ACIT, CHENNAI V. M/s. Maan Sarovar Properties Development Pvt. Ltd., CHENNAI

ITA 1734/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0880 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-01-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 14-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Keywords: Difference of opinion; Change of opinion
• Section: 143(3); 147; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NOS. 1733 & 1734/MDS/2012 (ASSESSMENT YEARS : 2004-05 & 2005-06) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(1), CHENNAI - 600 034 . (APPELLANT) V. M/S MAAN SAROVAR PROPERTIES DEVELOPMENT PVT. LTD., NO.33/2, GANGAI STREET, KALAKSHETRA COLONY, BESANT NAGAR EXTN., CHENNAI - 600 090. PAN : AAACM 6304 Q (RESPONDENT) APPELLANT BY : SMT. VIDISHA KALRA, CIT-DR RESPONDENT BY : NONE DATE OF HEARING : 21.01.2013 DATE OF PRONOUNCEMENT : 21.01.2013 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THESE APPEALS FILED BY THE REVENUE, IT IS MAIN LY AGGRIEVED THAT THE CIT(APPEALS) QUASHED THE RE-ASSESSMENT PRO CEEDINGS INITIATED UNDER SECTION 147 OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') TAKING A VIEW THAT ORIGINAL ASSESSMENTS WERE COMPLE TED UNDER I.T.A. NOS. 1733 & 1734/MDS/12 2 SECTION 143(3) OF THE ACT AND RE-ASSESSMENT PROCEED INGS WERE INITIATED ON A MERE CHANGE OF OPINION. CERTAIN OTH ER GROUNDS HAVE ALSO BEEN TAKEN ON MERITS. SINCE THE ISSUE REGARDI NG REOPENING GOES TO THE ROOT OF THE ASSESSMENT, THIS ASPECT IS DEALT WITH FIRST. 2. FACTS APROPOS ARE THAT ASSESSEE HAD FILED ITS RE TURNS OF INCOME FOR ASSESSMENT YEAR 2004-05 ON 1.11.2004 AND FOR AS SESSMENT YEAR 2005-06 ON 14.8.2006 ADMITTING AN INCOME OF ` 7,88,206/- AND ` 69,65,075/- RESPECTIVELY. THE ASSESSMENT PROCEEDIN GS WERE COMPLETED UNDER SECTION 143(3) ON 14.8.2006 FOR BOT H THE YEARS. THERE WAS A SURVEY IN THE PREMISES OF THE ASSESSEE DONE ON 1.7.2005 AND THE ORIGINAL ASSESSMENTS WERE COMPLETE D AFTER CONSIDERING RESULT OF THE SURVEY. DURING THE COURS E OF ORIGINAL ASSESSMENT PROCEEDINGS, VARIOUS NOTICES WERE ISSUED WITH REGARD TO CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 8 0-IB(10) ON ITS VARIOUS HOUSING PROJECTS. FOR THESE, ASSESSEE HAD FLED A PAPER-BOOK CONTAINING DETAILS, WHICH WAS ACKNOWLEDGED BY THE A SSESSING OFFICER ON 17.4.2006. QUESTIONS RAISED, INTER ALIA, INCLUD ED THE AREA OF COMMERCIAL PORTION IN THE PLAN AND ALSO WHETHER COM MERCIAL AREA EXCEEDED PRESCRIBED LIMIT. IT SEEMS AN INSPECTION WAS ALSO DONE BY AN INSPECTOR OF THE DEPARTMENT ON THE FLATS COMPLET ED. ASSESSEE I.T.A. NOS. 1733 & 1734/MDS/12 3 HAD ALSO SUBMITTED A DETAILED OPINION OBTAINED FROM SHRI TCA RAMANUJAM, FORMER CHIEF COMMISSIONER OF INCOME TAX AND ALSO SHRI K. SUBRAMANIAM, FORMER MEMBER OF CENTRAL BOARD OF D IRECT TAXES, WITH REGARD TO THE ALLOWABILITY OF ITS CLAIM UNDER SECTION 80-IB(10) OF THE ACT. AFTER CONSIDERING THE MATERIAL ON RECORD, ASSESSING OFFICER HAD ORIGINALLY COMPLETED THE ASSESSMENT ALLOWING TH E CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80-IB(10) OF T HE ACT. 3. HOWEVER, THEREAFTER, ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 OF THE ACT ON 24.3.2011 FOR BOTH THE YE ARS. AS PER THE A.O., THE AGGREGATE OF COMMERCIAL AREA EXCEEDED 5% OF AGGREGATE BUILT UP AREA. FOR ASSESSMENT YEAR 2004-05, THE VE RY PRESENCE OF COMMERCIAL AREA DISENTITLED THE ASSESSEE FOR CLAIMI NG A DEDUCTION UNDER SECTION 80-IB(10). INSOFAR AS ASSESSMENT YEA R 2005-06 WAS CONCERNED, A.O. GAVE A REASON THAT BY VIRTUE OF AME NDMENT TO SECTION 80-IB(10) BY FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 1.4.2005, THE COMMERCIAL AREA HAVING EXCEEDED 5% OF AGGREGATE BUILT UP AREA, DEDUCTION UNDER SECTION 80-IB(10) CO ULD NOT BE ALLOWED. 4. ASSESSEE, IN REPLY TO THE NOTICES, REQUESTED THE ASSESSING OFFICER TO TREAT THE ORIGINAL RETURN FILED BY IT AS RETURN FILED IN I.T.A. NOS. 1733 & 1734/MDS/12 4 PURSUANCE TO NOTICE UNDER SECTION 148 OF THE ACT. THEREAFTER, RE- ASSESSMENTS WERE COMPLETED AND DEDUCTION CLAIMED UN DER SECTION 80-IB(10) WAS DENIED. THOUGH THE ASSESSEE ARGUED B EFORE THE ASSESSING OFFICER THAT THE RE-ASSESSMENT PROCEEDING S COULD NOT HAVE BEEN REOPENED ON A MERE CHANGE OF OPINION, ASSESSIN G OFFICER WAS OF THE VIEW THAT ASSESSEE HAD FAILED TO PROVIDE FUL L AND TRUE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT AND THE REOPENIN G WAS NOT BASED ON A CHANGE OF OPINION. 5. ASSESSEE MOVED IN APPEAL BEFORE CIT(APPEALS) FOR BOTH THE YEARS, STRONGLY ASSAILING THE REOPENING DONE AND AL SO THE DENIAL OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. AS P ER THE ASSESSEE, DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S ITSELF, ASSESSING OFFICER HAD ISSUED NOTICE SEEKING EXPLANA TION ON THE COMMERCIAL AREA BUILT BY IT AND THESE WERE DULY REP LIED ALONG WITH PLAN APPROVAL. ASSESSING OFFICER WAS HAVING ALL RE LEVANT MATERIAL AT THE TIME OF COMPLETION OF ORIGINAL ASSESSMENT. PRE SENT PROCEEDINGS, AS PER THE ASSESSEE, WERE BASED ON AN AUDIT QUERY. THERE WAS EVEN AN INSPECTION DONE BY THE REVENUE IN THE PREMISES F OR VERIFYING THE COMMERCIAL AREA. A PAPER-BOOK WITH ALL DETAILS WAS AVAILABLE ON THE FILE OF THE ASSESSING OFFICER AND THIS WAS FURNISHE D DURING THE COURSE I.T.A. NOS. 1733 & 1734/MDS/12 5 OF REGULAR ASSESSMENT PROCEEDINGS. ON MERITS, IT W AS ARGUED THAT COMMERCIAL PORTION WAS HELD IN THE NAME OF SHRI P. BHARATHI RAJAA, SELLER OF THE LAND AND NEVER HELD BY THE ASSESSEE. CONSTRUCTION OF COMMERCIAL PORTION, AS PER THE ASSESSEE, WAS DONE B Y SHRI BHARATHI RAJAA AND JUST BECAUSE THERE WAS A COMMON APPROVAL, DENIAL OF DEDUCTION UNDER SECTION 80-IB(10) WAS NOT JUSTIFIED . 6. LD. CIT(APPEALS) WAS APPRECIATIVE OF THE CONTENT IONS OF ASSESSEE. ACCORDING TO HIM, ASSESSMENTS WERE REOPE NED AFTER FOUR YEARS FROM THE EXPIRY OF THE IMPUGNED IMPUGNED ASSE SSMENT YEARS. THERE WAS NOTHING ON RECORD TO SHOW THAT INCOME CHA RGEABLE TO TAX HAD ESCAPED BY REASON OF ANY FAILURE ON THE PART OF THE ASSESSEE TO PROVIDE FULLY AND TRULY ALL MATERIAL FACTS NECESSAR Y FOR THE ASSESSMENTS. AS PER LD. CIT(APPEALS), THE REOPENIN G WAS RESORTED TO BASED ON INFORMATION SUBMITTED BY THE ASSESSEE DURI