The DCIT, 1(1), Bhopal V. Shri Rajendra Bhandari, Bhopal

ITA 219/IND/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98966 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 21-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N P PATWA
• Keywords: Search and seizure; Retrospective amendment; Wrong claim; Difference of opinion; Non compliance; Competent authority; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 153A; 147; 148; 6; 132; 139

Judgement Text

RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNA L INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 219/IND/2014 A.Y.2004-05 DY. COMMR. OF INCOME TAX 1(1) BHOPAL ::: APPELLANT VS RAJENDRA BHANDARI BHOPAL ::: RESPONDENT ITA NO. 681 /IND/2014 A.Y.2005-06 RAJENDRA BHANDARI BHOPAL PAN AAXPB-2648A ::: APPELLANT VS ASSTT.COMMR. OF INCOME TAX 1(1) BHOPAL ::: RESPONDENT RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 2 ASSESSEE BY SHRI ASHISH GOYAL AND SHRI N.P.PATWA REVENUE BY SHRI R.A. VERMA DATE OF HEARING 14.7.2015 DATE OF PRONOUNCEMENT 1 7 .8.2015 O R D E R PER SHRI B.C. MEENA, AM ITA NO. 219/IND/214 FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE LEARNED CIT(A), BILASPUR CAMP BH OPAL DATED 27.10.2013. 2. THE ASSESSEE WAS DERIVING INCOME FROM CONSTRUCTION OF HOUSE IN HIS INDIVIDUAL CAPACITY. DURING THE YEAR UN DER CONSIDERATION, THE ASSESSEE CARRIED OUT CONSTRUCTION O F HOUSING PROJECT OF BARKHEDA AND ANAND NAGAR IN THE NAME OF RISHIPURAM EXTENSION AND RISHIPURAM-III. THE RE TURN OF INCOME WAS FILED ON 31.10.2004 CLAIMING DEDUCTION OF RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 3 RS. 17,38,988/- U/S 80IB(10) OF THE ACT. THE ASSESSM ENT WAS FINALIZED U/S 143(3) AND THE CLAIM OF THE ASSESSEE W AS ALLOWED. THEREAFTER, THE ASSESSMENT WAS REOPENED BY ISSUING NOTICE U/S 148 OF THE ACT. THE LEARNED CIT( A) GRANTED RELIEF BY HOLDING AS UNDER :- DECISION I HAVE CONSIDERED THE SUBMISSION MADE BY THE LD. AR WITH REFERENCE TO MATERIAL AVAILABLE ON RECORD CAREFULLY. THE ORIGINAL RETURN OF INCOME WAS FILED ON 21.10.2004. THE ASSESSMENT U/S 153A R.W.S. 143(3) WAS COMPLETED ON 29.12.2006 WHEREBY THE CLAIM OF DEDUCTION U/S 80IB(10) WAS ALLOWED. THE A.O. INITIATED PROCEEDINGS U/S 147/148 AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE FACTS AND CIRCUMSTANCES OF THE CASE, STATUTORY PROVISION AND THE LEGAL PROPOSITION ON ISSUES INVOLVED ARE ENUMERATED HEREUNDER :- RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 4 (A) IT IS PERTINENT TO MENTION HERE THAT IN CASES COVERED UNDER IST PROVISO TO SECTION 147, PROCEEDINGS U/S 147/148 CAN BE INITIATED ONLY IF ANY OF SUCH CONDITIONS ARE FULFILLED FOR ESCAPEMENT OF INCOME CHARGEABLE TO TAX. (I) ASSESSEE FAILED TO MAKE A RETURN U/S 139 OR IN RESPONSE TO NOTICE U/S 142 OR 148 OF I.T. ACT (J) ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY OF ASSESSMENT OF THAT ASSESSMENT YEAR IT IS A SETTLED LAW THAT MERE ESCAPEMENT OF INCOME IS NOT SUFFICIENT TO JUSTIFY THE INITIATION OF PROCEEDINGS U/S 147/148 OF THE IT ACT AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR AND THAT SUCH ESCAPEMENT MUST BE BY REASON OF FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR TH E RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 5 ASSESSMENT, IN SUCH CASES, THE A.O. HAS TO RECORD NOT ONLY THE REASON/BELIEF BUT ALSO THE SPECIFIC DEFAULT OF THE APPELLANT AS PROVIDED IN THE PROVISIONS TO SECTION 147. RELIANCE IS PLACED IN TH E CASE OF FENNER INDIA LTD. VS. DCIT 241 ITR 672 (MAD); MISTRILALJI NARSI DEVELOPMENT CORPN VS. CIT 323 ITR 194 (MUM); HINDUSTAN LEVER LTD. VS. ACIT 268 ITR 332 (MUM); G.M. SHAH WINES PVT. LTD. VS. ITO; 260 ITR 513 (CAL.); IPCA LABORATORIES VS. DCIT 251 ITR 416. (B) IN THE PRESENT CASE IN HAND, APPARENTLY THERE WAS NO FAILURE