Shri Nitin Agrawal, Bhopal V. The ACIT 1(1), Bhopal

ITA 156/IND/2013

• Counselvise Citation: 15622714 RSA 2013
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 25-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA
• Keywords: Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

NITIN AGRAWAL ITA NO.156/IND/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 156/IND/2013 A.Y.2004-05 NITIN AGRAWAL BHOPAL PAN ADUPA - 9906 ::: APPELLANT VS ASSTT.COMMR. OF INCOME TAX 1(1) BHOPAL ::: RESPONDENT APPELLANT BY SHRI ASHISH GOYAL AND SHRI N.D. PATWA RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 3.9.2015 DATE OF PRONOUNCEMENT 1 4 . 9.2015 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL, DATED 17.1. 2013. NITIN AGRAWAL ITA NO.156/IND/2013 2 2. BRIEFLY STATED, THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CONSTRUCTION OF HOUSES. THE RETURN OF INCOME WAS FILED DECLARING INCOME AT NIL AFTER CLAIMING DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT. THE O RIGINAL ASSESSMENT WAS COMPLETED ON 30.8.2006 AND THE RETURNED INCOME WAS ACCEPTED. THE ASSESSMENT WAS REOPENED BY ISSUING NOTICE U/S 148 OF THE ACT ON 29.3.2011 AFTER RECORDING REASONS AND OBTAINING APPROVAL OF THE CIT. THE ASSESSMENT WAS COMPLETED U/S 147 READ WITH SECTION 143(3) OF THE ACT ON 23.12.2011 AT TAXABLE INCOME OF RS.33,19,740/- BY NOT ALLOWING THE CLAIM OF DEDUCTIO N UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961. THE LEARNED CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSI NG OFFICER. HENCE, THIS APPEAL. 3. THE ASSESSEE HAS CHALLENGED THE REOPENING IN GROUN D NOS. 1 AND 2 WHICH READ AS UNDER :- NITIN AGRAWAL ITA NO.156/IND/2013 3 (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE VALID ITY OF ISSUE OF NOTICE U/S 148 AND CONSEQUENT REASSESSMENT U/S 147/143(3) AS MADE BY THE ASSESSING OFFICER. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ISSUE OF NOTICE U/S 148 BY THE ASSESSING OFFICER ON THE BASI S OF MISTAKES IN FORM NO. 10CCB AS COMMITTED BY THE COUNSEL OF THE APPELLANT. 4. WE HAVE HEARD BOTH THE SIDES. THIS ASSESSMENT HAS BEEN REOPENED AFTER DUE APPROVAL OF THE CIT AND AFTER RECORDING REASONS THAT THE ASSESSEE HAS CLAIMED DEDUCTI ON U/S 80IB(10) OF THE INCOME TAX ACT AT RS.33,19,742/- ON THE INCOME WHICH INCLUDES INTEREST ON FDR OF RS.2,73,386/-. APPARENTLY, NO DEDUCTION WAS AVAILABLE TO THE ASSESSEE ON THE INTEREST INCOME ON FDR. FURTHER, IN FORM NO. 10CCB SUBMITTED BY THE ASSESSEE ALONG WITH THE NITIN AGRAWAL ITA NO.156/IND/2013 4 RETURN OF INCOME, IN COLUMN 18(V) THE CHARTERED ACCOUNTANT HAS NOT CERTIFIED THE BUILT UP AREA OF EAC H BUILDING. THE INFORMATION REGARDING BUILT UP AREAOF EAC H UNIT IS NECESSARY TO BECOME ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT. THESE DETAILS ARE THE MATERIALS AND NECESSARY FOR ASSESSMENT. THUS, IN OUR CONSIDERED VIEW, THE ASSESSEE FAILED TO DISCLOSE ALL M ATERIAL FACTS FULLY AND TRULY IN ITS RETURN OF INCOME. 