M/s Jitendra G. Patel Project Ltd., RAJKOT-GUJARAT V. The Asstt. Commr. Income Tax, Circle-1, RAJKOT-GUJARAT

ITA 142/RJT/2015

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0114 (ITAT-RAJKOT)
• Duration Of Justice: 7 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 14-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D. B. GUPTA
• Keywords: Retrospective amendment; Difference of opinion; Change of opinion
• Section: 147; 143(3); 80IA

Judgement Text

आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद 瀈यायपीठ 瀈यायपीठ瀈यायपीठ 瀈यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E- COURT AT AHMEDABAD) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER आयकर अपील सं./ITA No. 142/Rjt/2015 /Asstt. Year: 2006-2007 M/s Jitendra G. Patel Project Ltd., C-15, Usha Kiran Apartment, Sardarnagar main Road, Rajkot. PAN: AAFCM7258L Vs. A.C.I.T., Central Circle-1, Rajkot. स ु नवाई क ार /Date of Hearing : 23/05/2022 घोषणा क ार /Date of Pronouncement: 18/08/2022 Assessee By: Shri D.M. Rindani, A.R. Revenue by: Shri D. B. Gupta, Sr.D.R. आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-1, Rajkot, arising in the matter of assessment order passed under s. 143(3) r.w.s. 148 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2006-2007. 2. The assessee has raised the following grounds of appeal: 1. The learned Commissioner of Income Tax(Appeals)-I, Rajkot has erred in dismissing the appeal and whereby upholding the order passed under u/s.143(3) r.w.s 148 of the Act is u warranted, unjustified and bad in law. 2. The learned Commissioner of Income Tax (Appeals)-I, Rajkot has erred in dismissing the appeal and whereby upholding the addition made on account of disallowance of Rs.12,99,648/- u/s.80IA(4) of the IT Act made by the Assessing Officer is unwarranted, unjustified and bad in law. ITA No.142/Rjt/2015 Asstt. Year 2006-07 2 3. The assessee in ground no. 1 has challenged the validity of the re- assessment proceedings initiated under section 147 of the Act on the reasoning that the same is merely based on the change of opinion. 4. Brief facts of the case are that the assessee is a private limited company and engaged in the business of civil construction. The assessee has filed its return of income on 31-12-2006, declaring an income of Rs. 32,70,375/- after claiming the deduction u/s 80IA(4) of the Act. The case of the assessee was selected under scrutiny, and the AO had completed the assessment under section 143(3) of the Income Tax Act, 1961 vide order dated 22-12-2008 wherein the deduction u/s 80IA(4) of the Act to the extent of Rs. 12,99,648/- only was allowed. The AO subsequently issued a notice under section 148 read with section 147 of the Act, for income escaping assessment, dated 10-03-2010 on the basis of insertion of explanation by Finance Act 2009, after sub-section (13) of section 80IA(4) of the Act with effect from 01-04-2000 wherein the deduction under section 80-IA(4) of the Act was denied in the case of works contractor. 5. The assessee in response to such notice submitted that the assessee in earlier year has also claimed the same deduction u/s 80IA(4) which was duly allowed by the Revenue. The assessee further placed its reliance on various judgments where it was held that the assessment cannot be reopened on the basis of retrospective amendment under the statute. 6. However, the AO rejected the contention of the assessee and disallowed the deduction claimed by the assessee of Rs. 45,51,681/- under section 80IA(4) of the Act. 7. Aggrieved assessee preferred an appeal before the Ld. CIT(A) who upheld the order of the AO. ITA No.142/Rjt/2015 Asstt. Year 2006-07 3 8. Being aggrieved by the order of the Ld. CIT(A) the assessee in appeal before us. 9. Ld. AR for the assessee before us claimed that the reassessment proceeding cannot be initiated for the change in the provisions of the Act retrospectively. Accordingly, the Ld. AR claimed that the assessment framed under section 147/143(3) of the Act is not sustainable and liable to be quashed. 10. On the contrary, the Ld. DR before us relied on the order of authorities below. 