TO MAKE A RETURN U/S 139 OR SECTION 142 FOR SECTION 148 OF THE ILT ACT. ALSO, IT IS NOTI CED THAT THE APPELLANT HAS FILED ALL RELEVANT DETAILS RELATING TO CLAIM OF DEDUCTION U/S 80IB(10) BEFORE THE A.O. DURING THE ASSESSMENT PROCEEDINGS. THE A.O. HAS DISCUSSED THE ISSUE OF CLAIM OF DEDUCTION RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 6 U/S 80IB(10) AND SPECIFICALLY MENTIONED THAT THE DEDUCTION WAS ALLOWABLE. THEREAFTER, THE A.O. FORMED THE BELIEF FOR THE REASONS MENTIONED IN THE ORDER OF ASSESSMENT ITSELF THAT THERE IS ESCAPEMENT OF INCOME. ON PERUSAL OF THE REASONS FOR REOPENING, I FIND THAT KEEPING ASIDE TWO REASONS I.E. NECESSITY TO FURNISH COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY AND COMPLIANCE OF LIMIT OF BUILT UP AREA OF SHOPS AND COMMERCIAL ESTABLISHMENTS ON TOTAL BUILT UP AREA OF THE PROJECT, OTHER REASONS FOR REOPENING NAMELY APPROVAL FOR DEVELOPMENT AND CONSTRUCTION OF THE PROJECTS WERE GIVEN IN THE NAME OF THE SOCIETY AND NOT IN THE NAME OF THE APPELLANT, THE APPELLANT IS A MERE WORK CONTRACTOR AND NOT A DEVELOPER AND NO SINGLE PERMISSION ON PLOT AREA OF ONE ACRE OR RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 7 MORE WAS OBTAINED WERE DULY VERIFIED BY THE A.O. AT THE TIME OF ASSESSMENT PROCEEDINGS AND AFTER FORMING AN OPINION ON THESE ISSUES, THE A.O. ALLOWED DEDUCTION U/S 80IB(10) CLAIMED IN THE RETURN. MOREOVER, ON MERIT OF THE CASE, THE CLAIM CANNOT BE DECLINED MERELY BECAUSE THE APPROVAL WAS NOT IN THE NAME OF THE APPELLANT AS HAS BEEN DECIDED BY HON'BLE JURISDICTIONAL TRIBUNAL IN THE CASEOF RAJDHANI LAND AND HOUSING CORPORATION VS. ITO IN ITA NO. 558/IND/2010 DATED 25.04.2012; ITO- 1(1),BHOPAL VS. M/S PUNEET GODHA, BHOPAL IN ITA NO. 335/IND/2008 DATED 15.12.2010; GAYATRI BUILDERS VS. ACIT 1(1), BHOPAL IN ITA NO. 500/IND/2010 ETC. IN CIT VS. SANGHVI AND DOSHI ENTERPRISES REPORTED IN 255 CTR 156 THE HON'BLE HIGH COURT OF MADRAS HAS HELD THAT RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 8 OWNERSHIP OF LAND IS NOT THE CRITERIA TO DECIDE THE STATUS OF DEVELOPER TO CLAIM DEDUCTION. IF THE RISK ELEMENT INVOLVED IN THE PROJECT UNDERTAKEN BY THE ASSESSEE IS DEMONSTRATED WITH PROPER EVIDENCE, THE ASSESSEE IS MORE THAN A NORMAL BUILDER UNDERTAKING MERE CONSTRUCTION. THE A.O. ACCEPTED THE CLAIM OF DEDUCTION IN THE ORIGINAL ORDER OF ASSESSMENT AFTER VERIFYING THE FACTS AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE A.O. IS NOT JUSTIFIED IN MAKING A DIFFERENT OPINION ON SAME FACTS AND ON SIMILAR STATUTORY PROVISIONS. THE RATIO OF THE CASES IN SITA WORLD TRAVEL (INDIA) LTD. VS. CIT 140 TAXMAN 381 (DELHI) AND CIT VS. KELVINATOR OF INDIA LTD. (2010) 34 DTR (SC) 49 RELIED ON BY THE LD. AR IS SQUARELY RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 9 APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. (C) REGARDING THE TWO CONDITIONS AS STATED ABOVE, I FIND THAT THE CONDITIONS INSERTED IN CLAUSE (A), CLAUSE (D) AND EXPLANATION BY THE FINANCE (NO. 2) ACT, 2004 ARE BROUGHT INTO STATUTE W.E.F. 01.04.2005 AND THUS NON COMPLIANCE OF SUCH CONDITIONS CANNOT BE TREATED AS OMISSION ON THE PART OF THE APPELLANT IN RESPECT OF THE ASSESSMENT YEAR UNDER REFERENCE. IN THIS REGARD, RELIANCE IS PLACED IN THE DECISION OF THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF SAMBHAV ENGG. LTD. VS. CIT REPORTED IN 239 CTR 285, MANAN CORPORATION VS,. ACIT REPORTED IN 255 CTR 415, DCIT VS. GANESH HOUSING CORPORATION REPORTED IN 341 ITR 312, CIT VS. RADHE DEVELOPERS REPORTED IN 341 ITR RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 10 404 HON'BLE HIGH COURT OF MADRAS IN THE CASE OF SANGHVI & DOSHI ENTERPRISES VS. CIT REPORTED IN 255 CTR 415, DCIT VS. GANESH HOUSING CORPORATION REPORTED IN 341 ITR 312, CIT VS. RADHE DEVELOPERS