THIS PARA HEREIN BELOW. 4.11 AFTER CAREFUL CONSIDERATION OF THE ASSESSEE'S CASE AND RELYING UPON THE REPLIES FILED BY THE ASSESSEE, IT IS CLEAR THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB (10) OF IT ACT, FOR THE FOLLOWING REASONS.: 1. THE ASSESSEE IS ONLY A LAND OWNER AS PER ORIGINA L JDA AND SPL WAS DEVELOPER OF PROJECT. 2. THE ASSESSEE DID NOT INVOLVE IN ANY MANNER IN PR OJECT CONSTRUCTION AND ENTIRE DEVELOPMENT WAS CARRIED OUT BY M/S. SPL. ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 24 OF 27 3. THE CORE COMMITTEE CONSISTING OF TWO MEMBERS FRO M M/S. CPPL AND M/S. SPL AND SUPERVISION OF CONSTRUCTION ACTIVITY OR WITHOUT ANY OBJECTIVE PROOF OR DOES NOT CONFER THE RIGHT UPON THE ASSESSEE TO CLAIM DEDUCTION U/S. 80IB. 4. THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE, DOES NOT REFLECT ANY DEVELOPMENT ACTIVITY UNDERTAKEN BY THE ASSESSEE. 5. THE FLATS CONSTRUCTED (SOME OF THEM) ARE EXCEEDI NG 1500 SQ.FT VIOLATING THE CONDITIONS OF 80IB. 6. IN SHORT THE ASSESSEE IS A LAND LORD AND M/S. SP L IS A DEVELOPER, MAKING THE ASSESSEE INELIGIBLE FOR THE C LAIM OF 80IB (10). THE FACTS OF THE CASE ARE DIFFERENT FROM THE CASE L AW CITED BY THE ASSESSEE AND THE RATIO OF THIS CASE LAW IS N OT APPLICABLE TO THE ASSESSEE. FURTHER, THERE ARE VARI OUS CASE LAWS WHERE IT IS HELD THAT THE LANDOWNER CANNOT CLA IM THE BENEFIT DEDUCTION U/S. 80IB. EVEN AS PER THE INCOME -TAX ACT, THE DEVELOPERS ONLY CAN AVAIL THE BENEFIT OF S ECTION 80IB. THE ASSESSEE COMPANY BEING THE LANDOWNER IS N OT ELIGIBLE FOR THE DEDUCTION U/S 80IB. 20. FROM THE ABOVE PARA REPRODUCED FROM THE ASSESSM ENT ORDER, IT IS SEEN THAT THIS IS THE CONTENTION OF THE AO THAT THE CLAI M OF THE ASSESSEE REGARDING CORE COMMITTEE CONSISTING OF TWO MEMBERS FROM ASSESSEE AND SPL AND SUPERVISION OF CONSTRUCTION ACTIVITY WAS WI THOUT ANY OBJECTIVE PROOF AND IT DOES NOT CONFER THE RIGHT UPON THE ASS ESSEE TO CLAIM DEDUCTION U/S. 80IB OF THE IT ACT AND IN OUR CONSID ERED OPINION, IF THE ASSESSEE IS ABLE TO ESTABLISH THAT THE ASSESSEE WAS JOINTLY ENGAGED IN SUPERVISION OF CONSTRUCTION ACTIVITY ALONG WITH SPL THEN THE OBJECTIONS OF THE AO DO NOT SURVIVE EXCEPT THE CLAIM OF THE ASSES SEE IN RESPECT OF SOME FLATS EXCEEDING 1500 SQ.FT. HENCE IN OUR CONSIDERE D OPINION, AS PER THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED I N THE CASE OF CIT ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 25 OF 27 VS. SHRAVANEE CONSTRUCTIONS (SUPRA), IF IT IS FOUND THAT THE ASSESSEE WAS ACTUALLY DOING SOME ACTIVITIES CONNECTED WITH DEVEL OPING AND BUILDING HOUSING PROJECTS THEN THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80IB (10) EVEN IF MAJOR CONSTRUCTION IS BEING UNDERTAKEN BY O THER PARTY I.E. THE BUILDER AS PER THE JDA. IN THAT CASE I.E. IN THE C ASE OF CIT VS. SHRAVANEE CONSTRUCTIONS (SUPRA), IT WAS FOUND THAT THE ASSESS EE HAS UNDERTAKEN THE JOB OF OBTAINING KHATA FROM MUNICIPALITY, OBTAINING PLAN SANCTION FOR CONSTRUCTION OF APARTMENT ON THE SAID PROPERTY BY T HE LOCAL AUTHORITY, MAKING THE LAND