11. We have heard the rival contentions of both the parties and perused the materials available on record. The primary controversy in the present case relates whether there was a change of opinion for initiating the proceedings under section 147 of the Act in the given facts and circumstances. At this juncture, we find it important to refer the reasons recorded for initiating the proceedings under section 147 of the Act which reads as under: “On perusal of the assessment records, it is noticed the assessee is a contractor engaged in the business of construction activities. The assessee has claimed deduction of Rs. 4551681/- u/s.80IA of the IT Act, 1961 in its return of income. 2. As per the amendment by Financed Act, 2009, w.e.f. 1.4.2000, as per the explanation to sub section (13) of section 80IA, the assessee company does not fulfils all the conditions, as laid down in section 80IA(4) of the IT Act, therefore, the assessee is not entitled for the deduction of Rs.4551681/- claimed u/s.80IA of the Income Tax Act, 1961. 3. In view of the above, I have reasons to believe that the income chargeable to tax has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. " 11.1 On the perusal of the reasons recorded by the AO for initiating the proceedings under section 147 of the Act, it is revealed that the case of the assessee was reopened on account of retrospective amendment under the ITA No.142/Rjt/2015 Asstt. Year 2006-07 4 provisions of law. In the similar facts and circumstances, the Hon’ble Gujarat High Court in the case of Sadbhav Engineering Ltd versus DCIT reported in 45 taxmann.com 388 has quashed the assessment framed under section 147 of the Act. The relevant extract of the order is extracted below: “16. In the present case, as could be noted from the material on record, the Assessing Officer on a detailed scrutiny had explained the claim made by the Assessing Officer under section 80IA(4) of the Act. This was also challenged further before the CIT (Appeals) and the Tribunal. The sole question, therefore, is whether the reassessment proceedings can be initiated only on the basis of insertion of Explanation which had been substituted by the Finance (No.2) Act, 2009 with retrospective effect from April 01, 2000. Such Explanation clarified that the deduction under section 80IA of the Act would not be admissible in the case of an assessee carrying on business in the nature of works contract. Such explanation having held to be clarificatory in nature, the ratio laid down in the case of Parixit Industries (P.) Ltd. (supra) would apply. The Assessing Officer initiated such proceedings of reopening solely on such ground of insertion of explanation and, therefore, it needs to be held as mere change of opinion. Hence, the assumption of jurisdiction on the Assessing Officer shall need to be interfered by way of writ jurisdiction. 17. Resultantly, all the three petitions deserve to be allowed quashing the impugned notice issued under section 148 of the Act and all consequential proceedings emanating therefrom.” 11.2 In view of the above, we conclude that the reopening of the assessment under section 147 of the Act based on the retrospective amendment under the provisions of law cannot be done. Thus, the assessment framed under section 143(3)/147 of the Act is not sustainable. Hence the ground raised by the assessee is allowed. Now coming to the issue on merit 12. At the outset, we note that the assessee has succeeded on the technical ground raised by it challenging the validity of the proceedings initiated under section 147 of the Act as discussed above vide in Paragraph No. 11 of this order. Therefore, we are of the view that the issue raised by the assessee on ITA No.142/Rjt/2015 Asstt. Year 2006-07 5 merit does not require any separate adjudication. As such, the assessment framed under section 147 of the Act has been held as invalid, we accordingly are not inclined to adjudicate the issue raised on merit by the assessee. 13. In the result, the appeal of the assessee is partly allowed. Order pronounced in the Court on 18 th August, 2022 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 18/08/2022 True Copy आदेश े / Copy of Order Forwarded to:- रा व / Revenue 2 आवेदक / Assessee सं!ं"# आयकर आय ु $ / Concerned CIT 4 आयकर आय ु $ - अपील / CIT (A) ' (व)ा*ीय +, ,न"#- आयकर अपील य अ"#करण- अ./दा!ाद / DR, ITAT, Ahmedabad 0 *ा12 3ा4ल / Guard file. B y O R D E R D e p u t y / A s s t t . R e g i s t r a r IT A T , R a j k o t