REPORTED IN 341 ITR 403, HON'BLE HIGH COURT OF MADRAS IN THE CASE OF SANGHVI &DOSHI ENTERPRISES VS. LEARNED CIT(A) IT REPORTED IN 255 CTR 156, HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SHRAVANEE CONSTRUCTIONS REPORTED IN 209 TAXMAN 6. RELIANCE PLACED BY THE LD. AR IN THE DECISION OF THE HON'BLE JURISDICTIONAL TRIBUNAL IN THE CASE OF C.I. BUILDERS V. ASSESSEE ITA NOS. 299 TO 305/INMD/2010 ON 31.1.2012; VARDHMAN BUILDERS & DEVELOPERS V. ITO, BHOPAL ITA NOS. 559/IND/2010 ON 9.5.2012; FORTUNE BUILDERS VS,. ACIT 1(2) BHOPAL ITA NO. RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 11 511 TO 513/IND/2010 ON 21.11.2011 IS SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT. (D) THE A.O. HAS WITHDRAWN THE DEDUCTION FOR THE REASONS STATED ABOVE. ONE OF THE REASONS FOR WITHDRAWAL OF DEDUCTION IS THAT THE APPELLANT HAS CONSTRUCTED DUPLEX HAVING BUILT UP AREA EXCEEDING 1500 SQ. FT. THIS WAS NOT ONE OF THE REASONS FOR REOPENING. HOWEVER, IT IS FOUND THAT THE A.O. IS SILENT IN HIS ORDER OF ASSESSMENT IN SPECIFYING THE DUPLEX WHICH HAVE VIOLATED BUILT UP AREA OF 1500 SQ. FT. THE A.O. IS SILENT ABOUT THE SOURCE ON THE BASIS FO WHICH HE HAS DRAWN SUCH CONCLUSION. THERE IS NO MATERIAL ON RECORD WHICH SUGGESTS PHYSICAL MEASUREMENT OF THE HOUSING UNITS BY ANY APPROVED VALUER. HAD THERE BEEN ANY RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 12 SPECIFICATION OF SUCH VIOLATION IN THE CONDITION LAID DOWN IN THE SECTION, THE CHARGE OF FURNISHING INCOMPLETE OR INACCURATE MATERIAL FACTS IN RETURN COULD HAVE BEEN VALIDLY FORMED. THE ORDER OF THE A.O. IS NOT AN SPEAKING ORDER IN THIS RESPECT AS HAS BEEN ALLEGED BY THE LD. AR. (E) THE A.O. REOPENED THE ASSESSMENT FOR THE A.Y. 2003-04 AFTER FOUR YEARS OF THE END OF THE RELEVANT5 ASSESSMENT YEAR FOR FAILURE OF THE APPELLANT TO FURNISH THE COMPLETION CERTIFICATE THOUGH THE ISSUE WAS EXAMINED IN COURSE OF ASSESSMENT PROCEEDINGS AND DEDUCTION U/S 80IB(10) FOR RS.15,30,656/- WAS ACCEPTED IN THE ORIGINAL ORDER OF ASSESSMENT U/S 143(3) DATED 29.12.2006. THE APPELLANT CHALLENGED THE JURISDICTION OF THE A.O. IN REOPENING THE RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 13 CASE AFTER FOUR YEARS BEFORE COMMISSIONER OF INCOME TAX (APPEAL-I), BHOPAL. THE CIT (APPEAL- 1) BHOPAL IN ORDER IN ITA NO. CUIT(A)-1/BPL/IT- 325/2010-11 DATED 18.11.2011 HAS DECIDED THE CASE IN FAVOUR OF THE APPELLANT AND DID NOT ADJUDICATE THE OTHER GROUNDS OF THE APPEAL. THE FACTS AND CIRCUMSTANCES OF THE YEAR UNDER REFERENCE BEING EXACTLY SIMILAR TO THE FACTS AND CIRCUMSTANCES OF THE AFORESAID ASSESSMENT YEAR, I FIND THAT THE ASSESSMENT PROCEEDINGS U/S 147 WAS NOT VALIDLY INITIATED & THE SUBSEQUENT ASSESSMENT COMPLETED U/S 147/143(3) OF THE ACT CANNOT STAND IN THE EYES OF LAW. HENCE, ASSESSMENT ORDER COMPLETED U/S 147 R.W.S. 143(3) DATED 20.12.2011 IS ANNULLED. THIS GROUND OF APPEAL SINCE DECIDED IN FAVOUR OF THE APPELLANT, THE OTHER GROUNDS RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 14 TAKEN BY THE APPELLANT ARE NOT REQUIRED TO BE ADJUDICATED. 3. FROM THE ORDER OF THE LEARNED CIT(A) IT IS CLEAR THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2003-04 WAS REOPENED ON THE ISSUE OF DEDUCTION U/S 80IB(10) OF THE ACT. THE MATTER REACHED TO THE ITAT AND THE ITAT VIDE ITS ORDER IN ITA NO. 50/IND/2012 IN THE ASSESSEES OWN CASE DATED 4.5.2012 DISMISSED THE APPEAL OF THE REVENUE BY UPHOL DING THE ORDER OF THE LEARNED CIT(A) AS UNDER :- 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN THE BUSINESS OF DEVELOPING AND CONSTRUCTING THE HOUSING PROJECT. THE ASSESSEE CARRIED OUT THE ACTIVITIES IN THE NAME OF BARKHEDA PROJECT (RISHIPURAM EXTENSION) AND ANAND NAGAR PROJECT (RISHIPURAM III). A SEARCH AND SEIZURE RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 