ITO, V. M/s Shalom Sankalp Ventures,

ITA 1696/BANG/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9291 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A SHANKAR
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1696 (BANG) 2013 (ASSESSMENT YEAR : 2008-09) THE INCOME TAX OFFICER, WARD-1(2), MYSORE APPELLANT VS M/S SHALOM SANKALP VENTURES, NO. D/6A TEMPLE ROAD, V.V.MOHALLA, MYSORE PAN NO.AHFS5359N RESPONDENT REVENUE BY : MS. NEERA MALHOTRA, CIT_DR ASSESSEE BY : SHRI A. SHANKAR, ADVOCATE DATE OF HEARING : 17-10-2016 DATE OF PRONOUNCEMENT: : 03-11-201 6 O R D E R PER SHRI A. K. GARODIA, AM THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF THE LD. CIT(A), MYSORE DATED 22-08-2013 FOR THE ASSESSMENT YEAR 200 8-09. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER; 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE . 2. THE CIT(A) ERRED IN ALLOWING DEDUCTION U/S . 8018(10) OVERLOOKING THE FACT THAT THE ASSESSEE HAS EXECUTED THE ITA NO.1696(B)2013 2 BUILDING PROJECT AS WORKS CONTRACT SINCE NE I THER THE OWNERSHIP RIGHTS IN THE PROPERTY NOR THE BUILDING W AS CONSTRUCTED BY ASSESSEE . 3. THE CIT(A ) HAS ERRED IN RELYING ON THE HON . KARNATAKA HIGH COUR T DEC I SION I N THE CASE OF M/S . SHRAVANEE CONSTRUCTIONS THOUGH THE HON. SUPREME COURT HAS ONL Y DISMISSED THE SLP FILED BY THE DEPARTMENT BY WAY OF NON-SPEAKING ORDER WHICH DOES NOT TANTAMOUNT TO DECLARATION OF L AW UNDER ARTICLE 141 OF THE CONSTITUT I ON AS HELD BY THE SUPREME COURT I N 245 ITR 360 . 4. THE CIT(A) ERRED IN ALLOWING THE DEDUCT I ON OVERLOOKING THE FACT THAT THE PERMISSION OF LOCAL AUTHORITIES F OR CONSTRUCT I ON OF BUILDING WAS NOT OBTAINED I N THE NAME OF THE ASSESSEE . 5. THE CIT(A) ERRED IN CONSIDERING CERTIFICATE G I VEN BY A CHARTERED ENGINEER TO THE EFFECT THAT NONE OF THE F LATS CONSTRUCTED BY THE ASSESSEE HAS BUILT UP AREA ABOVE 1500 SQ. FEET , WHICH IS A FRESH EVIDENCE AND THE SAME CANNOT BE ADMITTED UNDER RULE 46A(III) WITHOUT PROVIDING OPPORTUNITY TO THE AO . 6. THE CIT(A) ERRED IN ALLOWING DEDUCTION U/S . 8018 OVERLOOK I NG PROVISION OF SECTION 8018(10)(D) AS PER WHICH BUILT UP AREA FOR SHOPS AND COMMERCIAL ESTABLISHMENTS SHOULD NOT EXCEED 5% OF AGGREGATE BU ILT UP AREA OR 2000 SQ FEET WH I CHEVER IS LESS . 7 . THE CIT(A) FAILED TO NOTE THAT THE ASSESSEE HAS CONSTRUCTED CLUB HOUSE W I TH MULTIPURPOSE' HALL , GYMNASIUM ETC WHICH ARE COMMERCIAL ESTABL I SHMENTS AND ALSO OVER LOOKED SANCTION PLAN AVA I LABLE ON RECORDS AS PER WHICH AREA EARMARKED FOR COMMERCIAL USE WORKS OUT TO 28% OF THE TOTAL PROJEC T ITA NO.1696(B)2013 3 AND THUS CONTRAVENES SECT I ON 8018(10)(D) . 8 . THE CIT ( A) ERRED IN CONC L UDIN G THA T EACH PHA S E I S I N I TSELF A S EPARA T E HOUS I NG PROJECT FOR THE PURPOSE OF SECTION 80-IB(1O) AND THAT THE ASSESSEE WAS EL I GIB LE F O R DEDUCTION U/S 80- IB SINCE IT HAD OBTAINED COMPLETION CERTIFICATE FOR THE FI R S T PHASE WHEREAS , THE ASSESSEE BAD COMPLETED ONL Y THE FIRST PHASE O F THE PROJ EC T THEREBY RENDERING IT INELIG I BLE IN TERMS OF S UB SECTION (10) OF S ECTION 80- IB FOR CLAIMING DEDUCTION . 9. THE CIT(A) FURTHER ERRED IN CONCLUDING THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80-1B MERELY ON THE GROUND THAT SEPARATE COMPLETION CERTIFICATE AND SEPARATE K HATAS WERE OBTAINED BY THE ASSESSEE IN RESPECT OF THE FIRST P HASE CONSISTING OF 288 FLATS. THE CIT(A) FAILED TO APPRE CIATE THE FACT THAT FIRST PHASE AS ONLY A PART OF THE PROJECT WHIC H HAD NOT REACHED COMPLETION. 