USABLE FOR THE PURPOSE OF APARTMENT CONSTRUCTION BY PROVIDING PROPER ROAD AND TO GIVE AN APPROACH TO TH E SITE, JOINTLY SUPERVISING THE CONSTRUCTION OF THE APARTMENTS AND MARKING THE APARTMENTS FALLING TO THE SHARE OF THE ASSESSEE AND ALSO UNDERTAKING THE LEVELING OF THE ROAD AND REMOVAL OF ROCKY SURFACE I N THE SAID LAND AND MAKING USABLE FOR THE PURPOSE OF CONSTRUCTION OF TH E APARTMENT COMPLEXES. IN OUR CONSIDERED OPINION, THIS IS NOT T HE RATIO OF THIS JUDGMENT THAT ALL THESE ACTIVITIES ARE TO BE NECESS ARILY DONE BY THE ASSESSEE IN EACH AND EVERY CASE. IN OUR CONSIDERED OPINION, THE RATIO IS THIS THAT THE ASSESSEE SHOULD BE ABLE TO ESTABLISH THAT THE ASSESSEE WAS JOINTLY ENGAGED ALONG WITH THE OTHER JDA PARTNER IN ACTUAL DEVELOPMENT ACTIVITIES ALSO IN ADDITION TO HOLDING THE LAND. KE EPING THIS IN MIND, WE EXAMINE THE FACTS OF THE PRESENT CASE AND WE FIND T HAT AS PER THE JDA, ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 26 OF 27 SEVERAL ACTIVITIES ARE TO BE DONE BY THE ASSESSEE B UT WHAT IS MORE IMPORTANT IS THE DOING OF ACTUAL ACTIVITY AND NOT T HAT WHAT WAS AGREED TO BE DONE BY THE ASSESSEE. IN THIS REGARD, WE FIND TH AT THE ASSESSEE HAS BROUGHT ON RECORD THE EVIDENCE REGARDING LAND LEVEL ING ACTIVITY UNDERTAKEN BY THE ASSESSEE. THE ASSESSEE ALSO HAD UNDERTAKEN THE ACTIVITY OF OBTAINING KHATA ETC. HENCE THE ONLY ASPECT WHIC H IS NOT ESTABLISHED BY THE ASSESSEE IS REGARDING JOINT SUPERVISION OF THE CONSTRUCTION ACTIVITY BUT THIS IS VERY IMPORTANT BECAUSE MERE CERTIFICATE BY JDA PARTNER CANNOT BE A BASIS TO HOLD THAT THE ASSESSEE WAS ACTUALLY INVO LVED IN JOINT SUPERVISION OF THE CONSTRUCTION ACTIVITY. HENCE IN OUR CONSIDE RED OPINION, THE MATTER SHOULD GO BACK TO THE FILE OF THE AO FOR LIMITED PU RPOSE OF EXAMINING THIS CLAIM OF THE ASSESSEE THAT THE ASSESSEE WAS JOINTLY SUPERVISING THE CONSTRUCTION ACTIVITY ALONG WITH SPL AND IF IT IS F OUND THAT THE ASSESSEE IS ABLE TO ESTABLISH THIS THEN THE DEDUCTION U/S 80IB (10) SHOULD BE ALLOWED TO THE ASSESSEE TO THE EXTENT IT IS ALLOWABLE I.E. AFTER EXCLUDING THOSE FLATS WHERE THE AREA IS MORE THAN 1500 SQ. FEET. WE HELD SO BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE KARNATAKA HIGH C OURT RENDERED IN THE CASE OF CIT VS. SHRAVANEE CONSTRUCTIONS (SUPRA). 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2009-10 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1714 TO 1717/BANG/2013 & C.O. NOS. 62 TO 65/BANG/2014 PAGE 27 OF 27 22. IN THE COMBINED RESULT, THE CROSS OBJECTIONS OF THE ASSESSEE FOR ASSESSMENT YEAR 2009-10 IS DISMISSED. REMAINING TH REE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED, APPEALS FIL ED BY THE REVENUE FOR THE ASSESSMENT YEARS 2006-07 TO 2008-09 ARE DISMISS ED AND THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2009-1 0 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 08 TH DAY OF SEPTEMBER, 2017. SD/- SD/- (LALIET KUMAR) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 08 TH SEPTEMBER, 2017. / MS/ COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.