15 OPERATION WAS CONDUCTED U/S 132 OF THE ACT ON 4 2.11.2004 AND THE ASSESSMENT U/S 143(3) READ WITH SECTION 153A OF THE ACT, DETERMINING TOTAL INCOME AT RS.4,59,260/- WAS FRAMED ON 29.12.2006. THE ASSESSEE CHALLENGED THE SAID ORDER BEFORE THE LEARNED FIRST APPELLATE AUTHORITY, BHOPAL, WHO DECIDED THE APPEAL ON 3.5.2007. THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL WHEREIN VIDE ORDER DATED 26.9.2008 IN ITA NO. 112/IND/2007 IT WAS PARTLY ALLOWED. SUBSEQUENTLY, ON 31.3.2010, NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON THE REASON THAT THE CLAIMED DEDUCTION U/S 80IB(10) WAS WRONGLY ALLOWED TO THE ASSESSEE. THE ASSESSEE CHALLENGED THE ISSUANCE OF NOTICE VIDE LETTER DATED 16.6.2010. THE OBJECTIONS RAISED BY THE ASSESSEE WERE DISPOSED OF BY THE LEARNED AO VIDE COMMUNICATION RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 16 DATED 28.7.2008. ULTIMATELY, THE ASSESSMENT WAS COMPLETED U/S 143(3) READ WITH SECTION 147 DISALLOWING THE CLAIMED DEDUCTION OF RS. 15,30,656/- U/S 80IB(10) OF THE ACT, ORIGINALLY GRANTED BY THE AO. THE ASSESSEE CHALLENGED THE REASSESSMENT PROCEEDINGS AND ISSUANCE OF NOTICE U/S 147 ON TWO FOLD, FIRSTLY THE VALIDITY OF ISSUAN CE OF NOTICE U/S 147/148 BEYOND THE PERIOD OF FOUR YEARS AND SECONDLY THERE WAS NO REQUIREMENT OF FILING OF COMPLETION CERTIFICATE AS THE AMENDMENT WAS INSERTED FROM 1.4.2005. IT WAS ALSO POINTED OUT THAT THE CLAIM OF THE ASSESSEE U/S 80IB(10) OF 5 THE ACT WAS DULY EXAMINED BY THE AO, THEREFORE, REOPENING OF COMPLETED ASSESSMENT TANTAMOUNTS TO CHANGE OF OPINION FOR WHICH THE ASSESSEE PLACED RELIANCE UPON FOLLOWING JUDICIAL PRONOUNCEMENTS :- RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 17 ( I) TASHAN TEXTILE MILLS (P) LTD. VS. DCIT(2006) 284 ITR 542(MUM) (II) GERMAN REMEDIES LTD. VS. DCIT (2006) 287 ITR 494 (MUM) (III) WEL INTERTRADE (P) LTD. V. ITO (IV) SITA WORLD TRAVELS (INDIA) VS. CIT (2005) 274 ITR 186(DEL) (V) KELVINATOR OF INDIA 228 CTR 488 (SC) (VI) DCIT V. MANAK SHOES CO. LTD.; 36 DTR 164 (DELH I) 3.1 BEFORE COMING TO ANY CONCLUSION, IT IS NECESSARY TO MENTION CERTAIN FACTS. UNCONTROVERTEDLY SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE ACT WAS CARRIED ON 2.11.2004 AND ORIGINAL ASSESSMENT U/S 143(3) READ WITH SECTION 153A OF THE ACT, ALLOWING DEDUCTION U/S 80IB(10), WAS FRAMED ON 29.12.2006 (PAPER BOOK PAGES 18 TO 26). THE TRIBUNAL DECIDED THE APPEAL ON 29.9.2008 (PAPER BOOK PAGES 29 TO 38 OF THE PAPER BOOK). THE REASONS WERE RECORDED ON 31.3.2010. THE REASSESSMENT WAS FRAMED ON 20.12.2010. BY RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 18 THE FINANCE (NO. 2) ACT, 2004, WITH EFFECT FROM 1.4.2005, I.E. IN A.Y. 2005-06, AMENDMENT WAS MADE IN SECTION 80IB(10), WHICH AS PER THE REVENUE, WAS HAVING RETROSPECTIVE OPERATION. HOWEVER, THE FACT REMAINS THAT IN REGULAR 6 ASSESSMENT THE CLAIM OF THE ASSESSEE WAS DULY ACCEPTED BY THE AO THAT TOO AFTER DUE APPLICATION O F MIND AND ON EXAMINATION OF FACTS. HOWEVER, WE ARE REFRAINING OURSELVES IN GOING INTO MUCH DETAILS BECAUSE THE ONLY ISSUE RAISED BY THE REVENUE PERTAINS TO VALIDITY OF ANNULMENT OF REASSESSMENT. 3.2 IF THE REASONS FOR REOPENING U/S 148 ARE ANALYSED, WE FIND THAT IN THE REASONS RECORDED, THERE IS NO MENTION THAT THERE WAS ANY FAULT OF THE ASSESSEE AND MERELY MENTIONED THAT THE ASSESSEE DID NOT COMPLETE ITS PROJECT BY 31.3.2008 AS PROJEC T COMPLETION CERTIFICATE WAS NOT ISSUED BY THE LOCAL RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 19 AUTHORITY TO THE ASSESSEE AND FURTHER THE ASSESSEE MADE A WRONG CLAIM OF DEDUCTION U/S 80IB(10). WE FIND THAT FIRSTLY AFTER EXAMINATION OF RECORD, THE AO HIMSELF ALLOWED THE CLAIMED DEDUCTION AND SECONDLY TRUE AND FULL FACTS WERE DECLARED BY THE ASSESSEE WHILE FILING THE