NG THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS ITSELF AND, THERE W AS NOTHING NEW ON RECORD. RELYING ON THE DECISION OF HON'BLE APEX CO URT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD (320 ITR 561), LD. CIT(APPEALS) QUASHED THE REOPENING AND PURSUANT RE-ASSESSMENT DO NE FOR THE IMPUGNED ASSESSMENT YEARS. I.T.A. NOS. 1733 & 1734/MDS/12 6 7. NOW BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDERS OF CIT(APPEALS) FOR BOTH THE YEARS, SUBMITTED THAT JUS T BECAUSE ASSESSEE HAD PRODUCED DOCUMENTARY EVIDENCE, IT WOUL D NOT IMPLY THAT THERE WAS FULL AND TRUE DISCLOSURE OF ALL MATE RIALS. AS PER LEARNED D.R., ASSESSEES CASE WAS COVERED BY EXPLANATION 1 TO SECTION 147 OF THE ACT. IT WAS NOT BASED ON A CHANGE OF OPINIO N THAT THE REOPENING WAS RESORTED TO. ASSESSMENT ORIGINALLY D ONE WAS NOT IN ACCORDANCE WITH LAW SINCE ASSESSEE WAS NOT ELIGIBLE FOR SUCH A RELIEF FOR THE IMPUGNED ASSESSMENT YEARS. ACCORDING TO HE R, THE COMMERCIAL AREA EXCEEDED THE LIMIT PRESCRIBED UNDER THE ACT AND THEREFORE, ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80- IB(10) OF THE ACT. JUST BECAUSE ASSESSEE HAD PRODU CED ACCOUNT BOOKS OR EVIDENCE FROM WHICH, WITH DUE DILIGENCE, A SSESSING OFFICER COULD HAVE DISCOVERED MATERIAL EVIDENCE, WOULD NOT TANTAMOUNT TO A DISCLOSURE. 8. NO ONE APPEARED ON BEHALF OF ASSESSEE. THOUGH T HERE IS A LETTER DATED 21.1.2013 SEEKING ADJOURNMENT, IT DOES NOT GIVE ANY REASONABLE JUSTIFICATION FOR SEEKING ADJOURNMENT. THEREFORE, WE ARE REJECTING THIS LETTER AND PROCEEDING TO DECIDE THE CASE ON MERITS. I.T.A. NOS. 1733 & 1734/MDS/12 7 9. WE HAVE PERUSED THE ORDERS AND HEARD THE SUBMIS SION OF LEARNED D.R. IT IS NOT DISPUTED THAT THE REOPENIN G WAS RESORTED TO AFTER A LAPSE OF FOUR YEARS FROM THE END OF THE IMP UGNED ASSESSMENT YEARS. THE NOTICES UNDER SECTION 148 FOR BOTH THE YEARS WERE ISSUED ON 24.3.2011. THEREFORE, CLEARLY FIRST PROVISO TO SECTION 147 COMES INTO PLAY. AS PER THE FIRST PROVISO, WHERE AN ASSE SSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT, ACTION F OR RE-ASSESSMENT CANNOT BE TAKEN AFTER AN EXPIRY OF FOUR YEARS UNLES S THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETUR N OR RESPOND TO A NOTICE OR DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR THE ASSESSMENT. ASSESSING OFFICER HAD, DURING THE COUR SE OF ORIGINAL ASSESSMENT PROCEEDINGS, REQUIRED THE ASSESSEE TO JU STIFY ITS CLAIM OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. HOW THE ASSESSEE COULD HAVE CLAIMED DEDUCTION UNDER SECTION 80-IB, W HEN THERE WAS COMMERCIAL AREA FORMING PART OF BUILDING PROJECT, W AS ALSO QUERIED. THIS IS CLEARLY EVIDENCED FROM THE NOTICE DATED 1 ST FEBRUARY, 2006 TO THE ASSESSEE, AN EXTRACT OF WHICH IS APPEARING IN T HE IMPUGNED ORDER OF CIT(APPEALS). THIS IS REPRODUCED HEREUNDER FOR BREVITY:- II FURTHER, THE SANCTIONED BUILT UP IN YOUR OF THE COMMERCIAL BLOCK (1073.96 SQ. M) (I.E. 11560.39 SQ. FT) CONSTI TUTES 8.0% OF THE TOTAL SANCTIONED BUILT UP AREA (1293.58 SQ. M) (I.E. 130178.47 SQ.FT.) AND IS A SIGNIFICANT PROPORTION OF THE TOTA L SANCTIONED