10. THE CIT(A) ERRED IN RELYING UPON THE DECISION O F THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS VAN DANA PROPERTIES SINCE IN THAT CASE, THE ASSESSEE HAD OBT AINED PHASE-BY-PHASE APPROVAL WHEREAS IN THE INSTANT CASE THE ASSESSEE HAD NOT OBTAINED PHASE-WISE APPROVAL BUT F OR THE ENTIRE PROJECT. 11. THE CIT(A) ERRED IN GIVING A LIBERAL CONSTRUCTI ON OF SECTION 80-IB WHEN THE CONDITIONS SPECIFIED IN THE SECTION WERE NOT SATISFIED BY THE ASSESSEE. 12. THE CIT(A) ERRED IN HOLDING THAT THE ASSESSMENT ORDER PASSED DESERVES TO BE CANCELLED FOR THE REASON THAT REASONS RECORDED FOR INITIATING ACTION U/S 147 WERE NOT FUR NISHED TO THE ASSESSEE IGNORING THE DEDUCTION OF ITAT, DELHI IN THE CASE OF SMT. GAURINDER KAUR REPORTED IN 102 ITD 189 IN V IEW OF THE FACT THAT ASSESSEE WAS WELL AWARE OF THE REASONS FO R WHICH ASSESSMENT WAS RE-OPENED AND ALSO HAD PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. ITA NO.1696(B)2013 4 13. THE APPELLANT CARVES FOR LEAVE TO ADD FURTHER G ROUNDS OR AMEND THESE AND SUCH OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING, THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. THE LD. DR OF THE REVENUE SUPPORTED THE ASSESSME NT ORDER WHEREAS THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF T HE LD. CIT(A). HE ALSO SUBMITTED THAT AS PER GROUND NO.12 OF THE REVENUES APPEAL, GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) WAS NOT JUSTIFI ED IN HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE AO DESERVES TO BE CA NCELLED FOR THE REASON THAT REASONS RECORDED FOR INITIATING ACTION U/S 147 OF THE IT ACT, WERE NOT FURNISHED TO THE ASSESSEE. HE SUBMITTED THAT THE LD . CIT(A) HAS FOLLOWED THE TRIBUNAL ORDER RENDERED IN THE CASE OF SMT GAURINDE R KAUR REPORTED IN 102 ITD 189. HE ALSO SUBMITTED THAT THIS ISSUE IS COVER ED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER RENDERED IN THE CASE OF SRI S. ASHOK KUMAR (HUF) & SMT. HEMA S REDDY IN ITA NOS.1306 & 1307(B) /2014 DATED 25-05- 2016. HE SUBMITTED A COPY OF THIS TRIBUNAL ORDER A ND POINTED OUT THAT IN THIS CASE, THE TRIBUNAL HAD FOLLOWED THE JUDGMENT O F THE HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS TREND ELE CTRONICS 379 ITR 456 AND IT WAS HELD THAT WHEN THE AO FAILED TO FURNISH THE REASONS RECORDED FOR RE-OPENING OF THE ASSESSMENT, THE RE-ASSESSMENT ORD ER PASSED BY THE AO IS BAD IN LAW AND THE SAME WAS QUASHED BY THE TRIBUNAL . HE SUBMITTED THAT IN THE PRESENT CASE ALSO, REASONS WERE NOT FURNISHED B Y THE AO AND HENCE, THE ASSESSMENT ORDER HAS BEEN RIGHTLY QUASHED BY THE LD . CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT AS PER GROUND NO.12 RAISED BY THE REVENUE, THIS IS THE CON TENTION OF THE REVENUE ITA NO.1696(B)2013 5 THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN QUASHING T HE ASSESSMENT ORDER FOR NON-FURNISHING OF REASONS RECORDED BY THE AO FOR RE -OPENING AND THE CLAIM IS ON THE BASIS THAT THE ASSESSEE IS WELL AWARE OF THE REASONS FOR WHICH THE ASSESSMENT WAS RE-OPENED AND THE ASSESSEE HAD ALSO PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. HENCE, THIS IS NOT A CASE OF THE REVENUE THAT THE REASONS RECORDED WERE FURNISHED BY THE AO TO THE AS SESSEE. UNDER THESE FACTS, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE AS PER THE TRIBUNAL ORDER RENDERED IN THE CASE OF SHRI S. ASHO K KUMAR & SMT.HEMA S REDDY (SUPRA) IN WHICH THE TRIBUNAL HAS FOLLOWED TH E JUDGMENT OF THE HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF C IT VS TREND ELECTRONICS (SUPRA). PARA-10 OF THE TRIBUNAL ORDER IS RELEVANT WHICH IS REPRODUCED HEREIN BELOW; 10. ACCORDINGLY, IN THE CASE IN HAND WHEN THE AO H AS FAILED TO FURNISH THE REASONS RECORDED FOR RE-OPENING OF T HE ASSESSMENT AND CONSEQUENTLY, FAILED TO DISPOSE OF T HE OBJECTIONS WHICH WOULD HAVE BEEN RAISED BY THE ASSE SSEE AGAINST SUCH REASONS PRIOR TO THE COMPLETION OF RE- ASSESSMENT. HENCE, THE RE-ASSESSMENT ORDER PASSED BY THE AO IN THE CASE OF BOTH THE ASSESSEE ARE BAD IN LAW FOR WANT OF FUR NISHING THE REASONS RECORDING FOR REASSESSMENT OF ASSESSMENT DE SPITE THE SPECIFIC REQUEST MADE BY THE ASSESSEE AND CONSEQUEN TLY WE QUASH THE IMPUGNED ORDERS OF THE AO PASSED U/S 143( 3) R.W.S 147 OF THE ACT. UNDER THESE FACTS, IN THE PRESENT CASE, AS DISCUSS ED ABOVE WHERE THIS IS NOT DISPUTED THAT THE REASONS RECORDED WERE NOT FURNISHED BY THE AO TO THE ASSESSEE, WE DECLINE TO INTERFERE WITH THE ORDE R OF THE LD. CIT(A) ON THIS ISSUE I.E. REGARDING QUASHING THE ASSESSMENT ORDER ON THIS BASIS THAT THE REASONS RECORDED FOR RE-OPENING WERE NOT FURNISHED TO THE ASSESSEE BY THE ITA NO.1696(B)2013 6 AO. RESPECTFULLY FOLLOWING THE TRIBUNAL ORDER CITE D BY THE LD. AR OF THE ASSESSEE AND IN TURN BY FOLLOWING THE JUDGMENT OF T HE HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS TREND ELECTRON ICS (SUPRA), GROUND NO.12 OF THE REVENUE IS REJECTED. 5. IN VIEW OF OUR ABOVE DECISION, WE HAVE REJECTED GROUND NO.12 OF THE REVENUES APPEAL AND CONFIRMED THE ORDER OF THE LD. CIT(A) REGARDING QUASHING OF THE ASSESSMENT ORDER. OTHER GROUNDS AS IDE BY THE REVENUE DO NOT CALL FOR ANY ADJUDICATION BECAUSE ONCE THE ASSE SSMENT ORDER ITSELF IS QUASHED, NO ADDITION SURVIVES AND AS A CONSEQUENCE, DELETION OF THESE ADDITION BY THE LD, CIT(A) DO NOT REQUIRE ANY ADJUD ICATION ON MERIT OF SUCH DELETION OF VARIOUS ADDITIONS. WE WANT TO MAKE IT CLEAR THAT WE DO NOT EXPRESS ANY OPINION ON MERIT OF VARIOUS ADDITIONS D ELETED BY THE LD. CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (SMT ASHA VIJAYARAGHAVAN SD/- (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE: D A T E D : 03.11.2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE ITA NO.1696(B)2013 7 1. DATE OF DICTATION 2. , , DATE ON WHICH TYPED DRAFT IS PLACED BEFORE THE DICT ATING MEMBER .. 3. !' # . $ %# / $ %# # & DATE ON WHICH THE APPROVED DRAFT COMES TO THE PS/SR .PS. 4. ''() & * + DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTAT ING MEMBER FOR PRONOUNCEMENT 5. * . %# / # . . %# # + DATE ON WHICH THE ORDER COMES BACK TO THE PS/SR.PS .. 6 * !', + DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. ! !', ' , - ) IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. .% / 0 + DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. * 1'2 / 34 & 5 + DATE ON WHICH ORDER GOES FOR XEROX &ENDORSEMENT 10. 0 6 / + DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 11. * 7 & 0 8 + THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 12. !) * 9() & 0 9() /#5 . + THE DATE ON WHICH THE FILE GOES TO DESPATCH SECTION FOR DESPATCH OF THE TRIBUNAL ORDER 13. * 9() + DATE OF DESPATCH OF ORDER .