RETURN. IF THE LEGISLATUR E MADE AN AMENDMENT AT THE LATER STAGE, WE ARE OF THE VIEW THAT THE ASSESSEE MAY NOT BE PENALISED BECAUSE THE ASSESSEE CLAIMED THE DEDUCTION ON THE BASIS OF PREVAILING LAW, WHILE FILING THE RETURN. E VEN OTHERWISE, IN THE REASONS RECORDED IT HAS NOWHERE BEEN STATED BY THE AO THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR ASSESSMENT. WE FURTHER FIND THAT THE NOTICE WAS 7 ISSUED CLEARLY BEYOND THE PERIOD OF FOUR YEARS, THEREFORE, THE REASSESSMENT WAS EVEN OTHERWISE BARRED BY RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 20 LIMITATION. THE RATIO LAID DOWN BY HONBLE DELHI HIGH COURT IN CENTRAL INDIA ELECTRIC SUPPLY COMPANY LIMITED; 333 ITR 27 (DEL.), GEMINI LEATHER STORES; 100 ITR 1 (SC) AND ASSOCIATED INDUSTRY LIMITED; 224 ITR 560 (SC) SUPPORTS THE CLAIM OF THE ASSESSEE. WE FURTHER FIND THAT THE LEARNED AO INITIATED PROCEEDINGS U/S 148 OF THE ACT WHICH WERE BASED UPON SUBSEQUENT AMENDMENT MADE TO THE LEGISLATION, BUT FACT REMAINS THAT REOPENING WAS MADE BEYOND THE PERIOD OF FOUR YEARS WHICH IS CLEARLY BARRED BY LIMITATION. THIS VIEW IS SUPPORTED BY THE DECISION IN SADBHAV ENGG. LIMITED; 239 CTR 258 (GUJ.) BECAUSE THE ASSESSEE CANNOT BE EXPECTED TO COMPLY WITH THE REQUIREMENT OF THE ACT WHICH WAS MADE BY THE AMENDMENT ON A LATER DATE WAS NOT FORMING PART OF THE STATUTE BOOK WHEN THE ASSESSEE FILED THE RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 21 RETURN. OTHER VIEW IS THAT WHEN THE AO HIMSELF ALLOWED THE DEDUCTION U/S 80IB(10) OF THE ACT THAT TOO AFTER MAKING PROPER INQUIRY WHILE FRAMING THE ASSESSMENT U/S 143(3) READ WITH SECTION 153A OF THE ACT, WHETHER, MERELY ON THE BASIS OF CHANGE OF OPINION, REOPENING IS PERMISSIBLE ?. THE OBVIOUS REPLY IS NO. THIS VIEW IS SUPPORTED BY THE DECISION OF THE HONBLE APEX COURT IN CIT V. KELVINATOR OF INDIA; 320 ITR 561 8 (SC) (FB). THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SADBHAV ENGG. LIMITED (SUPRA) WHEREIN NOTICE WAS ISSUED U/S 148 AFTER A LAPSE OF FOUR YEARS ON THE BASIS OF SUBSEQUENT AMENDMENT OF LAW WITH RETROSPECTIVE EFFECT, HELD THAT THE NOTICE WAS INVALID. UNCONTROVERTEDLY, THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS IN THE RETURN. FROM THE FACTS IT IS RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 22 EVIDENTLY CLEAR THAT THE AO REOPENED THE ASSESSMENT IN VIEW OF SUBSEQUENT AMENDMENT BROUGHT OUT IN THE STATUTE BY THE FINANCE (NO. 2) ACT, 2004 WITH EFFECT FROM 1.4.2005 AS PER WHICH THE COMPLETION CERTIFICATE WAS INTRODUCED WITH RETROSPECTIVE OPERATION. HOWEVER, THE ASSESSEE FILED THE RETURN ON THE BASIS OF THE PROVISIONS OF THE ACT AS ON THAT DATE WHEN THE ASSESSEE WAS CLEAR CUT ELIGIBLE FOR DEDUCTION, THEREFORE, THERE IS NO REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AT THE RELEVANT TIME. THE RECORD OF THE CASE DOES NOT IN ANY MANNER INDICATE THAT PROCEEDINGS U/S 147 WERE SOUGHT TO BE REOPENED BY REASONS OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THE AY UNDER CONSIDERATION. IT IS CLEAR THAT THERE WAS NO FAILUR E RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 23 ON THE PART OF THE ASSESSEE, CONSEQUENTLY, THERE CANNOT BE DEEMED FAILURE AS CONTENDED BY THE REVENUE. 9 ON THE ISSUE OF CHANGE OF OPINION, THE DECISION FROM HONBLE APEX COURT IN KELVINATOR OF INDIA LIMITED (SUPRA) IS VERY MUCH CLEAR. THE HONBLE COURT WHILE COMING TO A PARTICULAR CONCLUSION AFFIRMED THE FULL BENCH DECISION OF HONBLE DELHI HIGH COURT PRONOUNCED IN 256 ITR 1 (FB) AND CIT V. EICHER LIMITED; 294 ITR 310. THE DECISION FROM HONBLE GUJARAT HIGH COURT IN THE CASE OF SADBHAV ENGG. LIMITED (SUPRA) IS EXACTLY ON THE ISSUE. THE RATIO LAID DOWN BY HONBLE BOMBAY HIGH COURT IN CIT V. BRAHMA ASSOCIATES (2011) 333 ITR 289, ACIT VS. ROLTA INDIA LIMITED; 132 ITD 98 (MUM) AND