5. FURTHER, AFTER PERUSING THE FACTUAL ASPECT AND THE C ASE LAWS RELIED ON BY BOTH THE SIDES, IT BECOMES CLEARLY EVIDENT THAT THE ASSESSEE HAS FAILED TO DISCLOSE TRULY AND FULLY ALL THE RELEVANT FACTS FOR CLAIMING DEDUCTION U/S 80IB(1 0) OF THE INCOME TAX ACT INASMUCH AS IN FORM NO. 10CCB THE REQUIRED COLUMN 18(V) REGARDING BUILT UP AREA OF EACH RESIDENTIAL UNIT HAS NOT BEEN CERTIFIED/FILLED AND THI S IS THE VERY ESSENTIAL CONDITION FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT AS WHEREVER RESIDENTI AL UNIT NITIN AGRAWAL ITA NO.156/IND/2013 5 BUILT UP AREA EXCEEDS MORE THAN 1500 SQ FT, NO DEDUCTIO N IS AVAILABLE TO THE ASSESSEE. FURTHER, INTEREST INCOME O N FDR OF RS.2,73,386/- WAS ALSO CLAIMED TO BE ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT WHICH IS NOT SO. IN VIEW OF THESE FACTS, THE ASSESSING OFFICER WAS HAVING PRIMA FACIE REASONABLE BELIEF THAT THE ASSESSEE HAS FAILE D TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS CLAIM OF DEDUCTION U/S 80IB(10) OF THE INCOME TAX A CT OF RS.33,19,740/-. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF SRI SHAKTI TEXTILES; 340 ITR 144 HELD THAT TH ERE IS NO LEGAL NECESSITY THAT THE MATERIALS REFERRED TO IN S ECTION 147 OF THE INCOME TAX ACT SHOULD BE FRESH MATERIAL COLLECTED SUBSEQUENTLY TO THE ORIGINAL ASSESSMENT ORDE RS. HON'BLE SUPREME COURT IN THE CASE OF RAYMOND WOOLEN MILLS LTD.; 236 ITR 34 HELD THAT WHAT IS REQUIRED TO B E SEEN IN A CASE SUCH AS WHETHER PRIMA FACIE THERE WAS SOME MATERIAL BEFORE THE ASSESSING OFFICER ON THE BASIS OF WHICH NITIN AGRAWAL ITA NO.156/IND/2013 6 HE COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECT NESS OF MATERIAL IS NOT TO BE CONSIDERED BECAUSE IT IS OPEN TO THE ASSESSEE TO PROVE THAT THE FACTS ASSUMED BY THE ASSESSI NG OFFICER IN THE NOTICE WERE ERRONEOUS. SIMILARLY, HON 'BLE KERALA HIGH COURT IN THE CASE OF G. SUKESH VS. DCIT; 2 52 ITR 230 HELD THAT INFORMATION AVAILABLE WITH THE ASSESS ING OFFICER AT THE TIME OF RECEIVING THE NOTICE U/S 148 NEED NOT BE COMPLETE AND ACCURATE. CONSIDERING ALL THESE FACTS OF THE CASE AND THE CASE LAWS, WE UPHOLD THE ORDER OF THE LEA RNED CIT(A) ON THE ISSUE OF INITIATION OF REASSESSMENT PROCEEDINGS U/S 148 OF THE ACT. THEREFORE, GROUND NOS. 1 AND 2 OF THE ASSESSEES APPEAL STAND DISMISSED. 6. IN GROUND NOS. 3 TO 5 THE ISSUE IS REGARDING COND ITIONS LAID DOWN UNDER SECTION 80IB(10) OF THE INCOME TAX A CT, 1961 FOR THE PROJECT PALACE AND ORCHARD FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT. NITIN AGRAWAL ITA NO.156/IND/2013 7 7. THE ASSESSING OFFICER DENIED THE CLAIM OF THE ASSE SSEE ON THE BASIS THAT THE ASSESSEE IS MERELY ACTING AS A CONTRACTOR TO THE CUSTOMER TO WHOM THE LAND HAS BEEN SOLD. NO REGISTRY WHATSOEVER IS BEING MADE FOR CONSTR UCTION WORK DONE BY THE ASSESSEE. NO NEW RESIDENTIAL PROPER TY IS BEING CONSTRUCTED OR TRANSFERRED BY THE ASSESSEE AS PE R THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE INTENTION BEHI ND SECTION 80IB(10) IS TO PROMOTE INVESTMENT IN A PARTIC ULAR SECTOR WHICH WAS LESS PROFITABLE. IN THE ASSESSEES CAS E NO INVESTMENT HAS BEEN MADE TO START THE PROJECT. THE ASSESSING OFFICER ALSO DENIED THE CLAIM ON THE BASIS T HAT THE PROJECT IS NOT APPROVED AS A WHOLE BY THE MUNICIPAL CORPORATION AND NO BUILDING PERMISSION WAS GIVEN. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAS CONSTRUCTED DUPLEX WHICH EXCEEDS MAXIMUM LIMIT OF 1 500 SQ.FT. SPECIFIED IN SECTION 80IB(10) OF THE INCOME T AX ACT, 1961 WHICH IS ONE OF THE BASIC CONDITIONS TO BE FULF ILLED IN NITIN AGRAWAL ITA NO.156/IND/2013 8 ORDER TO CLAIM THE DEDUCTION U/S 80IB(10) OF THE IN COME TAX ACT. THE ASSESSING OFFICER ALSO NOTED THAT THE PROVISIONS OF SECTION 80IB(10) OF THE INCOME TAX AC T, 1961 PRESCRIBED THE DATE OF COMPLETION ON WHICH THE ASSESS EE SHOULD HAVE OBTAINED COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY BUT NO SUCH CERTIFICATE WAS ISSUED BY THE LO CAL AUTHORITY. 8. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO CONSIDERED THE CASE LAWS RELIED UPON BY THE PARTIES. DURING THE RELEVANT PERIOD THE ASSESSEE CLAIMED THAT IT HAS CONSTRUCTED 2 PROJECTS, ONE ON TWO ACRES LAND AT VILL AGE DHAM KHEDA AT KHASRA NO.34/170/1/1 PURCHASED BY HIMSELF. IT IS CLAIMED THAT PROJECT WAS APPROVED BY GRAM PANCHAYAT ON 20.2.2002 AND COMPLETED ON 31.3.2004. IT IS CLAIMED THAT COMPLETION CERTIFICATE IS NOT REQUIRED AS PROJECT WAS PRIOR TO AMENDMENT IN THE ACT. THE OTHER PROJECT WAS ON 4 ACRES OF LAND OWNED BY SARV DHARM GRIH NITIN AGRAWAL ITA NO.156/IND/2013 9 NIRMAN SAHAKARI SAMITI MARYADIT SOCIETY KHASRA NO.34/170/2/1 AND 34/170/2/4 WHICH GOT APPROVAL TO CONSTRUCT DUPLEX BUNGALOWS ON THE LAND BELONGING TO SOCIETY AND THE ASSESSEE HAS DONE SO AS CONTRACTOR. THE ASSESSEE CLAIMED THAT THE LAND WAS UNDER GRAM PANCHAYAT, THEREFORE, THERE WAS NO REQUIREMENT OF SANCTI ON FROM MUNICIPAL CORPORATION, BHOPAL. BOTH THE LANDS WERE SITUATED IN THE REVENUE AREA OF DHAMKHEDA TEHSIL HUZUR BHOPAL. THE PROJECTS WERE APPROVED BY THE TOWN & COUN TRY PLANNING DEPARTMENT. THE COMPLETION CERTIFICATE WAS NECESSARY FOR CLAIMING DEDUCTION. THE FACTS OF THE CASE SHOW THAT THE ASSESSEE HAS SOLD OUT PLOTS TO THE CUST OMERS AND GAVE POSSESSION TO THEM. THEREAFTER, THE ASSESSEE H AS CONSTRUCTED INDIVIDUAL BUILDING FOR THESE PLOT OWNER S. THE PLAN APPROVAL PLACED IN THE PAPER BOOK AT PAGES 65 TO 92 CLEARLY SHOWS THAT THE INDIVIDUAL PLOT UNITS WERE APPRO VED BY SARPANCH GRAM PANCHAYAT. THE APPROVAL WAS FOR NITIN AGRAWAL ITA NO.156/IND/2013 10 INDIVIDUAL PLOT UNIT. THE CERTIFICATE REGARDING COMPLE TION PRODUCED AND PLACED AT PAGE 64 OF PAPER BOOK ITSELF SH OWS THAT THE COMPLETION WAS ALSO FOR INDIVIDUAL UNITS OF BUNGALOWS AS THE CERTIFICATE MENTIONS THE NUMBER OF SU CH UNITS. THE FACT THAT THE ASSESSEE HAS NOT CREDITED SALE PROCEEDS TOWARDS THE SALE OF BUILT UP AREA IN ITS BOOK S OF ACCOUNT HAS ALSO NOT BEEN CONTROVERTED BY THE LEARNED COUNSEL FOR THE ASSESSEE. FURTHER REGARDING COMPLETI ON CERTIFICATE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S GLOBAL REALITY; ITA NO. 40/2012 HELD THAT COMPLETION CERTIFICATE FROM LOCAL AUTHORITY FOR PROJE CT IS NECESSARY ON OR BEFORE THE DATE PRESCRIBED IN SECTION 80IB(10) OF THE INCOME TAX ACT, 1961. 9. THE HON'BLE ITAT IN THE CASE OF SKY BUILDERS & DEVELOPERS REPORTED IN 14 TAXMANN.78 HELD THAT WHERE THE ASSESSEE SOLD PLOTS TO RESPECTIVE CUSTOMERS BY REGIS TERING SALE DEED AND THEREAFTER CONSTRUCTED THE BUILDING AT AN NITIN AGRAWAL ITA NO.156/IND/2013 11 AGREED PRICE, IT HAS TO BE CONCLUDED THAT THE ASSESSEE MERELY WORKED AS A CONTRACTOR AND NOT AS A DEVELOPER AND THE ITAT HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT. KEEPI NG THESE FACTS IN VIEW, WE FIND NO FAULT IN THE ORDER OF THE LEARNED CIT(A). WE SUSTAIN THE SAME. 10. GROUND NO. 6 IS GENERAL IN NATURE AND DOES NOT REQU IRE ANY ADJUDICATION. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. PRONOUNCED IN OPEN COURT ON 14 SEPTEMBER, 2015 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 14 TH SEPTEMBER, 2015 DN/- NITIN AGRAWAL ITA NO.156/IND/2013 12