I.T.A. NOS. 1733 & 1734/MDS/12 8 BUILT UP AREA. HENCE, THIS PROJECT IS NOT A PURELY RESIDENTIAL PROJECT, BUT IN FACT, A COMMERCIAL CUM RESIDENTIAL PROJECT. THE DEDUCTION U/S 80IB(10) IS AVAILABLE FOR DEVELOPING AND BUILDING HOUSING PROJECTS (RESIDENTIAL PROJECTS) ONLY AND NO T FOR COMMERCIAL CUM RESIDENTIAL PROJECTS. ON THIS POINT ALSO, YOURE NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10). IT IS NOT DISPUTED THAT ASSESSEE HAD FILED A PAPER- BOOK ON 17.4.2006 AND ALSO GIVEN REASON WHY THE COMMERCIAL AREA COULD NOT BE CONSIDERED AS ITS OWN, SINCE IT WAS OWNED BY THE LA ND OWNER WHO HAD SOLD THE LAND TO THE ASSESSEE. THERE WAS ALSO AN I NSPECTION BY THE INSPECTOR OF THE DEPARTMENT IN THE COMPLETED PROJEC T OF THE ASSESSEE DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S. ASSESSEE HAD ALSO FILED DETAILED REASONS, WHY IT WAS CLAIMING DE DUCTION UNDER SECTION 80-IB(10) OF THE ACT, IN THE FORM OF EXPERT OPINION FROM SHRI TCA RAMANUJAM, FORMER CHIEF COMMISSIONER OF INCOME TAX AND ALSO SHRI K. SUBRAMANIAM, FORMER MEMBER OF CENTRAL BOARD OF DIRECT TAXES. ASSESSING OFFICER HAD COMPLETED ORIGINAL AS SESSMENTS AFTER CONSIDERING ALL SUCH DETAILS FURNISHED BY THE ASSES SEE AND ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IB(10) OF THE ACT. ONLY REASON WHY IT HAS BEEN REOPENED IS T HAT ASSESSEE, AS PER THE ASSESSING OFFICER, WAS NOT ELIGIBLE FOR SUC H DEDUCTION SINCE COMMERCIAL AREA EXCEEDED THE SPECIFIED LIMIT. HOWE VER, NO NEW TANGIBLE RECORDS HAD COME TO THE POSSESSION OF THE DEPARTMENT FOR I.T.A. NOS. 1733 & 1734/MDS/12 9 COMING TO SUCH A BELIEF. IT WAS BASED ON THE RECOR DS FILED BY THE ASSESSEE DURING THE COURSE OF ORIGINAL ASSESSMENT P ROCEEDINGS, ON WHICH ASSESSING OFFICER HAD ALREADY APPLIED HER MIN D AND ALLOWED THE DEDUCTION THAT THE REASON HAS BEEN FORMED. THE REFORE, CLEARLY, IT IS NOTHING BUT A CHANGE OF OPINION. ORIGINAL OPINI ON OF THE A.O. WAS THAT ASSESSEE WAS ELIGIBLE FOR CLAIMING DEDUCTION U NDER SECTION 80- IB(10) OF THE ACT, AND AFTER FOUR YEARS HE CHANGED THE OPINION. REOPENING CANNOT BE RESORTED TO AFTER FOUR YEARS FR OM THE END OF THE IMPUGNED ASSESSMENT YEARS, IF IT WAS BASED ON A MER E CHANGE OF OPINION WITHOUT ANY NEW TANGIBLE EVIDENCE. LAW DEC LARED BY HON'BLE APEX COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA) SQUARELY APPLIED. WE ARE OF THE OPINION THAT THE CIT(APPEAL S) WAS JUSTIFIED IN QUASHING THE RE-ASSESSMENTS DONE BY THE ASSESSEE. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF CIT(APPE ALS). SINCE WE HAVE UPHELD THE ORDER OF THE LD. CIT(APPEALS) ON TH E ISSUE OF REOPENING, OTHER GROUNDS OF THE REVENUE HAVE BECOME ACADEMIC. 10. IN THE RESULT, APPEALS FILED BY THE REVENUE F OR BOTH THE YEARS STAND DISMISSED. I.T.A. NOS. 1733 & 1734/MDS/12 10 THE ORDER WAS PRONOUNCED IN THE COURT ON MONDAY, TH E 21 ST OF JANUARY, 2013, AT CHENNAI. SD/- SD/- (S.S. GODARA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 21 ST JANUARY, 2013. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-V, CHENNAI-34 (4) CIT, CHENNAI-III, CHENNAI (5) D.R. (6) GUARD FILE