ACIT V. PRESTIGE FOODS LIMITED; 12 ITJ 506 (ITAT, INDORE) AND HEG LIMITED; 15 ITJ 125 (INDORE TRIBUNAL) FURTHER SUPPORTS THE CASE OF THE RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 24 ASSESSEE. HOWEVER, IN THE PRESENT CASE, THE ORIGINAL ASSESSMENT WAS FRAMED U/S 143(3) READ WITH SECTION 153A OF THE ACT ON EXAMINATION OF FACTS, PROPOSITION OF LAW THAT TOO AFTER DUE APPLICATION OF MIND BY THE LEARNED AO, THEREFORE, I T IS CLEARLY A CHANGE OF OPINION. FURTHER THE NOTICE U/S 148 OF THE ACT WAS OTHERWISE ISSUED AFTER A PERIOD OF FOUR YEARS FROM THE DATE OF ASSESSMENT, THEREFORE, IT IS OTHERWISE NOT PERMISSIBLE. 3.3 SO FAR AS THE RELIANCE OF THE LEARNED CIT DR ON THE DECISION IN IPCA LABORATORIES LIMITED AND GEM GRANITES V. CIT (SUPRA) IS 10 CONCERNED, THESE DECISIONS FROM HONBLE APEX COURT ENLIGHTEN US ON INTERPRETATION OF STATUTES WHEREIN IT HAS BEEN HELD THAT IF THE WORDINGS OF SECTION ARE CLEAR THEN THE BENEFIT WHICH ARE NOT AVAILABLE UNDER THE SECTION, CANNOT BE CONFERRED BY IGNORING OR RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 25 MISAPPROPRIATING THE WORDS IN THE SECTION. WITH GREAT RESPECT, WE ARE BOUND TO FOLLOW THE VERDICT O F THE HONBLE APEX COURT. IN THE CASE OF GEM GRANITES, THE HONBLE APEX COURT HAS HELD THAT EVERY STATUTE IS PRIMA FACIE PROSPECTIVE UNLESS IT IS EXPRESSLY OR BY NECESSARY IMPLICATION MADE TO HAVE RETROSPECTIVE OPERATION. SUBSEQUENT LEGISLATION MAY BE LOOKED INTO TO FIX THE PROPER INTERPRETATION TO BE PUT ON THE STATUTORY PROVISION S AS IT STOOD EARLIER, MEANING THEREBY FOR PROPER INTERPRETATION OF THE AMENDMENT, SUBSEQUENT LEGISLATION IS TO BE LOOKED INTO. HOWEVER, THE ISSU E BEFORE US PERTAINS TO VALIDITY OF ISSUANCE OF NOTIC E U/S 148 BEYOND A PERIOD OF FOUR YEARS, REASONS RECORDED BY THE AO AND THE AMENDMENT WHICH WAS MADE ON A LATER DATE, THEREFORE, THESE JUDICIAL PRONOUNCEMENTS MAY NOT HELP THE REVENUE. IN VIEW RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 26 OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE CIT(A). IT IS AFFIRMED. SINCE ON THE SIMILAR FACTS, THE HON'BLE ITAT HAS DECID ED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH REGARD TO REOPENI NG OF ASSESSMENT, RESPECTFULLY FOLLOWING THE SAME, WE DISMI SS THIS APPEAL OF THE REVENUE. 4. IN THE RESULT, ITA NO. 219/IND/2014 IS DISMISSED 5. ITA NO. 681/IND/2014 EMANATES FROM THE ORDER OF T HE LEARNED CIT(A), BILASPUR, CAMPED BHOPAL, DATED 3.9.2014 . IN THIS CASE THE LEARNED CIT(A) HAS CONFIRMED THE ACTIO N OF THE ASSESSING OFFICER IN ISSUING NOTICE U/S 148 OF THE ACT AND FINALLY SUSTAINING THE ADDITION IN THE ABSENCE OF COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY GIVING APPROVAL FOR THE PROJECT IS SINE QUA NON FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT. RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 27 6. AFTER HEARING BOTH THE SIDES, WE HOLD THAT THE PR OJECT ON WHICH THE DEDUCTION WAS CLAIMED, WAS SANCTIONED PRIO R TO AMENDMENT IN THE ACT AND THERE ARE VARIOUS CASE LAWS WHERE IT IS HELD THAT THE AMENDED PROVISIONS SHALL NOT BE APPLICABLE TO THE PROJECTS APPROVED PRIOR TO AMENDMENT IN THE FINANCE (NO. 2) ACT, 2005. IN THIS CASE THE PROJ ECT WAS APPROVED ON 7.6.2001 AND 16.2.2001. THE PROJECTS WER E COMPLETE PRIOR TO 31 ST MARCH, 2008. THE ASSESSEE COULD NOT GET COMPLETION CERTIFICATE FROM THE MUNICIPAL CORPORAT ION, BHOPAL. ON THAT BASIS THE ASSESSMENT WAS REOPENED AND THE LEARNED CIT(A) SUSTAINED THE ADDITION. IN THE CASE OF CHD DEVELOPERS LTD. VS. ACIT, CIRCLE 3(1), NEW DELH I, WHEREIN HON'BLE DELHI HIGH COURT HAS HELD AS UNDER :- THE ASSESSEE IS EXPECTED TO COMPLETE THE PROJECT AS PER THE APPROVED PLAN AT A PARTICULAR POINT OF TIME AND THE ASSESSEE IS NOT EXPECTED TO DO OR TO FULFIL L THE CONDITIONS WHICH ARE NOT IN EXISTENCE AT THE RELEVA NT RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 28 POINT OF TIME OR MADE COMPULSORY AFTER MAKING SOME AMENDMENT IN THE ACT FROM THE FUTURE DATE. SINCE TH E ASSESSEE WAS TO COMPLETE THE PROJECT ON OR BEFORE AND 31.03.2009 AND REQUEST WAS DULY MADE WITH THE COMPETENT AUTHORITY ON 05.11.2009 MENTIONING THAT THE PROJECT HAS BEEN COMPLETED AND COMPLETION CERTIFICATE MAY BE ISSUED AND IF THE SAME IS NOT ISSUED BY THE COMPETENT AUTHORITY THE ASSESSEE SHOULD NOT BE PENALIZED FOR THE SAME UNLESS AND UNT IL SOME CONTRARY FACTS ARE BROUGHT ON RECORD EVIDENCIN G THAT THE ASSESSEE CONTRAVENED THE CONDITIONS CONTAINED IN THE APPROVAL GRANTED BY SUCH COMPETENT AUTHORITY. AS PER SUB-SECTION (10) OF SECTION 80IB( 10), THE BENEFIT WILL BE HUNDRED PERCENT SUBJECT TO FULFILLMENT OF CERTAIN CONDITIONS. HOWEVER, THIS CONDITION WAS SUBSTITUTED BY THE FINANCE (NO. 2) AC T OF 2009 WITH EFFECT FROM 01.04.2009 WHICH HAS BEEN RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 29 FURTHER EXPLAINED BY SUB-CLAUSE (II) TO THE EXPLANA TION REGARDING COMPLETION CERTIFICATE. HOWEVER, SINCE TH E APPROVAL WAS GRANTED TO THE ASSESSEE ON 01.04.2005, THEREFORE, THE ASSESSEE IS NOT EXPECTED TO FULFILL THE CONDITIONS WHICH WERE NOT ON THE STATUTE WHEN SUCH APPROVAL WAS GRANTED TO THE ASSESSEE. THEREFORE, TH E APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. IN THE CASE OF CIT VS. TARNETAR CORPORATION (2012) 26 TAXMAN.COM 180(GUJ.) IT WAS HELD THAT IN THE PRESENT CASE, THEREFORE, THE FACT THAT THE APPELLANT HAD COMPLETED THE CONSTRUCTION WELL BEFOR E 31 ST MARCH, 2008 IS NOT IN DOUBT. IT IS, OF COURSE, TRU E THAT FORMALLY BU PERMISSION WAS NOT GRANTED BY THE MUNICIPAL AUTHORITY BY SUCH DATE. IT IS EQUALLY TRU E THAT EXPLANATION TO CLAUSE (A) TO SECTION 80IB(10) LINKS THE COMPLETION OF THE CONSTRUCTION TO THE BU PERMISSION BEING GRANTED BY THE LOCAL AUTHORITY. RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 30 HOWEVER, NOT EVERY CONDITION OF THE STATUTE CAN BE SEEN AS MANDATORY. IF SUBSTANTIAL COMPLETION THEREO F IS ESTABLISHED ON RECORD, IN A GIVEN CASE, THE COUR T MAY TAKE A VIEW THAT MINOR DEVIATION THEREOF WOULD NOT VITIATE THE VERY PURPOSE FOR WHICH THE DEDUCTIO N WAS BEING MADE AVAILABLE. IN THE PRESENT CASE, THE FACTS ARE PECULIAR. THE ASSESSEE HAS NOT ONLY COMPLETED THE CONSTRUCTION TW O YEARS BEFORE THE FINAL DATE AND APPLIED FOR BU PERMISSION. SUCH BU PERMISSION WAS NOT REJECTED ON THE GROUND THAT CONSTRUCTION WAS NOT COMPLETED, BUT ON SOME OTHER TECHNICAL GROUND. IN THAT VIEW OF MATTER, GRANTING RELIEF OF DEDUCTION CANNOT BE HELD TO BE ILLEGAL. IN ACIT VS. SURENDRA DEVELOPERS IN ITA NOS. 2743 TO 2745/DEL/2010 IT WAS HELD AS UNDER :- RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 31 THE LD. CIT(A), IT IS SEEN, HAS GRANTED RELIEF TO THE APPELLANT ON THE BASIS OF THE FACT THAT THOUGH THE APPELLANT HAD APPLIED FOR COMPLETION CERTIFICATE BEFORE THE LOCAL AUTHORITY6 IN TIME, THE SAID CERTI FICATE WAS NOT ISSUED IN TIME BY THE LOCAL AUTHORITY. SUCH ISSUANCE OF COMPLETION CERTIFICATE HAS BEEN HELD AN D IN OUR OPINION, CORRECTLY SO, TO BE BEYOND THE CONT ROL OF THE ASSESSEE. IN THE CASE OF HINDUSTAN SAMUDHA AWAS LTD. VS. ITO IN I TA NOS. 945 TO 950/PNP 2010 HON'BLE ITAT, PUNE BENCH HELD AS UNDER :- FROM THE ABOVE, ONE THING IS CLEAR THAT THE DATE TH AT APPEAR ON THE ARCHITECTS COMPLETION CERTIFICATE FI LED BEFORE THE LOCAL AUTHORITY IS A RELEVANT ONE. IN TH E INSTANT CASE, THE SAID DATE IS 25.03.2008 AND THE APPELLANT FILED REQUISITE FORM BEFORE THE LOCAL AUTHORITY INTIMATING THE COMPLETION OF THE PROJECT. THE RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 32 SAID CERTIFICATE/INTIMATION WAS ACCEPTED BY THE LOC AL AUTHORITY WITHOUT ANY AMENDMENTS OR OBJECTS. LOCAL AUTHORITY HAS NOT RAISED ANY QUERIES ON THE QUALITY CONSTRUCTION OF THE BUILDING OR THE COMPLETION OF T HE SAME AS PER THE PLANS APPROVED BY SUCH AUTHORITY. IN SUCH CIRCUMSTANCES, IN OUR OPINION, THE DELAY IN OBTAINING THE COMPLETION CERTIFICATE ON 10.10.2008 IS CERTAINLY NOT ATTRIBUTABLE TO THE APPELLANT AND OBTAINING THE SAID CERTIFICATE BEFORE 31.03.2008 IS BEYOND THE CONTROL OF THE APPELLANT. THE APPELLANT S JOB INCLUDES THE COMPLETION OF THE BUILDING IN ACCORDANCE WITH THE APPROVAL PLANS AND INTIMATION O F THE SAME TO THE LOCAL AUTHORITY BY WAY OF FILING TH E REQUISITE FORMS TOGETHER WITH THE COMPLETION CERTIFICATE GIVEN BY THE ARCHITECT, THE SPECIALIST IN THE MATTER AND THE APPELLANT HAS DONE HIS JOB SCRUPULOUSLY IN THIS CASE. HOWEVER, THE LOCAL RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 33 AUTHORITY HAS NEITHER OBJECTED TO THE SAID APPLICAT ION OF THE APPELLANT AND THE ARCHITECT BY RAISING ANY OBJECTION NOR ACCEPTED BY ISSUE OF SAID COMPLETION CERTIFICATE TILL 10.10.2008. THEREFORE, THE DELAY I N GRANT OF THE SAID CERTIFICATE IS CERTAINLY NOT ATTRIBUTABLE TO THE APPELLANT. THEREFORE, IN OUR OPINION, THE APPELLANT IS NOT DEFAULTER ON THIS ACC OUNT AND THUS THE A.O. HAS ERRED IN DENYING THE DEDUCTIO N U/S 80IB(10) OF THE ACT. ACCORDINGLY, THE ORDER OF THE CIT(A) HAS TO BE REVERSED. THUS, THE GROUNDS RAISED IN THE APPEAL ARE ALLOWED. HON'BLE ITAT, DELHI BENCH IN THE CASE OF M/S GIRIJA COLONISERS IN ITA NOS. 2417 TO 2422/DEL/2011 HAS HE LD AS UNDER :- IN THE LIGHT OF THE FACTS NARRATED IN A.O.S REMAND REPORT AND FACTS AVAILABLE ON RECORD, THE LD. CIT(A ) HAS TAKEN A VIEW THAT THE APPELLANT HAS COMPLETED RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 34 THE CONSTRUCTION MUCH PRIOR TO 31.03.2008 AND HAD FULFILLED ALL REQUIREMENTS/FORMALITIES OF THE COMPLETION CERTIFICATE AS NOTIFIED BY THE CORPORATI ON AT THE TIME OF FILING APPLICATION FOR ISSUANCE OF COMPLETION CERTIFICATE ON 26.11.2007. THE LD. CIT(A ) HAS ALSO RECORDED A FINDING THAT SALES OF ALL RESIDENTIAL UNITS IN RESPECT OF THREE PROJECTS WERE MATERIALIZED ON OR BEFORE 31.03.2008. THE MUNICIPAL AUTHORITY HAS NOT POINTED OUT ANY DEFECT AND IRREGULARITY IN THE APPELLANTS APPLICATION DATED 26.11.2007 SUBMITTED FOR ISSUANCE OF COMPLETION CERTIFICATE OF ALL THE SAID PROJECTS. THEREFORE, IN THE LIGHT OF FACTS FOUND BY THE LD. CIT(A) AND REASONS GIVEN BY HIM AND RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF ITAT, PUNE BENCH B IN THE CASE HINDUSTAN SAMUHA AWAS LIMITED (SUPRA), WE RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 35 DO NOT FIND ANY REASON TO TAKE A VIEW OTHER THAN TH E VIEW TAKEN BY THE LD. CIT(A) IN THE PRESENT CASE. W E, THEREFORE, UPHOLD THE ORDER OF LD. CIT(A) AND DISMI SS ALL THESE APPEALS FILED BY THE REVENUE. VISAKHAPATNAM BENCH OF THE ITAT IN THE CASE OF M/S VISHNU BUILDERS VS. ACIT (ITA NOS. 178, 179 & 180/VIZAG/2011) ORDER DATED 27 TH JULY, 2011 OBSERVED THAT COMPLETION CERTIFICATE WAS NOT FILED BEFORE THE ASSES SING OFFICER AND THE PROOF OF MUNICIPAL TAX ASSESSMENT OF VARIOUS FLAT OWNERS ESTABLISHING THAT THE HOUSING PROJE CT WAS COMPLETED BEFORE SEPTEMBER, 2008 WAS FILED. SINCE THERE WAS NO PRACTICE OF ISSUING THE PROJECT COMPLETI ON CERTIFICATE, THEREFORE, IT WAS HELD THAT IT WAS NOT A CO NDITION PRECEDENT OF FILING THE COMPLETION CERTIFICATE FOR AL LOWING DEDUCTION U/S 80IB(10) OF THE ACT. RAJENDRA BHANDARI ITA NOS. 219 AND 681/IND/2014 36 7. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE AFORESAID DECISIONS, WE ALLOW THE APPEAL OF THE ASSESSEE. FINALLY, THE APPEAL OF THE REVENUE FAILS AND THE APPEAL OF THE ASSESSEE STANDS ALLOWED. PRONOUNCED IN OPEN COURT ON 17 TH AUGUST, 2015 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 17TH AUGUST, 2015 DN/-